EXPLANATORY STATEMENT
Education, Science and Training Exempt Lump Sum (Tasmanian Child Abuse Payment) Determination 2005
Background
Under social security law all income earned, derived or received for a person’s own use or benefit, is counted as income. The only exceptions are items specifically exempted under the social security law.
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary to determine that an amount, or class of amounts, is an exempt lump sum for the purposes of the Act. An exempt lump sum is excluded from the definition of “ordinary income” under subsection 8(1) of the Act, so any such amount would not be taken into account under the social security income test.
In 2004 the Tasmanian Government agreed to make ex gratia payments to people abused as children while they were in Tasmanian State care. These Tasmanian ex gratia payments are similar to five other types of payments that have been exempted from the social security income test since 1998.
The purpose of this instrument is to ensure that an ex gratia payment made by the Tasmanian Government to a person who was abused as a child while in Tasmanian State care, is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.
The effect of this instrument is that people who are in receipt of a social security payment for which the Department of Education, Science and Training is responsible will not have their social security payments reduced because of the Tasmanian ex gratia payment that they receive as these payments will not be regarded as income for the purposes of the social security income test.
Explanation of the provisions
Part 1
Clause 1 of the instrument states the name of the instrument.
Clause 2 states that the instrument commences on 15 December 2004.
Clause 3 contains interpretation provisions. In particular, the term “compensation payment” is defined as an ex gratia payment made by the Tasmanian State Government in respect of child abuse suffered by a person while in Tasmanian State care.
The term “Tasmanian State care” is defined in clause 3 as care provided by an institution responsible for the provision of child welfare services. Such an institution must be, or must have been, either administered by the Tasmanian State Government or funded by the Tasmanian State Government.
Part 2
Subclause 4(1) states that paragraph 8(11)(d) of the Act allows the Secretary to determine that an amount, or class of amounts, received by a person is an exempt lump sum.
Subclause 4(2) provides that if a person has received a “compensation payment” and they are also in receipt of a social security payment, then any amount received by the person as a compensation payment is an exempt lump sum.
Clause 5 specifies that an amount received by a person referred to in subclause 4(2) is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act. Such an amount will be regarded as an exempt lump sum from the date that the amount was received by the person, provided that this date is after the commencement of this instrument (that is, after 15 December 2004).
Consultation
The Department of Prime Minister and Cabinet has advised that the Prime Minister’s office supports exempting these payments in accordance with this instrument.
The Department of Family and Community Services and the Department of Employment and Workplace Relations were also consulted to ensure a co-ordinated and consistent approach to the administration of these Tasmanian ex gratia payments for all social security payments under the Act.
This instrument is beneficial to customers because it exempts Tasmanian ex gratia payments from the social security income test. Public consultation was therefore regarded as unnecessary.
Retrospectivity
A delegate of the Secretary of the Department of Family and Community Services signed a similar instrument on 15 December 2004 in relation to social security payments within the Family and Community Services portfolio (the Social Security Exempt Lump Sum Determination No. 8 of 2004). This instrument will also have effect from 15 December 2004 to ensure that Tasmanian ex gratia payments are treated consistently for all social security payments under the Act from the same date. This retrospective commencement is beneficial to social security recipients in that it exempts their ex gratia payment from the income test from 15 December 2004. This instrument is entirely beneficial and does not disadvantage social security recipients in any way.