Social Services and Other Legislation Amendment No 2

8/12/2019 Social Services and Other Legislation Amendment No 2

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SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT(2014 BUDGET MEASURES No. 2) BILL 2014

OUTLINE

Budg et measures

This Bill will introduce several 2014 Budget measures in Schedules to the Billnumbered as set out below.

1. Implement the following changes to Australian Government payments:

from 1 January 2015pause indexation for three years of the incomefree areas and assets value limits for student payments, including thestudent income bank limits;

from 1 July 2017pause indexation for three years of the income and

assets test free areas for all pensioners (other than parenting paymentsingle) and the deeming thresholds for all income support payments;

from 20 September 2017 ensure all pensions are indexed to theConsumer Price Index only, by removing:

o benchmarking to Male Total Average Weekly Earnings;

o indexation to the Pensioner and Beneficiary Living Cost Index;

from 20 September 2017 reset the social security and veteransentitlements income test deeming thresholds to $30,000 for singleincome support recipients, $50,000 combined for pensioner couples,

and $25,000 for a member of a couple other than a pensioner couple.2. Generally limit the overseas portability period for disability support pension to

28 days in a 12-month period from 1 January 2015.

3. Exclude from the social security and veterans entitlements income test anypayments made under the new Young Carer Bursary Programme from1 January 2015.

4. Include untaxed superannuation income in the assessment for theCommonwealth Seniors Health Card (with products purchased before1 January 2015 by existing cardholders exempt from the new arrangements),

and extend from six to 19 weeks the portability period for cardholders.5. From 1 January 2015, remove relocation scholarship assistance for students

relocating within and between major cities.

6. Cease pensioner education supplement from 1 January 2015.

7. Cease the education entry payment from 1 January 2015.

8. From 1 January 2015, extend youth allowance (other) to 22 to 24 year olds inlieu of newstart allowance and sickness allowance.

9. Require young people with full capacity to learn, earn or Work for the Dolefrom 1 January 2015.


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10. Implement the following family payment reforms from 1 July 2015:

limit the family tax benefit Part A large family supplement to familieswith four or more children;

remove the family tax benefit Part A per-child add-on to the higher

income free area for each additional child after the first;revise the family tax benefit end-of-year supplements to their originalvalues and cease indexation;

improve targeting of family tax benefit Part B by reducing the primaryearner income limit from $150,000 a year to $100,000 a year;

limit family tax benefit Part B to families with children under six years ofage, with transitional arrangements applying to current recipients withchildren above the new age limit for two years; and

introduce a new allowance for single parents on the maximum rate of

family tax benefit Part A for each child aged six to 12 years inclusive,and not receiving family tax benefit Part B.

11. Increase the qualifying age for age pension, and the non-veteran pensionage, to 70, increasing by six months every two years and starting on1 July 2025.

12.From 1 January 2015, remove the three months backdating of disabilitypension under the Veterans Entitlements Act 1986.


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Financial impact statement

MEASURE FINANCIAL IMPACT OVER THEFORWARD ESTIMATES

Bud get measures

1. Changes to Australian Government payments:CPI-only indexation for pensions fromSeptember 2017.

Maintaining the eligibility thresholds for AustralianGovernment payments (student payments andpensions) for three years.

Saving of $314.70 million


2. Disability support pensionportability Saving of $12.3 million

3. Young Carer Bursary Programmeincomeexemption

The programme will cost$3.0 million over four years

4. Commonwealth Seniors Health Cardinclude

untaxed superannuation in assessment


5. Remove relocation scholarship assistance forcertain students


6. Pensioner education supplement Saving of $281.2 million over fiveyears

7. Education entry payment Saving of $65.4 million over fiveyears

8. Extension of youth allowance (other) to 22 to 24year olds in lieu of newstart allowance andsickness allowance


9. Require young people with full capacity to learn,

earn or Work for the Dole

Saving of $1,247.3 million

10. Family payment reforms, starting 1 July 2015 Saving of $4,777.3 over five years

11. Pension age increased from 67 to 70 No impact on forward estimates

12. Date of effect for veterans disability pension Saving of $40.0 million

REGULATION IMPACT STATEMENTS

Several measures in the Bill have a regulatory impact. The Office of Best PracticeRegulation agreed to the regulatory costings and offsets for the proposals.

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

The statements of compatibility with human rights appear at the end of thisexplanatory memorandum.


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SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT(2014 BUDGET MEASURES No. 2) BILL 2014

NOTES ON CLAUSES

Abbreviations used in this explanatory memorandum

Family Assistance Actmeans the A New Tax System (Family Assistance)Act 1999

Family Assistance Administration Act means the A New Tax System(Family Assistance) (Administration) Act 1999

Farm Household Support Actmeans the Farm Household Support Act 2014

Military Rehabilitation and Compensation Act means the MilitaryRehabilitation and Compensation Act 2004

Social Security Actmeans the Social Security Act 1991

Social Security Administration Act means the Social Security(Administration) Act 1999

Veterans Entitlements Actmeans the Veterans Entitlements Act 1986

Clause 1 sets out how the new Act is to be cited, that is, as the Social Services andOther Legislation Amendment (2014 Budget Measures No. 2) Act 2014.

Clause 2 provides a table setting out the commencement dates of the varioussections in, and Schedules to, the new Act.

Clause 3 provides that each Act that is specified in a Schedule is amended orrepealed as set out in that Schedule.


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Schedule 1Indexation and deeming thresholds

Summary

This Schedule implements the following changes to Australian Governmentpayments:

from 1 January 2015 pause indexation for three years of the income freeareas and assets value limits for student payments, including the studentincome bank limits;

from 1 July 2017pause indexation for three years of the income and assetstest free areas for all pensioners (other than parenting payment single) andthe deeming thresholds for all income support payments;

from 20 September 2017ensure all pensions are indexed to the Consumer

Price Index (CPI) only, by removing:o benchmarking to Male Total Average Weekly Earnings (MTAWE);

o indexation to the Pensioner and Beneficiary Living Cost Index (PBLCI);

from 20 September 2017reset the social security and veterans entitlementsincome test deeming thresholds to $30,000 for single income supportrecipients, $50,000 combined for pensioner couples, and $25,000 for amember of a couple other than a pensioner couple.

Background

Pause indexation of various rates and various income and asset thresholds

This Schedule pauses for three years the indexation that occurs on 1 July or1 January each year of various income and asset test thresholds that apply to somesocial security payment types. There are comparable provisions in the VeteransEntitlements Act which are also paused. When indexation recommences, it willapply to the (paused) thresholds and there will be no catch-up in respect ofindexation that would otherwise have occurred during the three-year pause.

Part 3.16 of the Social Security Act provides for the indexation and adjustment ofamounts. Division 2 deals with CPI indexation, which affects various amounts set

out in section 1190, and applies acronyms for the purposes of the table insection 1191, which describes the rules and timing for the relevant indexation.

This measure takes effect from 1 January 2015 and 1 July 2017 respectively.


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Index social security pensions by the CPI

Pensions other than pension PP (single) are indexed currently by the greater of thechange in the CPI and the change in the All Groups PBLCI (see Division 3 ofPart 3.16). The combined couple rate of maximum basic pension is then compared

to 41.76 per cent of MTAWE and increased if the MTAWE benchmark would give ahigher rate. The maximum single basic pension is set at 66.33 per cent of thecombined couple rate (around 27.7 per cent of MTAWE). Alternative indexation byPBLCI and then benchmarking against MTAWE are to cease from 1 July 2017, suchthat future indexation of pensions other than pension PP (single) will only be byreference to the CPI as the result of Part 3 of this Schedule.

Comparable changes will be made to payments made under the VeteransEntitlements Act.

Resetting deeming thresholds

Part 3 contains provisions amending the Social Security Act and the VeteransEntitlements Act that will have the effect of resetting (reducing) from20 September 2017 the amounts of the thresholds for the deeming of income fromfinancial assets used to determine the rate of payment for social security andveterans affairs payments.

The deeming rules in the Social Security Act and Veterans Entitlements Act assumefinancial assets are earning a certain amount of income, regardless of the incomethey actually earn. Deeming is used to calculate income for pension, benefit andallowance payments. The deeming thresholds are the amounts at which the lower

deeming rate ceases to apply and is replaced by the higher rate. Currently,the lower rate is 2 per cent and the higher rate is 3.5 per cent. Deemed income iscalculated by multiplying the total value of a customers financial assets by thedeeming rates. Deeming rates were last changed on 4 November 2013.

