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2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
SOCIAL SERVICES LEGISLATION AMENDMENT
(FAIR AND SUSTAINABLE PENSIONS) BILL 2015
REVISED EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Hon Scott Morrison MP)
THIS EXPLANATORY MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE
OF REPRESENTATIVES TO THE BILL AS INTRODUCED
SOCIAL SERVICES LEGISLATION AMENDMENT
(FAIR AND SUSTAINABLE PENSIONS) BILL 2015
OUTLINE
This Bill will introduce an important 2015 Budget measure, improving the
fairness and sustainability of the pension system.
From 1 January 2017, the Bill will rebalance the assets test parameters by
increasing the assets test free areas and the taper rate by which a pension
is reduced once the free areas are exceeded.
Those whose pension is cancelled will automatically be issued with a
Commonwealth Seniors Health Card, or a Health Care Card for those under
pension age, without the need to meet the usual income requirements.
Veterans whose service pension is cancelled under this measure will retain
their Veterans' Affairs Gold Card.
Financial impact statement
The measure will produce a saving of $2,434.0 million over the forward
estimates.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
The statement of compatibility with human rights appears at the end of this
explanatory memorandum.
SOCIAL SERVICES LEGISLATION AMENDMENT
(FAIR AND SUSTAINABLE PENSIONS) BILL 2015
NOTES ON CLAUSES
Abbreviations used in this explanatory memorandum
. 2014 Budget Measures No. 6 Act means the Social Services and Other
Legislation Amendment (2014 Budget Measures No. 6) Act 2014
. Social Security Act means the Social Security Act 1991
. Social Security Administration Act means the Social Security
(Administration) Act 1999
. Veterans' Entitlements Act means the Veterans' Entitlements Act 1986
Clause 1 sets out how the new Act is to be cited - that is, as the Social
Services and Other Legislation Amendment (Fair and Sustainable Pensions)
Act 2015.
Clause 2 provides a table setting out the commencement dates of the various
sections in, and the Schedule to, the new Act.
Clause 3 provides that legislation that is specified in a Schedule is
amended or repealed as set out in that Schedule.
Schedule 3 - Assets test and concession cards
Summary
From 1 January 2017, this Schedule will rebalance the assets test
parameters by increasing the assets test free areas and the taper rate by
which a pension is reduced once the free areas are exceeded.
People whose pension is nil on 1 January 2017 as a result of these changes
will automatically be issued with a Commonwealth Seniors Health Card, or a
Health Care Card for those under pension age, without the need to meet the
usual income requirements. Veterans whose service pension is cancelled
under this measure will retain their Veterans' Affairs Gold Card.
Background
Assets test
An assets test applies to social security pensions - namely, age pension,
disability support pension, wife pension, carer payment, bereavement
allowance, widow B pension and certain pensions administered by the
Department of Veterans' Affairs. Pension payments are assessed under both
income and assets tests, and the test that produces the lower rate will
apply to the person.
The pension assets test has a free area for the value of assets (excluding
the family home) below which a person's rate of pension is not affected
under the assets test by their assets holdings. The value of a person's
assets above these free areas currently reduces their pension by $1.50 per
fortnight for each extra $1,000 in assessable assets over the free area
(the assets taper rate).
An assets test also applies to parenting payment and allowances (widow
allowance, youth allowance, austudy payment, newstart allowance, sickness
allowance, special benefit and partner allowance). These allowances come
within the definition of social security benefit under the Social Security
Act. For these payments, if the value of a person's assets exceeds the
assets test free area, then the payment is not payable. There is no assets
taper rate for these payments.
Currently, the assets test free areas are:
. $202,000 for a single homeowner;
. $286,500 for homeowner couples;
. $348,500 for non-homeowner singles; and
. $433,000 for non-homeowner couples.
The changes made by Part 1 of this Schedule increase the free areas to:
. $250,000 for a single home owner;
. $375,000 for home owner couples;
. $450,000 for non-home owner singles; and
. $575,000 for non-home owner couples.
