EXPLANATORY STATEMENT

Military Rehabilitation and Compensation (Clean Energy Advance – Top-Up Payment) Determination 2012

The Military Rehabilitation and Compensation (Clean Energy Advance – Top-Up Payment) Determination 2012 is made under subsection 424H(1) of the Military Rehabilitation and Compensation Act 2004 (the Act). 

Background

The Clean Energy (Household Assistance Amendment) Act 2011 (the Household Assistance Act) makes amendments to, among other Acts, the Military Rehabilitation and Compensation Act 2004 that includes financial assistance for increases in the cost of living arising from the introduction of a carbon price on 1 July 2012.  The initial assistance will generally be delivered in a lump sum clean energy advance before commencement of the carbon pricing scheme, paid from May to June 2012. 

The clean energy advance period will cover a period of six to 18 months, depending on the type of payment.

Generally, the clean energy advance provisions in the Household Assistance Act apply from 14 May 2012, with most payments to be made over the period 14 May to 30 June 2012.   Section 424H of the Act allows the Military Rehabilitation and Compensation Commission to determine, by legislative instrument, the circumstances in which top‑up payments of clean energy advance may be paid to people where they have a change of circumstances during the clean energy advance period that would result in the person not being appropriately assisted for their anticipated increased energy costs. 

Purpose

The operation of the Determination will mean that, if the person's change of circumstance during the clean energy advance period results in:

• the person not being able to receive the entire advance amount because of a multiple eligibility exclusion (for example where someone transfers from a permanent impairment payment under the Act to above general rate disability pension under the VEA;

the person will receive an additional amount of clean energy advance equivalent to the difference between the higher and lower advance amounts for the number of days remaining in the advance period. 

This may happen more than once during a clean energy advance period, and may result from people switching from, to or between payments under the Act, and the VEA.

The Determination is a legislative instrument.

Explanation of provisions

Section 1 states the name of the Determination.

Section 2 states that the Determination commences, or is taken to have commenced, on 14 May 2012.  This date corresponds with the commencement of the provisions of the Act under which the Determination is made.

Section 3 contains the interpretation provisions.

Section 4 sets out the circumstances in which a person will be eligible for a top‑up payment. 

There are a number of circumstances that will make a person eligible for a top‑up payment.  As there are different clean energy advance periods for different payments under the Act and different clean energy advance periods that apply for payments under the ABSTUDY scheme, the Military Rehabilitation and Compensation Act Education and Training Scheme (MRCAETS), the VEA, and the Veterans’ Children Education Scheme (VCES), the timing of a person’s change in circumstances can also affect whether the person is eligible for a top‑up payment.

Subsection 4(1) provides that if the Commonwealth (Department of Veterans’ Affairs) pays a clean energy advance to a person and subsequently that person has a change in circumstances, as set out in subsection 4(2), that results in the person either having a higher rate of clean energy advance daily rate or a longer clean energy advance period, the person will be eligible for a top‑up payment.

Subsection 4(2) sets out when a person’s change of circumstances will make the person eligible for a top-up payment. 

Paragraph 4(2)(a) provides that a person who was paid a clean energy advance as a result of receiving a permanent impairment payment under the Act will be eligible for a top‑up payment if:

• their change of circumstances results in receipt of a different clean energy underlying payment (MRCA special rate disability pension) and the change of circumstances occurs before 20 March 2013.

Paragraph 4(2)(b) provides that a person who was paid a clean energy advance as a result of receiving a permanent impairment payment under the Act will be eligible for a top‑up payment if:

• their change of circumstances results in receipt of a different clean energy underlying payment (above general rate disability pension under the VEA) and the change of circumstances occurs before 20 March 2013.

Paragraph 4(2)(c) provides that a person who was paid a clean energy advance as a result of receiving a wholly dependent partner payment under the Act will be eligible for a top‑up payment if:

• their change of circumstances results in receipt of a different clean energy underlying payment (education allowance under the MRCAETS or VCES) and the change of circumstances occurs before 20 March 2013.

Section 5 sets out the method of calculating a person’s first top‑up payment.

Subsection 5(1) states that a person’s first top‑up payment is to be calculated in accordance with the method statement at the end of subsection 5(3).

Subsection 5(2) is used to calculate the first top-up for a person.

The first step in method statement 1 is to multiply the original clean energy daily rate (as used to calculate the person’s original payment) by the number of days from the person’s original payment start day until the day before the change in circumstances.  The person’s original payment start day will either be the first day of the relevant clean energy advance period or the first day the person qualified for a clean energy advance, which ever occurs last. 

The second step in method statement 1 is to multiply the new clean energy advance daily rate by the number of days remaining in the relevant clean energy advance period on and from the change day.

