EXPLANATORY STATEMENT
Veterans’ Entitlements (Exempt Lump Sum – The Netherlands Government Compensation Payments) Determination 2016 (Instrument 2016 No. R61)
EMPOWERING PROVISION
Paragraph 5H(12)(c) of the Veterans’ Entitlements Act 1986 (VEA).
PURPOSE
The purpose of the instrument is to ensure that certain compensation payments made by the Netherlands Government to Department of Veterans’ Affairs clients in receipt of service pension or income support supplement, or to their partners, will not be regarded as income under the income test provisions of the VEA.
The Netherlands Government established a compensation scheme in December 2015 with the aim of providing moral compensation to former civil servants and military personnel who were in the service of the Dutch East Indies Government and received little or no salary during the Japanese occupation of the Dutch East Indies during World War 2 and who were still alive on 15 August 2015. Those who meet the qualifying conditions will be entitled to a one-off payment (the Netherlands compensation payment) under the scheme in the amount of 25,000 Euros.
This instrument provides that a Netherlands compensation payment is an exempt lump sum for the purposes of paragraph 5H(12(c) of the VEA.
Paragraph 5H(12)(c) of the VEA allows the Repatriation Commission to determine that an amount, or class of amounts, is an “exempt lump sum”. An exempt lump sum is excluded from the definition of “ordinary income” under subsection 5H(1) of the VEA, meaning the lump sum amount is not to be taken into account in determining the amount of VEA income support payment under the veterans’ entitlements income test.
The attached instrument will ensure that if a person or the person’s partner receives a Netherlands compensation payment and the person is eligible for, or in receipt of a service pension or income support supplement, then the amount of the payment received by the person is an exempt lump sum.
The initial exemption of these payments 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 financial assets produced from the lump sum are exempt from the relevant income deeming provisions of the VEA.
CONSULTATION
Section 17 of the Legislation Act 2003 requires a rule-maker to be satisfied, before making a legislative instrument that any consultation the rule-maker considered appropriate and reasonably practicable, has been undertaken.
This instrument was made in consultation with, and following advice from, the Commonwealth Department of Social Services (DSS) which has made a virtually identical instrument under paragraph 8(11)(d) of the Social Security Act 1991. That instrument is the Social Security (Exempt Lump Sum – The Netherlands Government Compensation Payments in respect of the World War Two Japanese Occupation of the Dutch East Indies) Determination 2016.
The nature of consultation with DSS was by way of email correspondence and telephone calls.
The instrument is beneficial in nature as it exempts the relevant payments from the income test under the VEA. As a result, public consultation was considered unnecessary.
Accordingly, it is considered the requirements of section 17 of the Legislation Act 2003 have been met.
RETROSPECTIVITY
Yes. The instrument commences on 1 March 2016.
The Netherlands Government commenced payments to eligible persons under the compensation scheme as early as 1 March 2016.
The instrument’s retrospective commencement is designed to ensure any Netherlands compensation payments that may have been paid to DVA clients before registration of this instrument will be treated as exempt income under the VEA.
While retrospective in nature, the instrument will not infringe section 12 of the Legislation Act 2003 because the retrospective operation would not disadvantage any person or impose a liability on a person other than the Commonwealth.
DOCUMENTS INCORPORATED-BY-REFERENCE
No.
REGULATORY IMPACT
None.
HUMAN RIGHTS STATEMENT
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
The attached instrument engages the right to social security contained in Article 9 of the International Covenant on Economic Social and Cultural Rights. 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 Veterans’ Entitlements Act 1986 (VEA) certain pensions are subject to a means-test which assesses the income and assets of the pensioner to determine the level of pension the person is entitled to. Where a pensioner receives a lump sum, the payment is generally treated as income and would be assessed in the means test for the pension which could result in a reduced pension.
The instrument will ensure that Netherlands compensation payments received by relevant DVA clients will not be treated as ordinary income when assessing the person’s eligibility or rate of pension under the VEA income test.
The right to social security is promoted by the attached instrument in that it ensures that these payments, intended to compensate those who suffered a loss of earnings during the World War Two Japanese Occupation of the Dutch East Indies, are not treated as income for the purposes of the means-test for certain pensions.
Conclusion
The attached instrument is compatible with human rights, because it supports a person’s right to social security.
Mark Harrigan
Assistant Secretary, as delegate of the Repatriation Commission
Rule-Maker
FURTHER EXPLANATION OF PROVISIONS
See: Attachment A
Attachment A
FURTHER EXPLANATION OF PROVISIONS
Section 1
This section sets out the name of the instrument.
Section 2
This is the commencement provision. It provides that the instrument is taken to have commenced on 1 March 2016.
Section 3
This section sets out the primary legislation that authorises the making of the instrument, namely paragraph 5H(12)(c) of the VEA.
Section 4
This section defines terms used in section 5 of the instrument including the term “Netherlands compensation payment”.
Consistent with the DSS instrument, the term is defined to mean “a payment made by the Netherlands Government to people who were civil servants or military personnel and who were in the service of the Dutch East Indies Government during the Japanese occupation of the Dutch East Indies during World War 2”.
Section 5
This is the operative provision of the instrument. It provides that if a person or the person’s partner receives a Netherlands compensation payment and the person is eligible for, or in receipt of a service pension or income support supplement, then the amount of the payment received by the person or the person’s partner is an exempt lump sum.
The provision is made under paragraph 5H(12)(c) of the VEA for the purposes of the definition of “ordinary income” in subsection 5H(1) of the VEA.