EXPLANATORY STATEMENT
Issued by Authority of the Secretary of the Department of Agriculture
Social Security Act 1991 (as notionally modified by the
Farm Household Support Act 2014)
Social Security (Exempt Lump Sum) (Emergency Water Infrastructure Rebate) (Agriculture) Determination 2014
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary to determine that an amount or class of amounts received by a person is an exempt lump sum for the purposes of the Act. The Secretary as far as Paragraph 8(11)(d) relates to Farm Household Allowance (FHA), is the Secretary, Australian Government Department of Agriculture. The effect of this Determination is that a rebate made under a Emergency Water Infrastructure Program by the state governments is an exempt lump sum under paragraph 8(11)(d) as applied and modified by Part 5 of the Farm Household Support Act 2014 (FHS Act).
Background
Under social security law, an income test is used to determine a person’s eligibility for a social security payment and if they are eligible, the rate of a social security payment that is payable. An income amount earned, derived or received for a person’s own use or benefit is generally assessable as income. However, some amounts that would otherwise be income are specifically exempted. The income test used for social security payments also applies to FHA as applied and modified in Part 5 of the FHS Act.
Paragraph 8(11)(d) of 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, meaning the lump sum amount is not to be taken into account under the social security income test. The exemption of the Emergency Water Infrastructure Rebate from the assessment of a person’s income will beneficially impact that person’s eligibility for a social security payment or if they are eligible, the rate of the payment they are entitled to receive. Part 5 of the FHS Act applies to Paragraph 8(11)(d) of the Act for the purposes of the income test for FHA. A determination made by the Secretary of the Department of Agriculture under Paragraph 8(11)(d) is only applied as far as it relates to FHA.
The initial exemption of the Emergency Water Infrastructure Rebate 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.
The Emergency Water Infrastructure Rebate Programs
The Emergency Water Infrastructure Rebate Program is offered to primary producers who are adversely affected by drought conditions. The eligibility and assessment of the Emergency Water Infrastructure Rebate Program differs by state. The purpose of the Emergency Water Infrastructure Program is to assist primary producers in a drought-declared area or on an Individually Droughted Property (IDP) with the establishment of water infrastructure to supply water for emergency animal welfare needs. The rebate is not intended as a property development or property management incentive; rather, it is intended to assist primary producers in providing urgently needed water for the welfare of their animals. The rebate is currently (or has been) available in Queensland, New South Wales and South Australia.
Effect of determination
This Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003. The Secretary of the Department of Social Services can make similar determinations in relation to their respective portfolio responsibilities.
Explanation of Provisions
Section 1 of the Determination states the name of the Determination and how it is to be cited.
Section 2 states that the Determination commences on 1 July 2014.
Subsection 3(1) States that for paragraph 8(11)(d) of the Social Security Act 1991 as far as it relates to FHA (as applied by Part 5 of the Farm Household Support Act 2014), the Emergency Water Infrastructure Rebate is an exempt lump sum.
This subsection also specifies the programs that, for the purposes of this determination are known as the Emergency Water Infrastructure Rebate. These include:
- Emergency Water Infrastructure Rebate administered by the New South Wales Rural Assistance Authority.
- Emergency Water Infrastructure Rebate administered by the Queensland Department of Agriculture, Fisheries and Forestry
- the Far North Water Infrastructure Grant that is provided under the Far North Water Infrastructure Grant scheme and administered by Livestock SA Incorporated.
Consultation
The Department of Social Services, the Department of Human Services, the Office of Best Practice Regulation in the Department of the Prime Minister and Cabinet, and the Australian Government Solicitor were consulted regarding this exemption.
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. The Office of Best Practice Regulation (OBPR) was consulted and considers that the determination has minor impacts and therefore a Regulation Impact Statement is not required (OBPR Reference Number: 16411).
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) (Emergency Water Infrastructure Rebate) (Department of Agriculture) Determination 2014
The Legislative Instrument 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
The effect of the Determination is that a person who receives an Emergency Water Infrastructure Rebate will not have that payment assessed as income for the purposes of FHA.
The FHA, which commenced on 1 July 2014, provides financial assistance to farmers and their partners who are in financial hardship, in the form of time-limited income support and funding to obtain relevant advice and/or training, while they undertake actions to improve their situation. The FHA is aligned where possible with social security payments under social security law and seeks to achieve the legitimate purpose of providing financial assistance to farmers who are in financial difficulty if they undertake actions to improve their situation.
Human rights implications
The Farm Household Support (Consequential and Transitional Provisions) Act 2014 and the FHS Act were assessed as engaging human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights at section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. The full analysis of those provisions is set out in the Explanatory Memorandum to each Act.
The Determination engages Article 11(1) and Article 12(1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR).
Article 11(1) of the ICESCR protects the right to an adequate standard of living, including food, water and housing. States have an obligation to ensure the availability and accessibility of the resources necessary for the progressive realisation of this right. Article 12(1) of the ICESCR recognises the right of all individuals to enjoy the highest attainable standard of physical and mental health. The Committee on Economic, Social and Cultural Rights (CESCR) has stated that this right is not confined to the right to health care[1]. The CESCR considers that article 12 more broadly acknowledges that the right to health embraces a wide range of socio economic factors that promote conditions in which people can lead a healthy life, and extends to the underlying determinants of health, such as food and nutrition, housing, access to safe and potable water and adequate sanitation, safe and healthy working conditions, and a healthy environment.
The Determination promotes the right to an adequate standard of living, including food, water and housing; and the right to the highest attainable standard of health. The changes made by the Determination will operate beneficially as the rebate amount will not be taken into account when assessing a person’s eligibility or rate of FHA entitlements under the income test. If the rebate is not exempted, a person in receipt of the rebate may not be eligible for the FHA or if they are eligible, their rate of payment might be reduced.
The exemption of the rebate 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, as it applied to FHA. This is consistent with the treatment of other lump sum payments exempted under paragraph 8(11)(d) of the Act as applied or modified by Part 5 of the FHS Act.
The exemption provided by the Determination will ensure that receipt of a rebate will not be taken into account when assessing a person’s eligibility or rate of FHA under the FHS Act and is therefore consistent with the promotion of the right to social security.
Conclusion
This Determination supports a person’s human right to social security.
Paul Grimes, Secretary of the Department of Agriculture.