EXPLANATORY STATEMENT
Social Security Act 1991
Social Security (Exempt Lump Sum – Youpla Group Funeral Benefits Program Payments) Determination 2022
Purpose
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Social Services (Department), or delegate, to determine, by legislative instrument, that an amount, or class of amounts, received by a person is an exempt lump sum for the purposes of the Act.
The Social Security (Exempt Lump Sum – Youpla Group Funeral Benefits Program Payments) Determination 2022 (Determination) ensures that an amount paid to an eligible person under the Youpla Group Funeral Benefits Program (Program) is an ‘exempt lump sum’ under paragraph 8(11)(d) of the Act.
A payment under the Program is a lump sum payment made by the Australian Government to support eligible persons affected by the collapse and liquidation of the Youpla Group of companies. The Program aims to meet the immediate costs of funeral claims for recently deceased fund members whose death was covered by an eligible funeral insurance policy issued by the Youpla Group.
By determining that a payment made under the Youpla Group Funeral Benefits Program is an exempt lump sum under the Act, the amount of the payment will not be assessed as income for the purposes of the recipient’s social security payment.
Background
Exempt lump sums
An income amount earned, derived or received for a person’s own use or benefit is generally assessed as income under the social security law. However, paragraph 8(11)(d) of the Act allows the Secretary of the Department, or delegate, 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 excluded from the definition of ‘ordinary income’ in subsection 8(1) of the Act. This means the amount is not taken into account under the social security income test.
The exemption of a lump sum payment from the income test does not affect the assessment of any ongoing income generated by the lump sum, nor any assessable asset produced from the lump sum. These will be counted under the social security income and assets tests respectively. This is consistent with the treatment of other amounts as exempt lump sums under paragraph 8(11)(d) of the Act.
Youpla Group Funeral Benefits Program
The Youpla Group of companies, including the four funeral funds of the Youpla Group (Aboriginal Community Benefit Fund Pty Ltd, Aboriginal Community Benefit Fund No 2 Pty Ltd, ACBF Funeral Plans Pty Ltd and Community Funeral Plans Pty Ltd), were placed into liquidation in March 2022 by its directors, causing uncertainty and distress for its members who are now left without funeral cover. At the date of liquidation, the Youpla Group was providing funeral cover for 14,500 fund members who are almost all First Nations people.
The Youpla Group’s entry into liquidation triggered a need to allow the families of deceased Youpla Group fund members to mourn their loved ones and conduct Sorry Business with the dignity that had been intended.
The Youpla Group Funeral Benefits Program has been established by the Australian Government to provide support through a grant payment. This support ensures national consistency and removes the need for affected families to rely on state and territory government arrangements for pauper’s funerals.
The Youpla Group Funeral Benefits Program aims to pay for funeral expense claims relating to a deceased Youpla Group fund member’s death (that had not otherwise been paid) for policies that were active as at or after 1 April 2020. This will include claims made to the liquidator of the Youpla Group prior to the commencement of the Program.
The Youpla Group Funeral Benefits Program provides support to eligible persons through a grant payment for an amount up to the cover limit in the fund member’s policy. The cover limit is typically $8,000 but can range between $3,000 and $15,000.
The Program is administered by the Department of the Treasury and will pay funeral claims received up to 30 November 2023.
Retrospective commencement
The Determination commences on 7 September 2022. This reflects that the Program commenced on that date, and eligible persons were able to apply for a grant payment under the Program from that date.
The retrospective commencement is designed to support affected social security recipients and is intended to ensure that payments made under the Program are consistently treated as exempt lump sums under the Act from when the Program began.
The retrospective operation of the instrument does not infringe section 12 of the Legislation Act 2003 because the retrospective operation does not disadvantage any person or impose a liability on a person other than the Commonwealth.
Consultation
The Department of Social Services consulted with the Department of Agriculture, Fisheries and Forestry and the Department of Veterans’ Affairs on the intention to make this Determination.
The Department of the Treasury were consulted on the text of the Determination. This is because Treasury is responsible for the administration of the Youpla Group Funeral Benefits Program, and so were best placed to provide comments on the proposed provisions.
Regulation Impact Statement
The Office of Best Practice Regulation (OBPR) advised that the Determination does not require a Regulation Impact Statement (OBPR Reference OBPR22‑03197). The Determination will operate in a beneficial manner. It is unlikely to have a more than minor regulatory impact, as the Determination is to enable the effective functioning of the Program.
Availability of independent review
A decision on the assessment of an individual’s income as part of the social security income test, which may involve a payment covered by this Determination, is subject to internal and external merits review under Parts 4 and 4A of the Social Security (Administration) Act 1999.
The Determination is a legislative instrument for the purposes of the Legislation Act 2003 and is subject to disallowance.
Explanation of the provisions
Section 1
This section states that the name of the Determination is the Social Security (Exempt Lump Sum – Youpla Group Funeral Benefits Program Payments) Determination 2022.
Section 2
This is the commencement provision. It provides that the Determination commences on 7 September 2022. This is the date the Youpla Group Funeral Benefits Program commenced. This commencement date ensures that all payments made under the Program will be captured by this Determination.
Section 3
This section provides that the legislative authority for making the Determination is paragraph 8(11)(d) of the Social Security Act 1991.
Section 4
This section defines terms used in the Determination.
‘Act’ is defined as the Social Security Act 1991.
‘Youpla Group Funeral Benefits Program’ is defined as the program under which payments are made to eligible persons in respect of the death of a person whose death was covered by an eligible funeral insurance policy issued by a company in the group of companies known as the Youpla Group, in circumstances where the policy has been affected by the collapse and liquidation of those companies. This is the Australian Government program referred to in item 556 of Part 4 of Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997. This program makes payments to eligible persons affected by the collapse and liquidation of the Youpla Group of companies, in relation to an eligible funeral insurance policy.
Section 5
This is the operative provision of the Determination. It provides that the amount of a payment made under the Youpla Group Funeral Benefits Program is an exempt lump sum for the purposes of paragraph 8(11)(d) of the Act.
The effect of section 5 is that payments made to eligible persons under the Youpla Group Funeral Benefits Program will not be assessed as income under the Act. This means that the amount of the payment will not have any impact on a recipient’s social security payments, in terms of the social security income test.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Social Security Act 1991
Social Security (Exempt Lump Sum – Youpla Group Funeral Benefits Program Payments) Determination 2022
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
The effect of the Social Security (Exempt Lump Sum – Youpla Group Funeral Benefits Program Payments) Determination 2022 (Determination) is that an amount paid to an eligible person under the Youpla Group Funeral Benefits Program is an ‘exempt lump sum’ under paragraph 8(11)(d) of the Social Security Act 1991 (the Act). This means the amount of the payment will not be assessed as income for the purposes of the recipient’s social security payment.
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.
Under the Act, social security payments are subject to a means test which assess the person’s income and assets to determine their eligibility for the payment, and their rate of payment. The Determination will operate beneficially as a payment made under the Youpla Group Funeral Benefits Program will not be taken into account under the social security income test. If the 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 may be reduced. Therefore, the Determination is consistent with promoting the right to social security.
Conclusion
The Determination is compatible with human rights as it supports a person’s right to social security.
Andrea Wallace-Green
Acting Branch Manager of the Payment Structures and Seniors Branch
Delegate of the Secretary of the Department of Social Services