EXPLANATORY STATEMENT
Social Security (Exempt Lump Sum) (River Red Gum Structural Adjustment Package Payment) (DEEWR) Determination 2010
Summary
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Education, Employment and Workplace Relations (DEEWR) to determine that an amount received by a person is an exempt lump sum for the purposes of the social security law. The effect of this Determination is that for the purpose of social security payments for which the Minister for Education, Employment and Workplace Relations is responsible, a payment made under the River Red Gum Structural Adjustment Package (Adjustment Package) is an exempt lump sum under paragraph 8(11)(d).
Background
Under the social security law, all income 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 from the social security income test. 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. As a result, any such amount is not to be taken into account under the social security income test.
The NSW Government made an announcement on 2 March 2010 to establish protection over significant river red gum plantations. The Adjustment Package provides one-off payments to eligible workers in the forestry industry who are employed by, providing services under contract to, or in the case of a Working Principal, engaged in the day to day operations of, sawmills deciding to close as a result of the 2 March announcement. Worker Assistance would only apply to eligible workers as at 7 August 2009 who have been eligible workers for a continuous period of at least 6 months prior to 7 August 2009 until made redundant or had their contract or work terminated as a result of the 2 March announcement and who have made a formal application for assistance by 30 June 2011.
The effect of this instrument is that a payment made to an eligible worker under the Adjustment Package will not be assessed as income under the social security law.
This Determination is a legislative instrument. The Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) will make a complementary Determination in relation to those matters that the Minister for Families, Housing, Community Services and Indigenous Affairs has responsibility for under the Administrative Arrangements Order. This will ensure that a payment made under the Adjustment Package received by a recipient of a FaHCSIA-administered social security payment will also be an exempt lump sum for the purposes of the Act.
Explanation of Provisions
Section 1 of the Determination states the name of the Determination.
Section 2 states that the Determination commences on the day after it is registered.
Subsection 3(1) states that for the purposes of paragraph 8(11)(d) of the Act a River Red Gum Structural Adjustment Package Payment is an exempt lump sum.
Subsection 3(2) provides that a River Red Gum Structural Adjustment Package Payment is a Special Redundancy Payment, Training Allowance or Relocation Allowance provided under the Package administered by Industry and Investment NSW.
Consultation
The Department has consulted with FaHCSIA regarding this exemption.
Regulatory Impact Analysis
This Determination does not require a Regulatory Impact Statement or 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.
Overview
The Social Security (Exempt Lump Sum) (River Red Gum Structural Adjustment Package Payment) (DEEWR) Determination 2010 was enacted to address the specific issue of providing financial relief to workers affected by the closure of sawmills due to the protection of river red gum plantations. This legislative instrument was introduced to ensure that payments made under the River Red Gum Structural Adjustment Package are not treated as assessable income for the purposes of social security benefits administered by the Department of Education, Employment and Workplace Relations. The determination aligns with the policy objective of offering targeted assistance to eligible forestry workers, ensuring that their redundancy payments do not negatively impact their social security entitlements. This initiative was a collaborative effort between the Department of Education, Employment and Workplace Relations and the Department of Families, Housing, Community Services and Indigenous Affairs to provide a comprehensive support mechanism for affected workers.
Scope and Application
The Social Security (Exempt Lump Sum) (River Red Gum Structural Adjustment Package Payment) (DEEWR) Determination 2010 applies to payments made under the River Red Gum Structural Adjustment Package for eligible workers in the forestry industry. These are workers who were employed by, providing services under contract to, or engaged in the day-to-day operations of, sawmills deciding to close due to the NSW Government's announcement on 2 March 2010. Eligibility is restricted to those who were continuously employed for at least six months prior to 7 August 2009, made a formal application by 30 June 2011, and were rendered redundant or had their contract or work terminated as a result of the closure announcement. This Determination ensures that such payments are treated as exempt lump sums under the Social Security Act 1991, meaning they are excluded from the definition of ordinary income and not assessed as income for the purposes of social security benefits administered by the Department of Education, Employment and Workplace Relations (DEEWR). The application of this Determination is limited to the Commonwealth jurisdiction, but a complementary Determination by the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) ensures that the exemption also applies to social security payments administered by FaHCSIA.
Key Provisions
The main sections of the Determination clarify that a River Red Gum Structural Adjustment Package Payment is an exempt lump sum for social security purposes under subsection 8(11)(d) of the Social Security Act 1991 (the Act) (section 3(1)). This exempt lump sum includes Special Redundancy Payments, Training Allowances, or Relocation Allowances provided under the Adjustment Package administered by Industry and Investment NSW (section 3(2)). The Determination begins on the day after it is registered (section 2). These sections effectively exempt these payments from being considered as income when determining eligibility for social security benefits.
The Determination imposes certain obligations on the parties involved. It requires that payments under the Adjustment Package are only applicable to eligible workers who meet specific criteria, such as having been continuously employed for at least six months prior to 7 August 2009 and having made a formal application for assistance by 30 June 2011 (background information). This ensures that only those who meet the eligibility requirements receive the exempt lump sum status for their payments.
Breach of the provisions outlined in the Determination could lead to administrative consequences, though specific offences and penalties are not explicitly stated in the document. The Determination does not outline specific criminal or civil penalties for non-compliance, but the implications of not adhering to the eligibility criteria could result in payments being assessed as ordinary income for social security purposes, thereby affecting the recipients' eligibility for social security benefits. The Determination's primary focus is on ensuring that eligible workers receive their payments without these being counted as income in the social security income test.