EXPLANATORY STATEMENT
Social Security Act 1991
Social Security (Exempt Lump Sums – Expense Payment Associated with Participation in the New Employment Services Trial) Determination 2019
Purpose
Paragraph 8(11)(d) of the Social Security Act 1991 (the Act) allows the Secretary of the Department of Social Services (DSS) 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 Sums – Expense Payment Associated with Participation in the New Employment Services Trial) Determination 2019 (the Determination) ensures that an amount paid by, or on behalf of, the Commonwealth to assist with an individual’s expenses associated with, or incidental to, that individual’s participation in the New Employment Services Trial (NEST) (referred to as an Expense Payment) is an exempt lump sum under paragraph 8(11)(d) of the Act.
Background
Under the 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.
Paragraph 8(11)(d) of the Act allows the Secretary of DSS 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 NEST
On 1 July 2019, the Department of Employment, Skills, Small and Family Business introduced the NEST. The NEST is testing key elements of a new employment services model in two trial locations: the Mid North Coast in New South Wales, and Adelaide South in South Australia. Relevantly, the NEST is trialling three service offers: Digital First (from July 2019), Digital Plus (from October 2019) and Enhanced Services (from November 2019). While Digital First commenced in July 2019, job seekers entering Digital First are not eligible to receive Expense Payments.
Under the NEST, job‑ready job seekers (that is, job seekers assessed as being the most job ready) who are capable of being serviced online, entered Digital First with access to a digital employment services platform that includes an online job board, job matching and online training modules.
Job‑ready job seekers requiring some additional support will enter Digital Plus. They will receive services through an online environment but will also receive targeted support as needed. A variety of support will be available to job seekers depending on their individual needs, including access to the provision of goods and services to assist them into work.
Job seekers with multiple or severe barriers to work who require face‑to‑face servicing from a provider will enter the Enhanced Services service offer. These job seekers will be placed in either one of two tiers, based on their needs:
- Tier 1 – intensive help to improve job-readiness and finding a job, or
- Tier 2 - comprehensive case management, addressing both vocational and non-vocational barriers.
Enhanced Services providers will have discretion and flexibility to decide to which tier a job seeker is assigned.
Expense Payments
In delivering services to job seekers entering Digital Plus and Enhanced Services, the Department of Employment, Skills, Small and Family Business, and Enhanced Services providers, may make small discretionary payments for assisting eligible job seekers to get and keep a job. For example, discretionary payments may be made for goods and services such as work boots, mobile phone, fuel, transport, relocation assistance, accredited training, or interpreter services.
Expense Payments for those goods and services will be made by the Department of Employment, Skills, Small and Family Business for NEST participants in the Digital Plus service offer, and by Enhanced Service providers for NEST participants in the Enhanced Services service offer. These Expense Payments will be of an ad hoc nature and each request will be reviewed on a case‑by‑case basis.
As such, an Expense Payment will only be paid by, or on behalf of, the Commonwealth to assist with the individual’s expenses associated with, or incidental to, the individual’s participation in the NEST. If a NEST participant is eligible for an Expense Payment, the amount will generally be received by way of a direct reimbursement to the individual; or a direct payment to a supplier who provides a product or service to the individual.
This Determination ensures that these Expense Payments will be exempt lump sums for the purposes of the Act. The effect is that an Expense Payment will not be regarded as income under the Act, so that if a social security recipient receives an Expense 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
The Department of Employment, Skills, Small and Family Business, the Department of Agriculture, and the Department of Veterans' Affairs were consulted.
This Determination will be beneficial to the persons affected as it exempts Expense Payments from the social security income test. As such, public consultation was considered unnecessary.
Regulation Impact Statement (RIS)
The Office of Best Practice Regulation (OBPR) was consulted on 20 September 2019 and confirmed that the Determination does not require a Regulatory Impact Statement (OBPR Reference: 24959). The Determination will operate in a beneficial manner. It is not regulatory in nature, will not impact business activity and will have no, or minimal, compliance cost or competition impact.
Explanation of the provisions
Section 1 provides how the instrument is to be cited, that is, as the Social Security (Exempt Lump Sums – Expense Payment Associated with Participation in the New Employment Services Trial) Determination 2019.
Section 2 provides that this Determination commences on the day after this instrument is registered on the Federal Register of Legislation.
Section 3 provides that the authority for making the Determination is paragraph 8(11)(d) of the Act.
Section 4 contains definitions of certain terms used in the Determination.
“Expense Payment” is defined to mean, in the case of an individual participating in the NEST, an amount:
(a) paid by, or on behalf of, the Commonwealth, to assist with the individual’s expenses associated with, or incidental to, the individual’s participation in the NEST; and
(b) received by any means including a reimbursement to the individual; or a direct payment to a supplier who provides a good or service to the individual.
“New Employment Services Trial” is defined to mean the program established by the Commonwealth and known as the “New Employment Services Trial” (see table item 349 in Part 4 of Schedule 1AB of the Financial Framework (Supplementary Powers) Regulations 1997). The NEST tests aspects of a new employment services model (including the three service offers: Digital First, Digital Plus and Enhanced Services) in two trial locations ahead of national roll out of the new model.
Section 5 specifies that, if an individual participating in the NEST receives an Expense Payment, that amount 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 Expense Payment is received by the NEST participant (including by way of a reimbursement, or as a good or service provided by the supplier).
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 Sums – Expense Payment Associated with Participation in the New Employment Services Trial) Determination 2019
Overview of the legislative instrument
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 an individual participating in the New Employment Services Trial (NEST) who receives an amount paid by, or on behalf of, the Commonwealth to assist with an individual’s expenses associated with, or incidental to, the individual’s participation in the NEST (referred to as an Expense 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 an Expense 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 an Expense Payment is not exempted, a person in receipt of that payment may not be eligible for 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 an Expense Payment from the income test on receipt does not alter the fact that any ongoing income generated by the lump sum is not 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 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, Acting Group Manager, Pensions Group, as a delegate of the Secretary of the Department of Social Services