In 1996, when extended deeming introduced the deeming thresholds, they wereinitially set at $30,000 for a person who is not a member of a couple and $50,000 fora pensioner couple. Since then, the thresholds have been indexed to the CPI on1 July each year. From 4 November 2013:

if a person is single and getting either a pension or allowance, the first

$46,600 of the persons financial assets is deemed to earn income at2 per cent per annum and any amount over that is deemed to earn income at3.5 per cent per annum;

if a person is a member of a couple:

o if at least one of the couple is getting a pensionthe first $77,400 ofthe persons and his or her partner's financial assets is deemed to earnincome at 2 per cent per annum and any amount over that is deemedto earn income at 3.5 per cent per annum; or

o if neither of the couple is getting a pensionthe first $38,700 for eachof their share of jointly owned financial assets is deemed to earnincome at 2 per cent per annum and any amount over that is deemedto earn income at 3.5 per cent per annum.


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The deeming threshold amounts (currently $46,600 and $77,400) will be reset(reduced) to $30,000 and $50,000 respectively from 20 September 2017.

The deeming threshold for a member of a couple, other than a pensioner couple,is set at an amount equal to one-half of the amount of the deeming threshold for a

pensioner couple. The deeming threshold amount for a member of a couple otherthan a pensioner couple (currently $38,700) will be $25,000 from20 September 2017.

Under the amendments made by item 1 of Part 1 of this Schedule, indexation of thedeeming thresholds will be paused for three years from 1 July 2017. Whenindexation of pension income and asset test free areas and deeming thresholdamounts recommences on 1 July 2020, it will apply to the reset deeming thresholdamounts, and there will be no catch up in respect of indexation that would haveotherwise occurred during the three-year pause.

The amendments made by this Part commence on 20 September 2017.

Explanation of the changes

Part 1Amendments commencing on 1 January 2015

Pausing indexation

Amendm ents to the Socia l Secur i ty Act

Item 1 adds further subsections to section 1192. New subsection (5AC) affects

indexation provided for by item 14 in the CPI Indexation Table in subsection 1191(1).Item 14 deals with the pension free area (which is an abbreviation for the ordinaryincome free area for social security pension (see item 20 of the table insubsection 1190(1)). For pensions other than Pension PP (Single), the pension freearea is not to be indexed on 1 July 2017, 1 July 2018 and 1 July 2019.

New subsection (5AD) affects indexation provided for by items 14AA (the youthallowance and austudy ordinary income free area), 14AB (the youth allowance andaustudy range reduction boundary), 15 (the student income bank balance limit)and 24 (the youth allowance (non-independent) assets value limit) of theCPI Indexation Table in subsection 1191(1). The amounts under these items are not

to be indexed on 1 January 2015, 1 January 2016 and 1 January 2017.

New subsection (5AE) affects indexation provided for by items 18 (pension singlehomeowner asset value limit), 19 (pension partnered homeowner asset value limit),20 (pension partnered non-homeowner asset value limit), 35 (deeming threshold individual) and 36 (deeming threshold pensioner couple)of the CPI Indexation Tablein subsection 1191(1). The amounts under these items are not to be indexed on1 July 2017, 1 July 2018 and 1 July 2019.


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Amendments to the Veterans Entitlements Act

Item 2 repeals subsections 59C(2A) and (3) and substitutes a newsubsection 59C(3), which affects indexation provided under items listed in the CPIIndexation Table in subsection 59B(1): item 4, which deals with the pension free

area (an abbreviation for the ordinary/ adjusted income free area for service pensionand income support supplement (see item 7 of the table in subsection 59A(1));item 6, which deals with the pension single homeowner asset value limit; item 7 ,which deals with the pension partnered homeowner asset value limit; item 8, whichdeals with the pension partnered non-homeowner asset value limit; item 11, whichdeals with the deeming threshold individual; and item 12, which deals with thedeeming threshold pensioner couple. The amounts under these items are not tobe indexed on 1 July 2017, 1 July 2018 and 1 July 2019.

Index social security pensions by the CPI

Part 2Amendments commencing on 1 July 2017

Amendm ents to the Socia l Securi ty Act7

Items 7 and 8 repeal section 1195, which currently benchmarks indexed ratesagainst MTAWE, and Division 3 of Part 3.16, which alternatively indexes againstPBLCI.

Items 4, 5, and 6 are consequential to the repeal of section 1195 and Division 3 ofPart 3.16, and remove references to indexation by PBLCI and benchmarking againstMTAWE, and to Division 3 of Part 3.16.


Item 12repeals sections 59EAA to 59EA which currently benchmarks indexed ratesagainst MTAWE or PBLCI.

Items 9, 10 and 11are consequential to the repeal of sections 59EAA to 59EA andremove references to indexation by PBLCI and benchmarking against MTAWE byrepealing paragraph 59(aa) and amending subsection 59C(2).

Item 13 repeals the redundant definition of fortnightly MTAWE figurein subsection 198(1).

Amendm ents to the Income Tax Assessment Ac t 1997

Item 3makes a consequential amendment to the note to subsection 54-40(2). Thisis to correct references to the Social Security Act provisions, reflecting the repeal ofsection 1195.


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Resetting deeming thresholds

Part 3Amendments commencing on 20 September 2017

Item 14 repeals subsections 1081(1) and (2), and substitutes new provisions

indicating that the deeming threshold for a person who is not a member of a coupleis $30,000 and that the deeming threshold for a pensioner couple is $50,000. Whilethese are the same amounts currently specified in subsections 1081(1) and (2),item 17is an application provision making it clear that the stated amounts are to beused when working out the rate of social security payments on or after20 September 2017, rather than any higher amounts that have resulted from priorindexation.

Item 15 repeals and substitutes the note to subsection 1081(3), which currentlyindicates that the amounts fixed by subsections 1081(1) and (2) are indexed every1 July and makes reference to indexation provisions of sections 1190 to 1192.

The new note removes reference to the amounts being indexed every 1 July,and instead refers only to sections 1190 to 1192 for indexation of the deemingthresholds in subsections 1081(1) and (2). This takes account of the fact that, underitem 1 of Part 1 of this Schedule, amendments are being made under newsubsection 1192(5AE) that will have the effect that indexation of the deemingthresholds will not occur on 1 July 2017, 1 July 2018 and 1 July 2019.

Item 16inserts new subsections 1192(7A) and (7B), which relate to the calculationof deeming thresholds on 1 July 2020, the first indexation date after thenon-occurrences of indexation of deeming thresholds referred to in newsubsection 1192(5AE) under item 1 in Part 1 of this Schedule. Under new

subsection 1192(7A), the current figure for the deeming threshold for an individualimmediately before 1 July 2020 is taken to be $30,000 and, under newsubsection 1192(7B), the current figure for the deeming threshold for a pensionercouple immediately before 1 July 2020 is taken to be $50,000.


Item 18 repeals section 46H, and substitutes a new section indicating atsubsection (1) that the deeming threshold for a person who is not a member of acouple is $30,000 and, at subsection (2), that the deeming threshold for a couple is$50,000. While these are the same amounts currently specified in

subsections 46H(1) and (2), item 20is an application provision making it clear thatthe stated amounts are to be used when working out the rate of service pension orincome support supplement on or after 20 September 2017, rather thanany higheramounts that have resulted from prior indexation.

Item 19 inserts new subsections 59C(4) and (5), which relate to the calculation ofdeeming thresholds on 1 July 2020, the first indexation date after thenon-occurrences of indexation referred to in Part 1 of this Schedule. Under newsubsection 59C(4), the current figure for the deeming threshold for an individualimmediately before 1 July 2020 is taken to be $30,000 and, under newsubsection 59C(5), the current figure for the deeming threshold for a couple

immediately before 1 July 2020 is taken to be $50,000.


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Schedule 2Disability support pension

Summary

This Schedule introduces a change in relation to disability support pension generallyto limit the overseas portability period for disability support pension to 28 days in a12-month period from 1 January 2015.

Background

Division 2 of Part 4.2 of the Social Security Act provides for the portability of socialsecurity payments. The portability period refers to the length of time that socialsecurity payments can be paid to a person while that person is outside Australia.A persons payment is not payable for any period of absence that occurs after theend of the persons portability period for a payment (section 1215).

Current portability rules for disability support pension state that, in the general case,a person in receipt of the disability support pension can continued to be paid duringany temporary absences, provided each period of absence is no longer than sixweeks in length.