The 'common allowable' asset test free area that applies where at least one
member of an illness-separated couple is residing in a special residence,
and they have a different home ownership status, will also be increased to
$237,500.
This Schedule also make amendments to increase the taper rate for pensions
so that a person's rate of a pension is reduced by $3.00 per fortnight
(instead of the current $1.50 per fortnight) for every $1,000 of assets
above the relevant assets test free area.
Indexation of the pension assets test free areas has been paused for three
years from 1 July 2017 by the 2014 Budget Measures No. 6 Act. The changes
to the assets test made by this Schedule replace the measure that pauses
the indexation of the assets test free areas in the 2014 Budget Measures
No. 6 Act. Accordingly, amendments are also made to the 2014 Budget
Measures No. 6 Act to ensure the assets limits for pensions are not paused.
Concession cards
The seniors health card and health care card are concession cards that may
be claimed by a person who is not receiving a social security pension or
benefit.
A health care card or seniors health card (for people of pension age) will
be automatically issued to those pensioners whose pension rate is nil on
1 January 2017 as a result of the changes to asset thresholds and taper
rates in Part 1 of this Schedule. The usual income test applying to such
cards will be disregarded for this purpose. Pensioners who are overseas at
1 January 2017 but would otherwise qualify for a card will be automatically
issued such a card upon their return, provided they return within 19 weeks
of leaving Australia.
Pensioners who are overseas at 1 January 2017 but return to Australia after
19 weeks will also qualify for a card if they have a nil rate of pension on
1 January 2017 as a result of these changes. However, the card will not be
automatically issued. They will need to claim the card on their return.
Similar amendments are made to ensure veterans and war widows who lose
their service pension or income support supplement as the result of the
changes in Part 1 of this Schedule are granted a seniors health card or a
health care card, as appropriate to their circumstances. In addition,
veterans who lose their service pension under this measure will retain
their Veterans' Affairs Gold Card.
Explanation of the changes
Part 1 - Assets test
Division 1 - Main amendments
Amendments to the Social Security Act
Items 1, 3, 9, 13, 17, 23 and 29 increase the assets value limit for
parenting payment (single) and social security benefit for a homeowner who
is not a member of a couple to $250,000.
Items 2, 4, 10, 14, 18, 24 and 30 increase the assets value limit for
parenting payment (single) and social security benefit for a non-homeowner
who is not a member of a couple to $450,000.
Items 5, 11, 15, 19, 25 and 31 increase the assets value limit for social
security benefit for a homeowner who is partnered, where the partner is
getting neither a pension nor a benefit, to $375,000.
Items 6, 12, 16, 20, 26 and 32 increase the assets value limit for social
security benefit for a non-homeowner, who is partnered where the partner is
getting neither a pension nor a benefit, to $575,000.
Items 7, 21, 27, 33 and 35 increase the assets value limit for social
security benefit for a homeowner who is partnered where the partner is
getting a pension or a benefit to $187,500.
Items 8, 22, 28, 34 and 36 increase the assets value limit for social
security benefit for a non-homeowner who is partnered, where the partner is
getting a pension or a benefit, to $287,500.
Items 37, 44 and 51 increase the assets value limit for social security
pension (other than parenting payment single) for a homeowner who is not a
member of a couple to $250,000.
Items 38, 45 and 52 increase the assets value limit for social security
pension (other than parenting payment single) for a non-homeowner who is
not a member of a couple to $450,000.
Items 39, 41, 46, 48, 53 and 55 increase the assets value limit for a
social security pension for a homeowner who is a member of a couple to
$187,500.
Items 40, 42, 47, 49, 54 and 56 increase the assets value limit for a
social security pension for a non-homeowner who is a member of a couple to
$287,500.
Point 1064-G4 of the Social Security Act provides for a reduction in a
person's rate of pension where the person has assets in excess of their
assets value limit. A formula in table G-2 is used to calculate the
reduction. There are similar provisions in points 1066-G4 and 1066A-H4.
