Social Security Amendment (Exempt Lump Sum - Certain Commonwealth Discretionary Payments) Determination 2018

EXPLANATORY STATEMENT

Issued by the authority of the Secretary of the Department of Social Services

Social Security Act 1991

Social Security Amendment (Exempt Lump Sum – Certain Commonwealth Discretionary Payments) Determination 2018

Purpose

This instrument determines an additional class of compensation payment as an exempt lump sum to those provided for by section 5 in the Social Security Exempt Lump Sum (Certain Commonwealth Discretionary Payments) Determination 2015 (Principal Determination). This instrument provides that a compensation payment in lieu of an amount paid under the Business Services Wage Assessment Tool Payment Scheme Act 2015 (BSWAT Act) to the person is also an exempt lump sum for the purposes of paragraph 8(11)(d) of the Social Security Act 1991 (the Act).

Under paragraph 8(8)(jb) of the Act, a payment under the BSWAT Act is not income for the purposes of the Act.  It is appropriate that compensation payments made in lieu of a payment under the BSWAT Act are also not income for the purposes of the Act.

The effect of this instrument is that such a payment paid in lieu of an amount paid under the BSWAT Act will not be regarded as income under the Act, so that if a social security recipient receives such a payment, it will be exempt from the social security income test.

Background

The Business Services Wage Assessment Tool (BSWAT) Payment Scheme is a statutory, time-limited scheme established by the BSWAT Act. The BSWAT Payment Scheme provides a one-off payment to eligible supported employees with an intellectual impairment whose wages were assessed and paid using the BSWAT.

Section 15 of the BSWAT Act requires that all applications for a payment under the Payment Scheme are to be made before 1 December 2017. Under subsection 18(2), the Secretary must not determine an application made on or after 1 December 2017.  In addition, under subsection 21(2) of the BSWAT Act, the Secretary must not make an offer to a person on or after 1 September 2018, except as a consequence of a review of a determination. 

Compensation payments, such as Act of Grace payments under section 65 of the Public Governance, Performance and Accountability Act 2013, may be made to some people who would have been eligible for a payment under the BSWAT Payment Scheme but for the expiration of certain statutory timeframes under the BSWAT Act.

Under the 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 Act allows the Secretary of the Department of Social Services to determine that an amount or class of amounts received by a person is an exempt lump sum for the purposes of the Act.  An exempt lump sum is not included in 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.

‘Compensation payment’ is defined in section 4 of the Principal Determination as a payment under:

In addition to the power to make this instrument under paragraph 8(11)(d) of the Act, subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend or vary any such instrument. Accordingly, this instrument repeals subparagraph 5(2)(b)(ii) in the Principal Determination, and inserts new subparagraph 5(2)(b)(ii) for the purposes of paragraph 8(11)(d) of the Act.

Commencement

The instrument commences on the day after it is registered.

Consultation

The Department of Veterans' Affairs and the Department of Agriculture and Water Resources were consulted.

This instrument will be beneficial to persons affected as it provides a social security income test exemption to an additional class of compensation payment in lieu of an amount paid under BSWAT Act to the person. As a result, public consultation was considered unnecessary.

Regulation Impact Statement (RIS)

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

Explanation of the provisions

Section 1

Section 1 provides how the instrument is to be cited, that is, as the Social Security Amendment (Exempt Lump Sum – Certain Commonwealth Discretionary Payments) Determination 2018.

Section 2  

Section 2 provides that the instrument commences on the day after it is registered.

Section 3

Section 3 provides that the authority for making this instrument is paragraph 8(11)(d) of the Act.

Section 4

Section 4 provides that the legislation in a Schedule to the instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to the instrument has effect according to its terms.

Schedule 1

Item 1

Item 1 repeals subparagraph 5(2)(b)(ii), and inserts new subparagraph 5(2)(b)(ii) to include a compensation payment in lieu of an amount paid under the Business Services Wage Assessment Tool Payment Scheme Act 2015 to be an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Social Security Amendment (Exempt Lump Sum – Certain Commonwealth Discretionary Payments) Determination 2018

The Determination is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the legislative instrument

Under the social security law, all income earned, derived or received for a person’s own use or benefit, is counted as income. Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Social Services to determine that an amount, or class of amounts, received by a person is an exempt lump sum for the purposes of the Act. An exempt lump sum is not included in the definition of 'ordinary income' under subsection 8(1) of the Act, so any such amount will not be taken into account under the social security income test.

This instrument provides an exemption for an additional class of compensation payment to those provided for by section 5 in the Social Security Exempt Lump Sum (Certain Commonwealth Discretionary Payments) Determination 2015. This instrument provides that a compensation payment in lieu of an amount paid under the Business Services Wage Assessment Tool Payment Scheme 2015 (BSWAT Act) to the person is also an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act. This exemption is consistent with the treatment of amounts paid under the BSWAT Act as exempt from the social security income test for the purposes of the Act.

Human rights implications

The instrument engages the right to social security under Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR). The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system. The social security scheme must provide a minimum essential level of benefits to 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 instrument will operate beneficially as a compensation payment in lieu of an amount paid under the BSWAT Act will not be taken into account when assessing a person’s eligibility or rate of social security entitlements under the social security income test. If the compensation payment is not exempted, a person in receipt of the payment may not be eligible for a social security payment or, if they are eligible, their rate of payment might be reduced. The Determination is therefore consistent with the promotion of the right to social security.

The exemption of certain compensation payments from the income test does not mean that any ongoing income generated by the lump sum is exempt from the income test, nor does it mean that any asset produced from the lump sum is exempt from the social security assets test. This is consistent with the treatment of other lump sum payments exempted under paragraph 8(11)(d) of the Act.

Conclusion

The Determination is compatible with human rights because it supports a person’s human right to social security.

Mary McLarty, Branch Manager, Payment Structures Branch, as a delegate of the Secretary of the Department of Social Services.