In addition, certain exceptions to the general rule apply, which allow for absences oflonger than six weeks. For example, unlimited portability period applies for severelyimpaired disability support pensioners (section 1218AAA). A persons portabilityperiod may also be extended (under section 1218C) if the person is unable to returnto Australia for specified reasons beyond their control and which occurred while the

person was absent from Australia and before the end of their general portabilityperiod.

If a disability support pensioners absence from Australia exceeds their portabilityperiod, their pension is not payable and will be cancelled after the end of theirportability period.

The amendments made by this Schedule will commence on 1 January 2015.


The amendments in this Schedule are intended to limit the portability period forAustralian resident disability support pensioners. Generally, the maximum portabilityperiod is a total of 28 days (whether consecutive or not) in the last 12 months. Thereis no limit to the number of times a person may be absent from Australia, so long asthe number of days in each period of absence over the past 12 months, when addedtogether, do not exceed 28 days.

Where an absence is for the purposes of seeking medical treatment, to attend to anacute family crisis or for a humanitarian purpose, the maximum portability period isfour weeks. It is intended that, if a person has already been absent for a period forthe purposes of seeking medical treatment, to attend to an acute family crisis or for a

humanitarian purpose, these days of absence are to count towards the 28 days ofabsence that is allowed for any purpose.


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These portability rules are subject to the existing exceptions undersections 1218AAA, 1218AA, 1218AB, 1218, 1218C or 1218D. That is, the currentrules allowing unlimited portability in exceptional circumstances, or an extension tothe portability period under certain circumstances, will continue to apply.


Items 1 and 2 insert a new note at the end of subsection 1215(1). The new noteexplains that, if a disability support pensioners period of absence extends beyondthe persons portability period, the Secretary must cancel the payment with effectimmediately after the end of the portability period, because of subsections 80(1),80(3AA) and 118(11B) of the Social Security Administration Act.

Item 3 repeals existing paragraph 1217(2)(b), and substitutes newparagraph 1217(2)(b). Existing paragraph 1217(2)(b) provides that a personsabsence is an al lowable absence if the absence does not exceed the period

specified in column 5 of the table. The new paragraph 1217(2)(b) provides that,in the case of item 2, an absence is an allowable absence if the absence does notcause the total number of days (whether consecutive or not) of the personstemporary absence from Australia in the last 12 months to exceed 28 days.The counting of the 28 days would include any days of absence for purposes ofseeking eligible medical treatment; to attend to an acute family crisis or for ahumanitarian purpose.

The rule in new paragraph 1217(2)(b) (that an absence is only an allowable absenceif it does not exceed 28 days in the last 12 months) does not apply if an exceptionrule in Subdivision B of Division 2 of Part 4.2 applies. That is, an absence is an

allowable absence even if it exceeds 28 days in the last 12 months if any one of thefollowing provisions applies:

section 1218AAAunlimited portability for severely impaired disability supportpensioners;

section 1218AA unlimited portability for terminally ill overseas disabilitysupport pensioner;

section 1218ABextended portability period for disability support pension;

section 1218 full time students outside Australia for purposes of Australian

course;section 1218Cextension of persons portability period general; or

section 1218Dlife saving medical treatment overseas.

Item 4makes a technical amendment to subsection 1217(4) by omitting the wordsaperiod of weeks, and substituting not an unlimited period. Item 5also makes atechnical amendment to subparagraph 1217(4)(b)(ii) by deleted the words of weeks.These amendments are required because the portability period for disability supportpension (general) is now calculated in days rather than in weeks.

Item 6provides for the amendment of the table at the end of section 1217, by therepeal of existing item 2 of the table and the substitution of new items 2 and 2AA.


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New item 2 provides that, for disability support pensioners generally, their maximumportability period is the period that is a total of 28 days (whether consecutive or not)of temporary absence from Australia for any purpose in the last 12 months.The 28 days is not to include days on which the person was not receiving disabilitysupport pension. It is intended that these 28 days would include any days of

absence, including if they are for the purpose of seeking medical treatment, to attendto an acute family crisis or for a humanitarian purpose.

New item 2AA provides that, for disability support pensioners who are absent for oneof the purposes in column 4 of item 2AA (that is, to seek eligible medical treatment,to attend to an acute family crisis, or for a humanitarian purpose), their maximumportability period is a continuous period of four weeks of absence from Australia. It isintended that any previous days of absence, regardless of the purpose of theprevious absence/s, would not affect the right to continue to be paid during futureperiods of absence, provided the future absence is for any of the purposes listed incolumn 4 of item 2AA, and each future period of absence is no longer than four

weeks.

Item 7 repeals existing subsection 1218AA(3), and substitutes newsubsection 1218AA(3). Existing subsection 1218AA(1) provides that the Secretarymay determine that a person has an unlimited portability period if all of the qualifyingcircumstances exist. Existing subsection 1218AA(2) provides that the Secretary mayrevoke the determination if any of the qualifying circumstances ceases to exist.

New subsection 1218AA(3) provides that, if the Secretary revokes the determination,the persons maximum portability period would be worked out under whichever oneof items 2, 2AA and 2A of the table in section 1217 applies. If the person was

absent from Australia at the time of the revocation, the persons absence is taken tohave started on the date of effect of the revocation. If item 2 of the table insection 1217 applies, the person is taken not to have been absent from Australia atany time in the 12 months before the revocation.

Amendm ents to the Socia l Secur i ty Adm in is t rat ion Act

Item 8 inserts new subsection 80(3AA) after subsection 80(3). The effect of newsubsection 80(3AA) is that the Secretary would be required to make a determinationto cancel a persons disability support pensionif he or she is qualified for the pensionbut the pension is not payable because the person remained absent from Australia

after the end of their portability period.

Item 9 provides for a new date of effect rule by the insertion of newsubsection 118(11B). New subsection 118(11B) provides that a determination undersection 80 to cancel a persons disability support pension because the pension is notpayable after the end of the persons portabilityperiod takes effect immediately afterthe end of the portability period.

Item 10 provides for the application and transitional provisions. The amendmentsare to apply in relation to temporary absences that start on or after 1 January 2015.In applying the amendments in relation to temporary absences that start on, or in the

first 12 months after, the commencement of this Schedule, days of temporaryabsence that occurred before that commencement are to be ignored.


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The effect of subitem 10(3) is that, where a person has, on or before the day thismeasure was announced, booked travel outside Australia, which involves transportof the person back to Australia before 1 January 2016, the amendments made bythis Schedule would not apply. That is, the existing six-week portability rule wouldcontinue to apply to any such person.


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Schedule 3Young Carer Bursary Programme

Summary

This Schedule amends the Social Security Act and the Veterans Entitlements Act toensure that a payment of a bursary under the programme established by theCommonwealth and known as the Young Carer Bursary Programme is not countedas income.

Background

The Young Carer Bursary Programme is a 2014 Budget measure which will providebursary payments to young carers aged 25 years and under to relieve the financialpressure on them to undertake part-time work in addition to their educational andcaring responsibilities. The funding will provide 150 bursary payments of up to

$10,000 a year from January 2015, and will target young carers in greatest financialneed.

The Young Carer Bursary Programme will have positive long-term financial impactsthrough the expected contribution to educational retention among young carers,and will assist an estimated 450 young carers over three years.

The amendments made by this Schedule will ensure that a payment of a bursaryunder the Young Carer Bursary Programme is not to be treated as income for thepurposes of the social security law and the Veterans Entitlements Act.

The amendments made by this Schedule commence on 1 January 2015.



Subsection 8(8) of the Social Security Act lists amounts that are not income forsocial security purposes. Item 1 inserts a new paragraph (jai) into subsection 8(8)to ensure that a payment of a bursary under the programme established by theCommonwealth and known as the Young Carer Bursary Programme does not countas income for the purposes of the social security law.

Amendm ents to the Veterans Entitlements Act

Item 2 inserts a new paragraph (pabc) into subsection 5H(8) of theVeteransEntitlements Act to ensure that a payment of a bursary under theprogramme established by the Commonwealth and known as the Young CarerBursary Programme does not count as income for the purposes of theVeteransEntitlements Act.


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Schedule 4Seniors health card

Summary

This Schedule will include untaxed superannuation income in the assessment for theCommonwealth Seniors Health Card (with products purchased before1 January 2015 by existing cardholders exempt from the new arrangements),and extend from six to 19 weeks the portability period for cardholders.

Background

This Schedule will include tax-free superannuation income in the assessment ofincome for qualification for the seniors health card, ensuring people on similarincomes will be treated the same for concession card purposes. The income will becalculated using the same method as for income support payments from

1 January 2015, using income deemed to be generated by various account-basedsuperannuation income streams, regarding them as financial investments.

