EXPLANATORY STATEMENT
Social Security Exempt Lump Sum (Redress WA) (DEEWR) Determination 2008
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretaries of the Department of Education, Employment and Workplace Relations (DEEWR) and the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) to determine that an amount, or class of amounts, is an exempt lump sum for the purpose of the Act. This instrument provides that, for the purpose of social security payments for which the Deputy Prime Minister is responsible, a payment made under the scheme known as Redress WA will be an exempt lump sum.
There are two levels of payment offered by the State of Western Australia under the scheme known as the Redress WA. The first level payment is up to $10 000 if applicants can demonstrate that they have experienced abuse while in State care. The second level payment is up to $80 000 if applicants can demonstrate medical or psychological evidence of loss or injury resulting from abuse.
Broadly, such payments are made by the State of Western Australia to individuals who:
- are aged 18 years and over, OR the legal guardian of a person aged 18 years and over and suffering from a legal disability
AND
- were abused in State care, including foster homes, group homes, hostels, orphanages or other residential settings that were subsidised, monitored, registered or approved by the State Government, prior to 1 March 2006
- are children from the stolen generation and child migrants that have suffered from the abuse in State care
- have already received ex-gratia payments from non-government organisations (for example churches)
The Western Australian Government will determine who is eligible for the first level payment or the second level payment in accordance with its own criteria, including the criteria noted above. In accordance with the criteria set down by the Western Australian Government, it is anticipated that the average payment for the majority of applicants will be between $20 000 and $30 000.
This instrument determines that a payment made by the State of Western Australia under Redress WA to a person is an exempt lump sum under paragraph 8(11)(d) of the Act. These payments are designed to acknowledge the impact of past institutional abuse and neglect and to provide opportunities for the recipients’ future. Neither the first level payment nor the second level payment represents receipt of money for services rendered directly or indirectly.
Background
The Western Australian Government Scheme known as Redress WA will be commencing in May 2008, to acknowledge adults who, as children, were abused while in State care in Western Australia.
Redress WA will provide a range of support services including finance, psychological counselling, legal advice, an apology and a lump sum ex-gratia payment up to
$80 000 to eligible individuals. Redress WA will provide ex-gratia payments from
1 May 2008. It is estimated that there are approximately 10,000 individuals who may be eligible to apply for payments.
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 responsible 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 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 instrument determines that a first level payment or a second level payment made by the State of Western Australia under the scheme known as Redress WA is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.
The effect of this instrument is that a first level payment or a second level payment made under the scheme known as Redress WA, on or after the commencement of this instrument, will not be regarded as income under the Act. Consequently, if a person receives a first level payment or a second level payment made by the State of Western Australia under the scheme known as Redress WA, it will be exempt from the income test under the social security law.
Explanation of Provisions
Part 1
Section 1 of the instrument states the name of the instrument.
Section 2 states that the instrument commences on 1 May 2008.
Section 3 contains interpretation provisions.
The term ex-gratia payment is defined as a one-off lump sum payment up to an amount of $80,000.00 made by the State of Western Australia.
The criteria and eligibility of the level of payment are determined by the Western Australian Government. Depending on the individual circumstances of the applicants, the ex-gratia payment is based on the severity and impact of the abuse and/or neglect suffered. Eligible applicants will receive either the first or second level of payment.
Part 2
Subsection 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.
Subsection 4(2) provides that if a person receives an ex-gratia payment as defined in section 3, then any amount of such a payment received by the person is an exempt lump sum.
Subsection 5 specifies that a payment referred to in subsection 4(2) received by a person will be regarded as an exempt lump sum from the date that the amount was received by the person, provided that date is on or after the commencement of this instrument.
Consultation
The Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) were consulted during the preparation of this determination. FaHCSIA also consulted with the Department of Veterans’ Affairs (DVA) during the preparation of this determination. These consultations were done to ensure a co-ordinated and consistent approach to the income test treatment of this one-off payment for all social security payments under the Act.
This instrument is beneficial to income support customers because it exempts from the income test a payment made under the scheme known as Redress WA. Public consultation was therefore seen as unnecessary.
Regulatory Impact Analysis
This exemption does not require a Regulatory Impact Statement (RIS) and/or a Business Cost Calculator Figure. This exemption is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact. It is not expected that any compliance costs will be incurred by business as a result of this exemption.