The current effect of these provisions is to reduce a person's rate of a
pension by $1.50 per fortnight for every $1,000 of assets above the
relevant assets test free area. Items 43, 50 and 57 amend the formulas in
these provisions to double the taper rate to produce a reduction of $3.00
per fortnight for every $1,000 of assets above the relevant assets test
free area.
There is a similar taper rate included in the hardship provisions that
apply in relation to the assets test. Item 58 amends paragraph 1130(3)(d)
to double the taper.
Items 59 to 61 increase the asset limits that apply in relation to certain
special residents to $237,500.
Section 1192 of the Social Security Act provides a method for indexing
amounts that are subject to CPI indexation. Among other things, the method
uses the 'current figure' for the amount to be indexed. Some assets value
limits are subject to CPI indexation (while others are adjusted).
Item 62 inserts a number of new provisions after subsection 1192(5B) of the
Social Security Act. These new provisions ensure that the 'current figure'
used to index the relevant assets value limits on 1 July 2017 is the
relevant assets value limit that applied on 1 January 2017 (due to the
increases provided for by this Schedule).
Item 63 is an application provision. It ensures the amendments made by
items 1 to 61 of this Schedule affect social security payments for days on
or after commencement (being 1 January 2017).
Amendments to the Veterans' Entitlements Act
Items 64 to 66 increase the asset limits that apply in relation to certain
special residents to $237,500.
Item 67 amends the taper rate under the hardship provisions for service
pension and income support supplement so that a person's rate of a pension
or supplement is reduced by $3.00 per fortnight (instead of the current
$1.50) for every $1,000 of assets above the relevant assets test free area.
Item 68 repeals subsections 59C(2A) and (3), and inserts new subsections
59(2A), (2B) and (3) to ensure the 'current figure' used to index the
relevant assets value limits on 1 July 2017 is the relevant assets value
limit that applied on 1 January 2017 (due to the increases provided for by
this Schedule).
Item 69 repeals sections 59H and 59J, and substitutes new section 59H and
59J. These are technical amendments to remove the quotation marks from the
terms 'single' and 'partnered'.
Item 70 increases the assets value limit for service pension or income
support supplement for a homeowner who is not a member of a couple to
$250,000.
Item 71 increases the assets value limit for service pension or income
support supplement for a non-homeowner who is not a member of a couple to
$450,000.
Item 72 increases the assets value limit for service pension or income
support supplement for a homeowner who is a member of a couple to $187,500.
Item 73 increases the assets value limit for service pension or income
support supplement for a non-homeowner who is a member of a couple to
$287,500.
Item 74 makes a technical amendment to note 4 in point SCH6-F3 of Schedule
6.
Item 75 amends the formula in point SCH6-F4(1) of Schedule 6 to double the
taper rate, producing a reduction of $3.00 per fortnight for every $1,000
of assets above the relevant assets test free area.
Item 76 is an application provision. It ensures the amendments made by
items 64 to 67 and 70 to 75 of this Schedule affect service pension and
income support supplement for days on or after commencement (being 1
January 2017).
Division 2 - Other amendments
Amendments to the 2014 Budget Measures No. 6 Act
Part 2 of Schedule 2 to the 2014 Budget Measures No. 6 Act pauses the
indexation of the pension assets free areas for three years from 1 July
2017. Item 78 removes Part 2 of Schedule 2. Item 77 makes a consequential
amendment to the commencement table of the 2014 Budget Measures No. 6 Act.
Part 2 - Concession cards
Amendments to the Social Security Act
Item 80 inserts new sections 1061ZJA and 1061ZJB, which modify the
qualification for seniors health card to create a new category of
qualification for affected pensioners.
New subsection 1061ZJA(1) provides that, where, immediately before
1 January 2017, a person was receiving a social security pension and the
Secretary is satisfied that the rate of that pension is nil on
1 January 2017 because of the operation of the amendments made by Part 1 of
Schedule 3, then the remainder of section applies.