From 1 January 2015, various long-term financial assets which produce an incomestream will be counted as financial investments, and subject to the deemed incomerules. The products to be treated in this way are an asset-tested income stream(long term) that is an account-based pension within the meaning of theSuperannuation Industry (Supervision) Regulations 1994, and an asset-testedincome stream (long term) that is an annuity (within the meaning of theSuperannuation Industry (Supervision) Act 1993) provided under a contract thatmeets the standards, if any, determined under subsection 9(1EA).

Holders of a seniors health card immediately before commencement of this measurewill not have the deemed rate of their tax-free superannuation income for productsheld prior to commencement counted in the income test from commencement,unless they cease to be the holder of a card after this time. However, if they have apartner who does not hold a seniors health card, then their partners income from asuperannuation product will be counted from commencement. Income fromsuperannuation products cardholders purchase following commencement will beincluded in the test.

A related measure will extend the period for which seniors health card holders may

travel temporarily overseas without losing qualification for the card from six weeks toup to 19 weeks. This will ease the regulatory burden for cardholders whosequalification for the card has remained unchanged, apart from the fact they havetemporarily travelled overseas for more than six weeks. Currently, the supplementpaid to holders of the card stops accruing after six weeks, and this will remain thecase with this change.



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Part 1Seniors health card income test

Division 1Main amendments


Items 1 to 4amend section 1071, which provides the seniors health card incometest. Item 1 inserts two new steps into the method statement at point 1071-1.New step 1A identifies whether the person or their partner at the test time has atleast one long -term f inancia l asset. This term is defined at new point 1071-13,inserted by item 4, to mean a financial investment within the meaning ofparagraph (i) or (j) of the definition of f inancia l investment in subsection 9(1).These paragraphs will be inserted into the Act at 1 January 2015 by the SocialServices and Other Legislation Amendment Act 2014(see item 4 of Schedule 11),

to mean:

(i) an assettested income stream (long term) that is an accountbasedpension within the meaning of the Superannuation Industry (Supervision)Regulations 1994; or

(j) an assettested income stream (long term) that is an annuity (within themeaning of the Superannuation Industry (Supervision) Act 1993) providedunder a contract that meets the requirements determined in an instrumentunder subsection (1EA).

The new definition in paragraph (i) of the definition of financial investment insubsection 9(1) is modified by requiring that the asset-tested income stream(long term) arises under a comply ing superannuat ion p lan(within the meaning ofthe Income Tax Assessment Act 1997) that is not a const i tu t iona l ly pro tected fund(within the meaning of that Act). These terms limit the type of fund which will comewithin the definition to avoid the possibility that assessable income may also beproduced by the income stream.

A note to this provision alerts the reader that this Schedule contains provisionspreserving the rules in the Calculator for a certain kind of long-term financial assetthat was being provided to a person immediately before 1 January 2015 where theperson held a seniors health card immediately before that day, provided that, sincethat day, the person has held a seniors health card.

New step 1B adds the persons deemed income amount under point1071-11Aor 1071-11B to the persons adjusted taxable income amount generated at step 1 ofthe existing method statement.

If the person is not a member of a couple, and has such an asset, their deemedincome from the asset is worked out under new point 1071-11A, inserted by item 3.If the person is a member of a couple, and either they or their partner has such anasset, their deemed income amount is worked out under new point 1071-11B, alsoinserted by item 3.


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New point 1071-11A works out an unpartnered persons deemed income amountusing a method statement. The method involves working out the total value of all thepersons long-term financial assets at the test time, and then applying existingsection 1076 to generate an amount of ordinary income the person would be takento receive per year on the assumption that the only financial assets of the person

were their long-term financial assets. This amount of ordinary income is then thepersons deemed income amount for the purposes of the seniors health card incometest.

New point 1071-11B works out a partnered persons deemed income amount, alsousing a method statement. The method involves working out the value of all of thepersons long-term financial assets and the value of the persons partners long-termfinancial assets, if the partner has reached the minimum age mentioned insection 301-10 of the Income Tax Assessment Act 1997. Currently, section 301-10specifies age 60, so that, if a person aged 60 or over receives a superannuationbenefit, the benefit is not assessable income. This ensures that only tax-free income

of a cardholders partner is included in the seniors health card income test as adeemed income amount in addition to taxable income already captured by the test.No age need be specified for the cardholder because, to be qualified for a seniorshealth card, a person must have reached pension age, which is a minimum of60 years.

The method then applies existing section 1077 to generate an amount of ordinaryincome for the couple, on the assumption that the only financial assets of the couplewere their long-term financial assets. The total ordinary income deemed for thecouple is then divided by two to give the persons deemed income amount for thepurposes of the seniors health card test. This matches the approach taken in

existing point 1071-11 where, if a person is a member of a couple, the couplesadjusted taxable incomes are added and then divided by two to work out the amountof the persons adjusted taxable income for the reference tax year.

Item 2 amends steps 3, 4 and 5 of the method statement, such that the methodstatement compares the sum of the persons adjusted taxable income and theirdeemed income from long-term financial assets against the persons seniors healthcard taxable income limit generated at step 2.

Item 5 provides for the application of these amendments. The amendments areprospective only, applying to working out whether a person is qualified for a seniors

health card on a day on or after 1 January 2015. However, some exceptions to thiswill apply. If a person held a seniors health card immediately before 1 January 2015,and a relevant long-term financial asset was being provided to the personimmediately before 1 January 2015, then that asset is not to be included in theseniors health card income test, if it would otherwise be caught by the test. This onlyapplies while the person continuously holds a seniors health card. If the personceases to hold a seniors health card under the Social Security Act, then theamendments would apply to the income test for any card they later hold.


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Items 6 to 9amend section 118ZZA, which provides the seniors health card incometest. Item 6 inserts two new steps into the method statement at point 118ZZA-1.New step 1A identifies whether the person or their partner at the test time has at

least one long -term f inancia l asset. This term is defined at new point 118ZZA-12,inserted by item 9, to mean a financial investment within the meaning ofparagraph (i) or (j) of the definition of f inancia l investment in subsection 5J(1).These paragraphs will be inserted into the Veterans Entitlements Act at1 January 2015 by the Social Services and Other Legislation Amendment Act 2014(see item 35 of Schedule 11), to mean:

(i) an asset-tested income stream (long term) that is an account-basedpension within the meaning of the Superannuation Industry (Supervision)Regulations 1994; or

(j) an asset-tested income stream (long term) that is an annuity (within themeaning of the Superannuation Industry (Supervision) Act 1993) providedunder a contract that meets the requirements determined in an instrumentunder subsection (1G).

The new definition in paragraph (i) of the definition of financial investment insubsection 5J(1) is modified by requiring that the asset-tested income stream (longterm) arises under a comply ing superannuat ion p lan (within the meaning of theIncome Tax Assessment Act 1997) that is not a const i tu t iona l ly pro tected fund(within the meaning of that Act). These terms limit the type of fund which will comewithin the definition in order to avoid the possibility that assessable income may alsobe produced by the income stream.

A note to this provision alerts the reader that this Schedule contains provisionspreserving the rules in the Calculator for a certain kind of long-term financial assetthat was being provided to a person immediately before 1 January 2015 where theperson held a seniors health card immediately before that day, provided that, sincethat day, the person has held a seniors health card.

New step 1B adds the persons deemed income amount under point118ZZA-10Aor 118ZZA-10B to the persons adjusted taxable income amount generated at step 1of the existing method statement.

If the person is not a member of a couple, and has such an asset, their deemedincome from the asset is worked out under new point 118ZZA-10A, inserted byitem 8. If the person is a member of a couple, and either they or their partner hassuch an asset, their deemed income amount is worked out under newpoint 118ZZA-10B, also inserted by item 8.

New point 118ZZA-10A works out an unpartnered persons deemed income amountusing a method statement. The method involves working out the total value of all thepersons long-term financial assets at the test time, and then applying existingsection 46D to generate an amount of ordinary income the person would be taken toreceive per year on the assumption that the only financial assets of the person weretheir long-term financial assets. This amount of ordinary income is then the personsdeemed income amount for the purposes of the seniors health card test.


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New point 118ZZA-10B works out a partnered persons deemed income amount,also using a method statement. The method involves working out the value of all ofthe persons long-term financial assets and the value of the persons partnerslong-term financial assets, if the partner has reached the minimum age mentioned insection 301-10 of the Income Tax Assessment Act 1997.

