EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum –Defence Force Reparation Scheme Payment) Determination 2018
Summary
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 Social Security Act 1991 (Cth) (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.
This Determination provides that a Defence Force Reparation Scheme Payment is an exempt lump sum for the purpose of paragraph 8(11)(d) of the Act.
A Defence Force Reparation Scheme Payment means a reparation payment made by the Secretary of the Defence Department as a result of a recommendation made by the Defence Force Ombudsman under section 14A or 14B of the Ombudsman Regulations 2017.
A Defence Force Reparation Scheme Payment is a one-off payment made to a person who has made a complaint about abuse allegedly engaged in by a member of Defence. The Defence Force Ombudsman can recommend that a payment be paid for a new complaint made under section 14A to a person if, at the time of the alleged abuse, the person was a member of the Defence Force, an Australian Public Service employee deployed outside Australia, or a Defence Contractor engaged to provide services outside Australia, either in connection with an operation of the Defence Force or for the purpose of capacity building or peacekeeping functions by the Defence Force.
The Ombudsman can also make a recommendation for old complaints under section 14B of the Ombudsman Regulations 2017. Any amounts made in accordance with section 14B are also exempt under this determination.
The Office of the Commonwealth Ombudsman, within its Defence Force Ombudsman jurisdiction, is able to receive reports of serious abuse within the Australian Defence Force. Upon receiving and assessing a complaint, there are two possible payments which the Commonwealth Ombudsman may recommend that the Secretary of the Defence Department pay:
- A payment of up to $45,000 to acknowledge the most serious forms of abuse; or
- A payment of up to $20,000 to acknowledge other abuse involving unlawful interference accompanied by some element of indecency
An additional payment of up to $5,000 may also be recommended where the Ombudsman is reasonably satisfied that the Defence Force did not respond appropriately to the abuse.
A Defence Force Reparation Scheme Payment represents an acknowledgment by the Defence Force that the abuse suffered by the complainant was wrong, that it has the potential to have a lasting and serious impact and also that in the past, the Defence Force was not positioned appropriately to respond to abuse in many cases. A similar determination has been made in 2013 in respect of payments made under the Defence Abuse Reparation Scheme.
The effect of this Determination is such that a payment made 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.
Commencement
The Determination commences on the day after this instrument is registered on the Federal Register of Legislation.
Consultation
This determination was made at the request of the Australian Defence Force.
The Department of Veterans’ Affairs and the Department of Agriculture and Water Resources were consulted.
This determination will be beneficial to persons affected as it exempts Defence Force Reparation Scheme payments from the social security income test. As a result, public consultation was considered unnecessary.
Regulatory Impact Analysis
The Determination does not require a Regulatory Impact Statement. The Determination 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 of the Determination states the name of the Determination.
Section 2 provides that the Determination commences the day after this instrument is registered on the Federal Register of Legislation.
Section 3 provides that the authority for making this Determination is paragraph 8(11)(d) of the Act.
Section 4 contains definitions of certain terms used in the Determination, including the definition of a “Defence Force Reparation Scheme Payment”. This is defined as a reparation payment made by the Secretary of the Defence Department as a result of a recommendation made by the Defence Force Ombudsman under section 14A or 14B of the Ombudsman Regulations 2017.
Section 5 specifies that a payment made to a person as a Defence Force Reparation Scheme Payment, 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 the payment is received by the person.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Social Security (Exempt Lump Sum – Defence Force Reparation Scheme Payment) 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.
The effect of the Determination is that a person who receives a Defence Force Reparation Scheme Payment will not have that payment assessed as income under the social security law.
Human rights implications
The Determination 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 Determination will operate beneficially as a Defence Force Reparation Scheme Payment 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 Defence Force Reparation Scheme Payment is not exempted, a person in receipt of that 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 a Defence Force Reparation Scheme Payment from the income test on receipt does not alter the fact that any ongoing income generated by the lump sum is exempt from the income test, and any assessable asset produced from the lump sum is counted under 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 as it supports a person’s right to social security.
Mary McLarty, Branch Manager, Payment Structures Branch, as a delegate of the Secretary of the Department of Social Services.