New subsection 1061ZJA(2) disregards paragraph 1061ZG(1)(d) (which applies
an income test) in determining the qualification of the person under the
Social Security Act for a seniors health card at any time on or after
1 January 2017.
New subsection 1061ZJA(3) requires the Secretary to issue a seniors health
card under the Social Security Act to the person if the person is qualified
for such card on 1 January 2017. A note confirms that the person does not
need to make a claim for the card in this situation.
New subsection 1061ZJA(4) similarly requires that, where the person is
outside Australia on 1 January 2017, returns within 19 weeks of leaving,
and qualifies for a seniors health card under the Social Security Act on
the day they return, the Secretary must issue a seniors health card to the
person. Notes confirm that the person does not need to make a claim for
the card, unless they return after the end of the 19-week period.
New section 1061ZJB provides that, if section 118XA of the Veterans'
Entitlements Act applies to the person (which is in similar terms to new
subsection 1061ZJA(1) of the Social Security Act) , then paragraph
1061ZG(1)(d) is disregarded in determining the qualification of the person
under the Social Security Act for a seniors health card at any time on or
after 1 January 2017. This will allow a person whose rate of service
pension on 1 January 2017 was nil because of the operation of the
amendments made by Part 1 of Schedule 3 to qualify for seniors health card,
disregarding the income test under the Social Security Act. The person can
then choose to claim a card under the Social Security Act or the Veterans'
Entitlements Act, according to their preference.
Item 79 is consequential to the insertion of new sections 1061ZJA and
1061ZJB, and makes qualification for a seniors health card under section
1061ZG subject to new section 1061ZJA and 1061ZJB.
Items 81 and 82 substitute new headings for Subdivisions A and B of
Division 3 of Part 2A.1, which deal with health care cards. The current
headings differentiate between cases where the card is automatically
issued, and those where a claim is required. However, after these changes,
there will be some automatically issued cards where a claim would otherwise
have been required, because an exemption to the income test applies. As a
result, the headings will now differentiate based upon whether the income
test generally applies. The substituted heading for Subdivision A, which
deals with automatic issue health care cards, will become 'Qualification
for automatic issue health care card where no health care card income
test'. The substituted heading for Subdivision B, which deals with health
care cards for which no claim is required, will become 'Qualification for
health care card in other circumstances'. Such cards are not 'automatic
issue health care cards' for the purposes of the social security law
generally.
Item 84 inserts new sections 1061ZRA and 1061ZRB, which modify the
qualification for health care cards to create a new category of
qualification for affected pensioners.
New subsection 1061ZRA(1) provides that, where, immediately before
1 January 2017, a person was receiving a social security pension and the
Secretary is satisfied that the rate of that pension is nil on
1 January 2017 because of the operation of the amendments made by Part 1 of
Schedule 3, then the remainder of the section applies.
New subsection 1061ZRA(2) disregards paragraphs 1061ZO(2)(d), (3)(e) and
(4)(d) (which apply an income test) in determining the qualification of the
person under the Social Security Act for a health care card at any time on
or after 1 January 2017.
New subsection 1061ZRA(3) requires the Secretary to issue a health care
card under the Social Security Act to the person if the person is qualified
for such card on 1 January 2017. A note confirms that the person does not
need to make a claim for the card in this situation.
New subsection 1061ZRA(4) similarly requires that, where the person is
outside Australia on 1 January 2017, returns within 19 weeks of leaving,
and qualifies for a health care card under the Social Security Act on the
day they return, the Secretary must issue a health care card to the person.
Notes confirm that the person does not need to make a claim for the card,
unless they return after the end of the 19-week period.
New section 1061ZRB provides that, if section 118XA of the Veterans'
Entitlements Act applies to the person (which is in similar terms to new
subsection 1061ZJA(1) of the Social Security Act), then paragraphs
1061ZO(2)(d), (3)(e) and (4)(d) are disregarded in determining the
qualification of the person under the Social Security Act for a health care
card at any time on or after 1 January 2017. This will allow a person
whose rate of service pension on 1 January 2017 was nil because of the
operation of the amendments made by Part 1 of Schedule 3 to qualify for a
health care card disregarding the income test under the Social Security
Act.