Currently, section 301-10 specifies age 60 so that, if a person aged 60 years or overreceives a superannuation benefit, the benefit is not assessable income. Thisensures that only tax-free income of a cardholders partner is included in the seniorshealth card income test as a deemed income amount in addition to taxable incomealready captured by the test. No age need be specified for the cardholder because,to be qualified for a seniors health card, a person must have reached pension age,which is a minimum of 60 years.

The method then applies existing section 46E to generate an amount of ordinaryincome for the couple, on the assumption that the only financial assets of the couple

were their long-term financial assets. The total ordinary income deemed for thecouple is then divided by two to give the persons deemed income amount for thepurposes of the seniors health card test. This matches the approach taken inexisting point 118ZZA-10 where, if a person is a member of a couple, the couplesadjusted taxable incomes are added and then divided by two to work out the amountof the persons adjusted taxable income for the reference tax year.

Item 7amends steps 3, 4 and 5 of the point 118ZZA-1 method statement, such thatthe method statement compares the sum of the persons adjusted taxable incomeand their deemed income from long-term financial assets against the personsseniors health card taxable income limit generated at step 2.

Item 10 provides for the application of these amendments. The amendments areprospective only, applying to working out whether a person is qualified for a seniorshealth card on a day on or after 1 January 2015. However, some exceptions to thiswill apply. If a person held a seniors health card immediately before 1 January 2015,and a relevant long-term financial asset was being provided to the personimmediately before 1 January 2015, then that asset is not to be included in theseniors health card income test. This only applies while the person continuouslyholds a seniors health card. If the person ceases to hold a seniors health card underthe Veterans Entitlements Act, then the amendments would apply to the income testfor any card they later hold.

Division 2Technical amendments

This Division makes amendments to rename the income test for the seniors healthcard the seniors health card income test, omitting the word taxable, to reflect thefact the test will now include tax-free elements.

Items 11 to 28 make technical amendments to the Social Security Act to substituteseniors health card income test and seniors health card income limit for theexisting labels which include the word taxable.

Item 29makes a technical amendment to the table in point 118ZZA-11 of VeteransEntitlements Act to reference correctly the seniors health card income limit table.


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Part 2Portability

Non-cancellation of concession cards for temporary overseas absences is providedfor by Division 4 of Part 2A.1 of the Social Security Act. Section 1061ZUB sets amaximum non-cance lla tion p er iod of up to six weeks beginning on the day the

person leaves Australia. The person ceases to be qualified for the card after the endof the period of six weeks beginning on the day the person leaves Australia(see subsection 1061ZUB(2)).

Item 30 makes a consequential amendment, narrowing the application ofsubsection 1061ZUB(2) to concession cards other than a seniors health card.

Item 31inserts new subsection 1061ZUB(2A), providing that person is not qualifiedfor a seniors health card for any period of absence after the end of the period of19 weeks beginning on the day the person leaves Australia.

Item 32 substitutes two subparagraphs for former paragraph 1061ZUB(3)(b),to provide for a maximum non-cancellation period of six weeks for concession cardsother than a seniors health card, and 19 weeks for a seniors health card.

Item 33 provides that the amendments made by items 30, 31 and 32 apply toperiods of absence from Australia beginning on or after the commencement of thoseitems. The amendments also apply to periods of absence from Australia beginningbefore the commencement of those items, where the person is continuously absentfrom Australia during the period beginning on the day the person leaves Australiaand ending immediately before 1 January 2015, and the length of that absence ifless than 19 weeks.

In other words, if a person leaves Australia in September 2014, and returns on31 December 2014, their card will have been cancelled, and they will have to reapplyfor a card. They would need to be re-granted a card on 31 December 2014 if theyare to retain the benefit of the provisions preserving the previous application of theincome test for continuing cardholders. However, if the person leaves Australia inlate 2014, and returns in January 2015, having been continuously absent in theintervening period, the new provisions may apply, provided the person was absentfor fewer than 19 weeksin total. In these cases, where the persons card had beencancelled in 2014 because they had been absent for more than six weeks, and theyreturn in 2015, having been continuously absent for less than 19 weeks,

the Secretary may retrospectively reinstate their card.


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Schedule 5Relocation scholarships

Summary

This Schedule will restrict qualification for the relocation scholarship payment tostudents relocating to or from regional or remote areas from 1 January 2015.Students relocating from major cities will only remain qualified for a relocationscholarship payment if they relocate to a regional or remote area.

Background

This measure will continue to recognise the reduced level of course and institutionchoice in regional and remote areas and the higher proportion of regional or remotestudents who need to relocate to study, compared to students from major cities.

Students from major cities are more likely than students from regional or remoteareas to have a suitable education institution near to their parental home.

The relocation scholarship payment is currently paid at a rate of $4,145 in the firstyear the student is required to live away from home and $1,036 each year thereafterfor students relocating from major cities (2014 rates). Recognising that they mayhave higher costs, students relocating from regional or remote areas are paid at ahigher rate of $2,073 in the second and third year they are required to live away fromhome to study.

Qualification for the relocation scholarship payment is restricted to recipients of youth

allowance (or ABSTUDY recipients under equivalent provisions in the ABSTUDYpolicy manual) undertaking higher education or higher education preparatorycourses.



Item 1amends section 592K of the Social Security Act to add further circumstancesin which a person is not qualified for a relocation scholarship payment despite beingotherwise qualified under section 592J.

The first circumstance, as dealt with by new subsection 592K(6), covers people whoare not independent (as defined in section 1067A) but who are required to liveaway from homeat the time their qualification is to be determined. Such people arenot qualified for a relocation scholarship payment where, on the day the personstarted to undertake the course that would have otherwise qualified them forpayment under paragraph 592J(d), each of the persons parents lived in a major c i tylocat ion (as defined by new subsection 592K(9)), and the persons place of study(as decided in accordance with principles made under new subsection 592K(8))is also in a major city location. This rule is intended to ensure that, for persons whoare not independent but are required to live away from home, they are not paid a

relocation scholarship payment when they have relocated from a major city (wheretheir parents live) to the same or another major city.


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19

The second circumstance, as dealt with by new subsection 592K(7), covers peoplewho are independent, but only as a result of one of a certain range of subsections insection 1067A of the Social Security Act: subsection (3), (5), (6), (7), (8), (9) or (11)).Such people are not qualified for a relocation scholarship payment if, six monthsbefore starting to undertake the course that would have otherwise qualified them for

payment under paragraph 592J(d), the persons usual place of residence was in amajor city location and, at the qualification time, the persons place of study is also ina major city location. This rule is intended to ensure that people, who areindependent under the provisions referred to in new paragraph 592K(7)(a) are notpaid a relocation scholarship payment where they have remained in a major citylocation, or relocated between major city locations, to study.

New subsection 592K(8) will provide power to the Secretary to make a legislativeinstrument outlining principles that must be complied with by decision-makers whendeciding a persons place of study at a particular time. These principles will be ableto address a range of study scenarios, including when a person is studying through

attending classes, conducting research or fieldwork, or is studying online.A legislative instrument will enable the rule-maker to adapt the principles flexibly tovarious study scenarios as they arise.

New subsection 592K(9) defines the term major c i ty locat ion as used in newsubsections 592K(6) and (7). The term will mean a location categorised as one ofthe Major Cities of Australia under the Remoteness Structure referred to insubsection 1067A(10F) of the Social Security Act. Under subsection 1067A(10F),the default Remoteness Structure is as described in the Australian Bureau ofStatistics publication, Statistical Geography Volume 1 Australian StandardGeographical Classification (ASGC) July 2006, or other Australian Bureau of

Statistics document that may be declared under subsection 1067A(10G) as areplacement document (for example, if new data becomes available from a morerecent census).

As at the date of introduction of the Bill, there is some useful information on theAustralian Bureau of Statistics website about the Remoteness Structure here:http://www.abs.gov.au/websitedbs/D3310114.nsf/home/remoteness+structure,and on the Doctor Connect website here:http://www.doctorconnect.gov.au/internet/otd/Publishing.nsf/Content/locator.

Item 2 is an application provision to clarify that the amendment made by the

Schedule applies from commencement of the Schedule onwards in relation toqualification for a relocation scholarship payment following that date (irrespective ofwhether qualification is, following commencement, being determined for a personwho has received qualification payments prior to commencement).
http://www.abs.gov.au/websitedbs/D3310114.nsf/home/remoteness+structurehttp://www.abs.gov.au/websitedbs/D3310114.nsf/home/remoteness+structurehttp://www.doctorconnect.gov.au/internet/otd/Publishing.nsf/Content/locatorhttp://www.doctorconnect.gov.au/internet/otd/Publishing.nsf/Content/locatorhttp://www.doctorconnect.gov.au/internet/otd/Publishing.nsf/Content/locatorhttp://www.abs.gov.au/websitedbs/D3310114.nsf/home/remoteness+structure


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Schedule 6Pensioner education supplement

Summary

This Schedule ceases pensioner education supplement from 1 January 2015.