Under step 3, the amounts at steps 1 and 2 are added together.  The result is then rounded up to the nearest $10 in step 4.  The result of step 4 is known as the new clean energy advance amount and the original payment is deducted from the new clean energy advance amount to arrive at the top‑up payment at step 5. 

Section 6 sets out the method of calculating a person’s top‑up payment where they have previously received a top‑up payment under the Determination and have a subsequent change in circumstances that makes the person eligible for a top‑up payment.

Subsection 6(1) states that if a person has previously been paid a top‑up payment under this Determination the method of calculating any further top‑up arising from a subsequent change in circumstances is as set out in section 6.

Subsection 6(2) says that if a person’s first top‑up payment was calculated under method statement 1, the method for calculating any subsequent top‑up payment is as set out in method statement 2.

The first step in method statement 2 is to multiply the original clean energy daily rate (as used to calculate the person’s original payment) by the number of days from the person’s original payment start day until the day before the first change in circumstances.  The person’s original payment start day will either be the first day of the relevant clean energy advance period or the first day the person qualified for a clean energy advance, which ever occurs last. 

Step 2 is to calculate the number of days from the first change day to the day before the second change day and multiply this number by the second clean energy advance daily rate.  Step 2 is repeated as needed for subsequent changes in circumstance, excluding the most recent change day, multiplying the number of days between change days by the clean energy advance daily rate that applies for the particular period.

Step 3 is to calculate the number of days from the most recent change day until the end of the new clean energy advance period and multiply that figure by the most recent clean energy advance daily rate.

The results of steps 1, 2 and 3 are added up in step 4.  The result of step 4 is then rounded up to the nearest $10 in step 5 and the result of step 5 is known as the new clean energy advance amount.

Step 6 is to calculate the sum of the original payment and any previous top‑up payments that have been made to the person under the Determination.  This result is then deducted from the new clean energy advance amount calculated at step 5 and the result becomes the top‑up payment at step 7.

Retrospectivity

The attached legislative instrument could commence before registration. For the purposes of subsection 12(2) of the Legislative Instruments Act 2003 (instrument that commences before registration not to negatively affect a person), if the instrument did commence before registration its operation would favour a person – the person could receive backdated payments of clean energy advance. 

Consultation

In relation to the carbon price proposal generally:

The Government established a working group of community sector leaders to help advise the Government on an assistance package for Australian households, under a carbon pricing mechanism. This Household Assistance Working Group, a sub-group advising the Multi Party Climate Change Committee, helped to inform the Government's policy-making process.

Members of the working group came from non-government organisations that represent those people the Government wanted to ensure received adequate assistance, especially people in low-income households. The Government also consulted with State and Territory Governments on aspects of household assistance to ensure it connects with and complements programs and activities already in place across the country.

The Department of Veterans’ Affairs ensured that key ex-service organisations were kept informed of policy developments in relation to the carbon price proposal through the ESO Round Table.  The ESO Round Table (Ex Service Organisation Round Table) is the main forum for dialogue between the Military Rehabilitation Compensation Commission, the Repatriation Commission, the Department of Veterans’ Affairs and the leadership of the ESO and Defence communities. 

In relation to the attached legislative instrument:

The Department of Veterans’ Affairs consulted the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA).  FaHCSIA prepared a similar legislative instrument and is the leader among Commonwealth Government agencies in this exercise.  Consultation was by way of e-mail, phone and meetings.

The Department of Veterans’ Affairs also consulted the ESO Round Table.  Consultation was by way of a meeting.

Documents incorporated by reference

No.

Human rights implications

The attached legislative Instrument does engage an applicable right or freedom.  It relates to the right to social security.  The right to social security requires, among other things, the right to a minimum essential level of benefits for all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.

The price on carbon is expected to increase the costs of living.  In particular, the costs of electricity and food.  The Government has taken steps to ensure that financially vulnerable members of the community are reasonably financially compensated for increased living costs due to the price on carbon. 

This compensation is intended to enable people with limited means to continue to have adequate access to essential services and would be in accordance with Australia’s social security obligations under the International Covenant on Economic, Social and Cultural Rights.

The UN Committee on Economic Social and Cultural Rights has stated that qualifying conditions for benefits must be reasonable, proportionate and transparent.

The attached legislative instrument appears to satisfy these criteria.  There are few qualifying conditions for a top-up of an advance.  Essentially a person must have received a clean energy advance and their circumstances must change in the way set out in the instrument and during the period set out in the instrument, in order for the person to have their advance increased.  There is no scope for the exercise of a discretion under the instrument, the qualifying conditions are prescriptive.

Conclusion

The legislative instrument in question is compatible with human rights because it maintains the right to social security and the qualifying conditions it imposes on the grant of the relevant benefit are appropriate.

Military Rehabilitation and Compensation Commission

Rule-Maker

Regulatory Impact Analysis

The Determination does not require a Regulatory Impact Statement or a Business Cost Calculator Figure.  The Determination is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.