Amendments to the Social Security Administration Act
Items 85 and 86 qualify the general requirement under section 11 that a
person who wishes to be granted a concession card must make a claim for the
card. Subsection 11(2) already provides an exception to the claim
requirement for a card for which a person is qualified under Division 1 of
Part 2A.1 of the Social Security Act or under Subdivison A of Division 3 of
that Part (an automatic issue health care card).
Item 86 adds two new subsections to section 11. New subsection 11(3)
exempts a seniors health card that the Secretary must issue to a person
under new subsection 1061ZJA(3) or (4) of the Social Security Act (inserted
by item 80 above) from the requirement that a person must claim the card.
New subsection 11(4) exempts a health care card that the Secretary must
issue to a person under new subsection 1061ZRA(3) or (4) of the Social
Security Act (inserted by item 84 above) from the requirement that a person
must claim the card.
Item 85 qualifies section 11 by reference to the two new subsections
inserted by item 86.
Items 87 and 88 amend section 37A, which deals with the duration of seniors
health cards and health care cards which are claimed, to exclude
automatically issued concession cards issued under these new provisions.
Section 37A provides that a seniors health card or health care card expires
at the end of the period specified in the determination granting the claim
for the card. New subsection 37A(1A) (inserted by item 87) provides that
subsection 37(1) does not apply to a non-claimed seniors health card issued
under subsection 1061ZJA(3) or (4) of the Social Security Act (inserted by
item 80 above). New subsection 37A(2A) similarly provides that
subsection 37A(2) does not apply to a non-claimed health care card issued
under subsection 1061ZRA(3) or (4) of the Social Security Act (inserted by
item 84 above).
Items 89, 90 and 91 provide for the form of non-claimed seniors health
cards and health care cards. Item 89 amends subsection 240A(3) to exempt a
card issued under subsection 1061ZJA(3) or (4) or 1061ZRA(3) or (4) of the
Social Security Act from the requirement to specify in such card a day at
which the card will expire. The Secretary may approve a form of such cards
under subsection 240A(2), including an expiry day for administrative
purposes, in the same way this can occur for automatically issued cards
such as a pensioner concession card.
Item 91 amends section 240C, which deals with the issue of replacement
cards upon the expiry of an automatic issue card. It amends
paragraphs 240C(1)(a) and (2)(a) to include reference to a card issued
under subsection 1061ZJA(3) or (4) or 1061ZRA(3) or (4) of the Social
Security Act, to also allow such cards to be automatically reissued if
required. Item 90 makes a consequential change to the heading of
section 240C to reflect its expanded scope as a result of the amendment
made by item 91.
Item 92 provides for the start day for seniors health cards and health care
cards, which will be automatically issued to persons at 1 January 2017 or
to persons who return to Australia after 1 January 2017 within 19 weeks.
Four new subclauses are added to Clause 3 of Schedule 2.
New subclause 3(4) applies when new section 1061ZJA (inserted by item 80
above) applies to a person because the rate of pension they were receiving
immediately before 1 January 2017 is nil on 1 January 2017 because of the
operation of the amendments made by Part 1 of Schedule 3 to this Bill. The
seniors health card the Secretary must issue to the person under that
section has a start day of 1 January 2017.
New subclause 3(5) applies when new section 1061ZJA (inserted by item 80
above) applies to a person because the rate of pension they were receiving
immediately before 1 January 2017 is nil on 1 January 2017 because of the
operation of the amendments made by Part 1 of Schedule 3 to this Bill. The
seniors health card the Secretary must issue to the person because they
return to Australia within 19 weeks of departing prior to 1 January 2017
under that section has a start day of the day the person returns to
Australia.
New subclause 3(6) applies when new section 1061ZRA (inserted by item 84
above) applies to a person because the rate of pension they were receiving
immediately before 1 January 2017 is nil on 1 January 2017 because of the
operation of the amendments made by Part 1 of Schedule 3 to this Bill. The
health care card the Secretary must issue to the person under that section
has a start day of 1 January 2017.