Background

In broad terms, the pensioner education supplement assists students with theongoing costs of full-time or part-time study. This Schedule repeals provisions thatprovide for pensioner education supplement, and makes related consequentialchanges.

The Government remains committed to providing incentives for income supportrecipients to improve their employment prospects through study or training. More

appropriate channels of Government-funded study and training assistance forincome support recipients are available through employment service providers andthe FEE HELP and VET FEE HELP tuition loan programmes.


Part 1Main amendments


Part 2.24A of the Social Security Act provides for the payment of pensionereducation supplement. Item 17 repeals Part 2.24A.

Consequential amendments are made as follows.

Item 1omits a pensioner education supplement, from subsection 7(6).

Item 2 repeals subparagraph (l)(v) of the definition of compensat ion affectedpaymentin subsection 17(1).

Item 3omits or supplement, from paragraph (l) of the definition of compensat ionaffected paymentin subsection 17(1).

Item 4 repeals and substitutes paragraph (m) of the definition of compensat ionaffected payment in subsection 17(1) to reflect the repeal ofsubparagraph 1061ZAAA(1)(b)(iv) by item 19.

Item 5 repeals the note at the end of the definition of approved course ofeducat ion o r studyin subsection 19AB(2).

Item 6 repeals and substitutes the definition of independentin subsection 23(1).

Item 7repeals paragraph (cb) of the definition of newly arrived residents waitingper iod in subsection 23(1).


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Item 8 omits , a double orphan pension or a pensioner education supplement,and substitutes or a double orphan pension in paragraph (a) of the definition ofpaydayin subsection 23(1).

Item 9omits the word , supplement from paragraph (a) of the definition of payday

in subsection 23(1).

Item 10 repeals paragraph 23(4AA)(c).

Item 11 omits paragraph 1061PB(1)(b), and substitutes subsection541B(5),in paragraphs 23(10F)(c) and (d).

Item 12repeals section 119.

Item 13repeals subsection 503AA(1).

Item 14 omits (2) from subsection 503AA(2). This is consequential to item 13.

Item 15 omits , 569A(b) or 1061PB(1)(b), and substitutes or 569A(b)in subparagraph 569H(7)(g)(iii).

Item 16repeals subsection 1049(1).

Item 18 adds and to the end of subparagraph 1061ZAAA(1)(b)(iii). This isconsequential to item 19.

Item 19repeals subparagraph 1061ZAAA(1)(b)(iv).

Item 20 omits , a mobility allowance or a pensioner education supplement ,and substitutes or a mobility allowance, in section 1158.


Item 21 omits allowance; or, and substitutes allowance., in paragraph (i) of thedefinition of supp lementary payment in subsection 15(5). This is consequential toitem 22.

Item 22 repeals paragraph (j) of the definition of supp lementary payment insubsection 15(5).

Item 23repeals subsection 50(3).

Item 24repeals paragraph 52(1)(h).

Item 25 omits , austudy payment or pensioner education supplement,and substitutes or austudy payment, wherever occurring in paragraphs 55(4A)(a)and (b).

Items 26 and 27 repeal paragraphs (i) and (o) of the definition of category I welfarepayment and paragraphs (d) and (i) of the definition of category Q w elfarepayment

respectively in section 123TC.


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Item 28repeals paragraph (i) of the definition of soc ia l secur i ty p er iod ic paymentin subclause 1(1) of Schedule 1.

Item 29repeals clauses 30 to 32 of Schedule 2.

Part 2Other amendments

Consequential amendments are also made to the following Acts.

Amendm ents to the Fami ly Ass is tance Act

Item 30 omits the reference to paragraph 17(1)(c) in subparagraph 14(1A)(b)(i).This is consequential to item 31.

Item 31repeals paragraph 17(1)(c).

Amendm ent to the Farm Household Suppo rt Act

Item 32repeals paragraph 94(i).


Item 33repeals item 22A.1 in the table contained in section 52-10.

Item 34repeals item 22A in the table contained in section 52-40.

Part 3Application and saving provisions

Subitem 35(1) provides that, despite the amendments to the definition ofcompensat ion af fected payment in subsection 17(1) of the Social Security Actmade by Part 1 of this Schedule, Parts 3.6A and 3.14 of the Social Security Actcontinue to apply as if those amendments had not been made.

Subitem 35(2) provides that, despite the amendments made by items 12, 13, 14and 16 of this Schedule, sections 119, 503AA and 1049 of the Social Security Act,as in force immediately before the commencement of this item, will continue to applyon and after the commencement of the items in relation to working out whether anapproved program of work supplement or language, literacy and numeracysupplement are payable in respect of a fortnight beginning before that

commencement.

Subitem 35(3) provides that, despite the amendment made by item 17 of thisSchedule, Part 2.24A of the Social Security Act, as in force immediately before thecommencement of this item, will continue to apply on and after the commencementin relation to days occurring before the commencement.

Subitem 35(4)provides that, despite the amendments made by items 18 and 19 ofthis Schedule, paragraph 1061ZAAA(1)(b) of the Social Security Act, as in forceimmediately before the commencement of this item, continues to apply on and afterthat commencement in relation to a relevant period that began before that

commencement.


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Subitem 35(5) provides that, despite the amendment made by item 20 of thisSchedule, section 1158 of the Social Security Act, as in force immediately before thecommencement of this item, continues to apply on and after that commencement inrelation to days occurring before that commencement.

Subitem 35(6)provides that, despite the amendments made by items 23 and 25 ofthis Schedule, subsections 50(3) and 55(4A) of the Social Security AdministrationAct, as in force immediately before the commencement of this item, continue toapply on and after that commencement in relation to the payment of fares allowanceon or after that commencement, to the extent that payment of fares allowance isbeing made because of the receipt of pensioner education supplement.

Subitem 35(7) provides that, despite the amendment made by item 24 of thisSchedule, paragraph 52(1)(h) of the Social Security Administration Act, as in forceimmediately before the commencement of this item, continues to apply on and afterthat commencement in relation to the payment of pensioner education supplement

on or after that commencement.

Subitem 35(8)provides that, despite the amendments made by items 26 and 27 ofthis Schedule to paragraphs (i) and (o) of the definition of category I welfarepayment and paragraphs (d) and (i) of the definition of category Q w elfarepayment in the Social Security Administration Act, Part 3B of that Act continues toapply as if those amendments had not been made.

Subitem 35(9)provides that, despite the amendments made by items 30 and 31 ofthis Schedule, subparagraph 14(1A)(b)(i) and paragraph 17(1)(c) of the FamilyAssistance Act, as in force immediately before the commencement of this item,

continue to apply on and after that commencement in relation to working out whetheran individual satisfies the work/training/study test or has recognised studycommitments before, on or after that commencement.

Subitem 35(10) provides that, despite the amendment made by item 33 of thisSchedule, item 22A.1 of the table in section 52-10 of the Income Tax AssessmentAct 1997, as in force immediately before the commencement of this item, continuesto apply on and after that commencement in relation to a payment of pensionereducation supplement before, on or after that commencement.


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Schedule 7Education entry payment

Summary

This Schedule ceases the education entry payment from 1 January 2015.

Background

In broad terms, the education entry payment assists with education expenses, and ispaid once a year to eligible recipients. This Schedule repeals provisions that providefor education entry payment, and makes related consequential changes.

The Government remains committed to providing incentives for income supportrecipients to improve their employment prospects through study or training. Moreappropriate channels of Government-funded study and training assistance for

income support recipients are available through employment service providers andthe FEE HELP and VET FEE HELP tuition loan programs.


Part 1Main amendments


Part 2.13A of the Social Security Act provides for the payment of education entrypayment. Item 3 repeals Part 2.13A.

Consequential amendments are made as set down below.

Item 1 repeals subparagraph (l)(iv) of the definition of compensat ion affectedpaymentin subsection 17(1).

Item 2omits allowance, payment, and substitutes allowance, in paragraph (l) ofthe definition of compensat ion af fected paymentin subsection 17(1).

Item 4repeals table item 7 in subsection 1222(2).

Item 5 omits or an education entry payment supplement in

paragraph 1223ABAAB(1)(a).

Item 6omits benefit; and, and substitutes benefit. in paragraph 1223ABAAB(2)(e).This is consequential to item 7.

Item 7repeals paragraph 1223ABAAB(2)(h).

Item 8repeals section 1224B.


The following paragraphs refer to the education entry payment. Amendments aremade to remove these references.


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Item 9 repeals paragraph (c) of the definition of supp lementary payment insubsection 15(5).

Item 10 repeals paragraph (d) of the definition of lump sum benef i t insubsection 47(1).

Item 11repeals paragraph (c) of the definition of household st imulus payment insection 123TC.

Amendm ent to the Veterans Entitlement Act

Part VIIAAof theVeterans Entitlement Actprovides for the payment of educationentry payment. Item 19repeals Part VIIAA.

Consequential amendments are made as follows:

Item 12 omits the words age; or and substitutes age. in paragraph (c) of thedefinition of compensat ion af fected pension in subsection 5NB(1).

Item 13repeals paragraph (f) of the definition of compensat ion af fected pensioninsubsection 5NB(1).

Item 14 omits the words pensions, supplements and payments, and substitutespensions and supplements in subsection 59M(1).

Item 15 omits the word supplement; and substitutes supplement. inparagraph 59M(1)(f). This is consequential to Item 16.

Item 16 repeals paragraph 59M(1)(i).

Item 17 omits the words pensions, supplements, allowances and payments,and substitutes pensions and supplements in note 2 to subsection 59M(1).

Item 18 omits the words supplement or payment and substitutes or supplementin subsections 59M(2), (3) and (4).

Part 2Other amendments

Consequential amendments are made as follows to various Acts, as set out below.

Amendm ent to the Farm Household Suppo rt Act

Item 20repeals paragraph 94(e).


Item 21omits or education entry payment in subparagraph 160AAAA(2)(c)(i).

Item 22omits or education entry payment in subparagraph 160AAAB(2)(c)(i).


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Item 23 omits the entry education entry payment supplement under the SocialSecurity Act 1991 in the table item headed social security or like paymentsin section 11-15.

Item 24omits purposes;, and substitutes purposes. in paragraph 51-35(e). This isconsequential to item 18.

Item 25repeals paragraph 51-35(f).

Item 26repeals and substitutes section 51-40.

Item 27repeals paragraph 52-10(1)(za).

Item 28repeals subsection 52-10(1J).

Item 29repeals section 55-10.

Amendm ent to the Taxat ion Admin istrat ion Act 1953

Item 30 omits , 55-5 or 55-10, and substitutes or 55-5 in paragraph 12-110(1)(c) ofSchedule 1.

Part 3Application and saving provisions

Subitem 31(1) provides that, despite amendments to the definition ofcompensat ion af fected payment in subsection 17(1) of the Social Security Act

made by Part 1 of this Schedule, Parts 3.6A and 3.14 of the Act continue to apply asif the amendments had not been made.

Subitem 31(2) provides that, despite the amendment made by item 3 of thisSchedule, Part 2.13A the Social Security Act, as in force immediately before thecommencement of this item, continues to apply on and after that commencement inrelation to the 2014 calendar year and earlier calendar years.

Subitem 31(3) provides that, despite amendments made by items 5 to 8 of thisSchedule, sections 1223ABAAB and 1224B of the Social Security Act, as in forceimmediately before the commencement of this item, continue to apply on and after

that commencement in relation to payments of education entry payment supplementor education entry payment made before, on or after that commencement.

Subitem 31(4) provides that despite the amendments of the definition ofcompensat ion af fected pension in subsection 5NB(1) of the VeteransEntitlements Act made by Part 1, Part IIIC of the Veterans Entitlements Actcontinues to apply as if those amendments had not been made.

Subitem 31(5)provides that despite the amendment made by item 19, Part VIIAA ofthe Veterans Entitlements Act 1986, as in force immediately before thecommencement of this item, continues to apply on and after that commencement in

relation to the calendar year 2014 and earlier calendar years.


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Subitem 31(6)provides that, despite the amendments made by items 14 and 15 ofthis Schedule, paragraphs 160AAAA(2)(c)(i) and 160AAAB(2)(c)(i) of the IncomeTax Assessment Act 1936, as in force immediately before the commencement of thisitem, continue to apply on and after that commencement in relation to payments ofeducation entry payment made before, on or after that commencement.

Subitem 31(7)provides that, despite the amendments made by items 18, 19 and 22of this Schedule, paragraph 51-35(f) and sections 51-40 and 55-10 of theIncome Tax Assessment Act 1997, as in force immediately before thecommencement of this item, continue to apply on and after that commencement inrelation to payments of education entry payment made before, on or after thatcommencement.

Subitem 31(8) provides that, despite the amendment made by item 21 of thisSchedule, subsection 52-10(1J) of the Income Tax Assessment Act 1997, as in forceimmediately before the commencement of this item, continue to apply on and after

that commencement in relation to payments of education entry payment supplementmade before that commencement.


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Schedule 8Age requirements for various Commonwealth payments

Summary

From 1 January 2015, this Schedule provides that young unemployed people aged22 to 24 would no longer be eligible for newstart allowance or sickness allowanceuntil they turn 25 years of age and would, instead, be able to claim and qualify foryouth allowance. To enable this, youth allowance for all types of persons who cansatisfy the activity test, will be available to persons who have not yet reached 25.Youth disability supplement will also be available to all youth allowance recipientswho have not yet reached 25. The amendments include safeguards to ensure thatexisting newstart allowance recipients who are 22, 23 or 24 leading up tocommencement (or persons undergoing certain waiting periods or suspensionperiods) can remain in receipt of newstart allowance. Similar savings rules areprovided for sickness allowance.

This Schedule also makes consequential amendments to the Farm HouseholdSupport Act to align rates at which farm household allowance is paid to farmers andtheir partners, with newstart allowance and youth allowance rates.

Background

The key aim of this measure is to incentivise young unemployed people to obtain therelevant education and training to increase employability. Changes to labour marketspresage the need for a highly educated and skilled workforce and this measure isdesigned to encourage young people to adequately skill themselves and move off

unemployment benefits. The proposal is driven by the current high youthunemployment rate of approximately 12 per cent, which is significantly higher than thecomparable national average of 5.4 per cent.

Presently, unemployed youth aged 22 to 24 are able to qualify for newstart allowanceor sickness allowance rather than youth allowance. Persons in this age bracket mayperceive an advantage by remaining in receipt of newstart allowance and adisincentive to pursue full-time study or employment, given the higher rate of newstartallowance and sickness allowance as compared to youth allowance. This measureremoves this disincentive by placing all under 25 year olds on the same paymentlevels whether unemployed or studying full-time. The broad financial incentives

provided for further education in lieu of working, applying to those on youth allowance(student) payments are not diminished, since youth allowance (student) attracts moregenerous income testing compared to youth allowance (other). In addition, a facility isprovided to youth allowance (student) recipients to accumulate a student income bankof $10,000 without affecting payments.

While youth allowance is paid at lower rates to newstart allowance, the payment has alarger income free area compared to newstart allowance, providing greater flexibility toearn while on payment.


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Item 1 replaces the reference to age 22 in paragraphs 19C(8)(b) and (c) of the

Social Security Act with a reference to age 25. This amendment is consequential onthe age adjustments proposed to be made by the Bill to youth allowance andnewstart qualification rules. Section 19C deals with definitions for a number of termsrelated to when a person is in severe f inancia l hardship. The concept of severefinancial hardship is relevant to a number of provisions in the Social Security Act,including those dealing with advance payments, ordinary waiting periods, specialemployment advances, certain rules dealing with seasonal workers and others.The specific amendments to paragraphs 19C(8)(b) and (c) will ensure that thereference to maximum payment rate in subsections 19C(2) and (3) will mean thatthe age thresholds relevant to determining a persons maximum payment rate will beinterpreted in line with the new qualification age thresholds for youth allowance and

newstart allowance as proposed by this Schedule to the Bill.

Item 2 is the key amendment that will lift the qualification age for youth allowance,allowing persons who have not yet reached 25 to qualify. Under section 543 of theSocial Security Act, a person is of youth allowance age if the person has attained theminimum age for youth allowance and has not yet attained the maximum age foryouth allowance as set out under section 543B. Prior to these amendments,the maximum age for youth allowance under section 543B was set at different ages(either 22 or 25) for persons not undertaking full-time study, persons undertakingfull-time study and persons who are new apprentices. This amendment proposes toset the maximum age of youth allowance at 25 for all persons previously dealt with

by subsection 543B(1). Note that subsection 543B(2) will still provide that persons inreceipt of youth allowance at the time they turn 25 to remain below the maximumage for youth allowance if they continue full-time study or remain as a newapprentice after they turn 25. The amendments made by this item will operatesubject to the application rules set out in item 13.

Items 3 and4propose to make changes to the basic qualification rules for newstartallowance, amending references to age 22 to age 25. These amendments willensure that a person is only qualified for youth allowance during a period where theyhave reached the age of 25. These amendments will operate subject to theapplication rules set out in item 14.

Item 5 proposes to amend the age at which a person can qualify for sicknessallowance, by changing the reference to 22 years to 25 years in paragraph 666(1)(e)of the Social Security Act. This will mean that, from commencement, a person willno longer be able to qualify for sickness allowance if they have not yet turned 25years old. This amendment will operate subject to the application rules set out initem 15.


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Item 6proposes to amend the age at which a person is able to have an amount byway of youth disability supplement to be added to their rate of youth allowance underthe youth allowance rate calculator. Prior to these amendments, a person can onlyreceive an amount by way of youth disability supplement if they have not turned 22.These amendments will allow a person to receive youth disability supplement up to

the age of 25 to align with the adjustment to the maximum age for youth allowancemade by item 2.

Items 7 89 and10propose to make changes to the rules around how to determinethe partner income free area for a personfor the purposes of the youth allowance,austudy payment, benefit rate calculator B (including for newstart allowance)and parenting payment (partnered) rate calculators. Prior to these amendments,the partner income free area was determined by reference to the amount of incomeof a partner beyond which youth allowance or newstart allowance would not bepayable to the partner if the partner were qualified for youth allowance or newstartallowance. Whether the calculation is conducted by reference to youth allowance or

newstart allowance depends on the age of the partner: whether they have reached22 years of age or not. The amendments propose to change references to 22 to 25for relevant partner income free areaprovisions such that the partner income freearea for a person will be calculated by reference to the income test for youthallowance for partners who are not yet 25 and by reference to the income test fornewstart allowance for partners who have already turned 25.

Item 11 is an amendment consequential upon the changes to youth disabilitysupplement proposed by item 6. Item 11 addresses the description of youthdisability supplement in the indexation table at section 1190 of the Social SecurityAct to refer to youth disability supplement as payable to a recipient of youth

allowance who is under 25 (rather than under 22). This item in the indexation tableoperates to make clear which amount is subject to the indexation rules in Part 3.16of the Social Security Act.

Item 12 is an application provision to clarify that the amendments made to thesevere financial hardship definitions in item 1 will apply for days on or after1 January 2015.

Item 13is an application provision that sets out how various amendments proposedby this Schedule will affect different persons.

Subitem 13(1)sets out the default rule (defaultin the sense that it operates subjectto subitems 13(2) and (3)) that the amendments made by item 2 to the maximumage for youth allowance apply for the purposes of working out whether a personqualifies for youth allowance for days from 1 January 2015 and onwards.


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Subitem 13(2)provides that, if a person was aged 22, 23 or 24 on the day beforethe amendments to adjust the maximum age of youth allowancecommence and is,at that time, receiving newstart allowance (or is undergoing a period of suspension),the amendment to the maximum age of youth allowance does not apply to theperson until their newstart allowance is cancelled. This provision will operate to

ensure, along with subitem 14(2), that existing persons in receipt of newstart(or subject to a period of suspension) will remain in receipt of newstart in spite of theamendments proposed to the ages at which a person can qualify for youth allowanceand newstart allowance as proposed by this Schedule to the Bill.

Subitem 13(3)is an application provision that will apply to a person where a claimfor newstart allowance was granted before the commencement of item 2 incircumstances where the start day is worked out as being on a day after1 January 2015. If this provision applies to a person, the amendments made byitem 2 (to adjust the maximum age of youth allowance) will not apply to that personuntil their newstart allowance is cancelled.

Subitem 13(4)is an application provision that deals with when the changes to youthdisability supplement (as paid as an amount by way of youth allowance) proposed byitem 6 will apply to a person. The subitem states that the amendment made byitem 6 will apply from 1 January 2015 onwards.

Item 14 deals with various circumstances around how the amendments made byitems 3 and 4 (to raise the lower age qualification limits for newstart allowance)apply, depending upon a persons particular case as follows.

Subitem 14(1)sets out the default rule (to operate subject to the more specific rules

in the remainder of item 14) that the amendments made by items 3 and 4 apply forworking out whether a person is qualified for newstart allowance from daysextending from 1 January 2015 onwards.

Subitem 14(2) provides that if, immediately before the amendments made by thisSchedule commence (that is, on 31 December 2015), the person was aged 22, 23 or24 and was receiving newstart allowance (or subject to a period of suspension),the amendments made by items 3 and 4 (to raise the lower qualification age fornewstart allowance from 22 to 25) do not affect the person from commencement on1 January 2015 until their newstart is cancelled. This provision will mean thatexisting recipients of newstart allowance, at the time this Schedule commences, will

be able to remain in receipt of newstart allowance.

Subitem 14(3) operates to ensure that claims for newstart allowance made bypersons aged 22, 23 or 24 that have been made but not determined by the Secretaryat the time immediately before 1 January 2015 can still be granted on the basis thatthe lower age limit for qualification for newstart allowance is not affected by theamendments proposed by items 3 and 4. This means that 22, 23 and 24 year oldpersons who have a claim pending (that is, made but not determined)on 1 January 2015 can still be granted newstart allowance on the basis of the claimas if the lower age limit for qualification remains 22, from 1 January 2015 until thepersons payment (if granted as a result of the claim) is cancelled.


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Subitem 14(4)deals with the application of the amendments proposed by items 3and 4 to persons aged 22, 23 or 24 who have claimed newstart allowance prior tothe time this Schedule commences and who are undergoing a liquid assets testwaiting period, in relation to that claim, on 1 January 2015. For such persons,the amendments made by items 3 and 4 do not apply from 1 January 2015 in

relation to their claim and subsequent qualification for and payment of newstartallowance as a result of that claim. Once any payment as a result of that claim iscancelled, the person will no longer be subject to this application provision and willnot be able to qualify for newstart allowance again until they turn 25.

Subitem 14(5) ensures that persons serving an income maintenance period on1 January 2015 in relation to newstart allowance are not affected by theamendments proposed by items 3 and 4 from 1 January 2015 until their payment iscancelled. This provision will operate as a beneficial rule for persons who are 22, 23and 24 in these circumstances, as they will able to resume payment on newstartallowance following their income maintenance period, notwithstanding the proposal

to raise the age of qualification for newstart allowance to 25.

Subitem 14(6)is an application provision that will apply to a person where a claimfor newstart allowance was granted before the commencement of items 3 and 4 incircumstances where the start day is worked out as being on a day after1 January 2015. If this provision applies to a person, the amendments made byitems 3 and 4 (to raise the lower age for qualification for newstart allowance) will notapply to that person until their newstart allowance is cancelled. This will operatebeneficially for such persons aged 22, 23 or 24 at the time of commencement, aspersons of these ages will still be able to receive newstart allowance,notwithstanding the amendments to the qualification age for newstart allowance

proposed by this Schedule.

Subitems 15(1) and (2) provide that item 5, which amends the lower qualificationage for sickness allowance from 22 to 25, applies for working out a personsqualification for sickness allowance from 1 January 2015 onwards, unless the personis 22, 23 or 24 on 1 January 2015 and is in receipt of sickness allowance or isundergoing a period of suspension in relation to their sickness allowance: suchpersons can remain in receipt (or have their sickness allowance payment resumedafter a period of suspension) following 1 January 2015 until their payment iscancelled.

Subitems 15(3) to 15(6) are modelled on the application provisions for newstartallowance at subitems 14(3) to 14(6), and operate as described in more detail abovein relation to newstart allowance in circumstances where, for persons aged 22, 23and 24: a claim is made but not determined; the person is serving a liquid assetstest waiting period; the person is serving an income maintenance period; or a claimis granted but the persons start day post-dates 1 January 2015.

Item 16provides that the amendments made by items, 7, 8, 9 and 10 (which makechanges to the rules around how to determine the partner income free area for aperson) apply in relation to working out that rates of social security payments for aperson for days following commencement on 1 January 2015 onwards.


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Amendm ents to the Farm

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Social Services and Other Legislation Amendment No 2

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