New subclause 3(7) applies when new section 1061ZRA (inserted by item 84
above) applies to a person because the rate of pension they were receiving
immediately before 1 January 2017 is nil on 1 January 2017 because of the
operation of the amendments made by Part 1 of Schedule 3 to this Bill. The
health care card the Secretary must issue to the person because they return
to Australia within 19 weeks of departing prior to 1 January 2017 under
that section has a start day of the day the person returns to Australia.
Amendments to the Veterans' Entitlements Act
Item 93 makes a technical amendment to paragraph 63D(2)(b) to provide that
a seniors health card issued under Part VIIC of the Veterans' Entitlements
Act is a 'concession card' for the purposes of section 63D.
Item 94 inserts a new subsection (13) at the end of section 85. The effect
of new subsection 85(13) is that, if, on 1 January 2017, a veteran's
service pension is nil as a result of this measure, for the purposes of
subsection 85(7) or 85(7A), the veteran will be taken to be receiving
service pension and retain entitlement to treatment for any condition (Gold
Card).
Item 95 is consequential to the insertion of new sections 118XA and 118XB,
and makes eligibility for a seniors health card under section 118V subject
to new sections 118XA and 118XB.
Item 96 inserts new sections 118XA and 118XB, which modify the eligibility
for seniors health card to create a new category of eligibility for
affected pensioners.
New subsection 118XA(1) provides that the section applies where,
immediately before 1 January 2017, a person was receiving a service pension
or income support supplement and the Commission is satisfied that the rate
of that pension is nil on 1 January 2017 because of the operation of the
amendments made by Part 1 of Schedule 3.
New subsection 118XA(2) disregards paragraphs 118V(1)(h), (1A)(f), (2)(h)
and (3)(h) (which apply an income test) in determining the eligibility of
the person under the Veterans' Entitlements Act for a seniors health card
at any time on or after 1 January 2017.
If a person is eligible for a seniors health card under Part VIIC on
1 January 2017, new subsection 118XA(3) requires the Commission to make a
determination under section 118ZG to that effect. A note clarifies that
the person does not need to make a claim for the card.
New section 118XB provides that, if new section 1061ZJA of the Social
Security Act (inserted by item 80 above) applies to the person (which is in
similar terms to new subsection 118XA(1) of the Veterans' Entitlements
Act), then paragraphs 118V(1)(h), (1A)(f), (2)(h) and (3)(h) are
disregarded in determining the eligibility of the person under the
Veterans' Entitlements Act for a seniors health card at any time on or
after 1 January 2017. This will allow a person whose rate of social
security pension on 1 January 2017 was nil because of the operation of the
amendments made by Part 1 of Schedule 3 to qualify for a seniors health
card disregarding the income test under the Veterans' Entitlements Act.
The person can then choose to claim a card under the Social Security Act or
the Veterans' Entitlements Act, according to their preference.
Item 97 makes a technical amendment as a consequence of item 93.
Item 98 inserts new subsection (2) at the end of section 118Y.
New subsection 118Y(2) provides that a person does not need to make a claim
for a seniors health card if a determination made under section 118ZG is in
force because of subsection 118XA(3).
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
SOCIAL SERVICES LEGISLATION AMENDMENT
(FAIR AND SUSTAINABLE PENSIONS) BILL 2015
This Bill 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 Bill
This Bill will change the pension assets test to make it fairer and better
targeted, and to help ensure the pension system is sustainable into the
future. The changes will:
. increase the assets test free areas to provide additional assistance
to pensioners with moderate asset holdings;
. provide an additional increase in the free areas for non-homeowners to
ensure fairer treatment for those who have chosen not to, or are not
in a position to, purchase their own home and therefore do not benefit
from the principal home exemption; and
. better target the pension by increasing the assets test taper (or
withdrawal) rate for assets above the new free areas from $1.50 to
$3.00 per fortnight for each extra $1,000 in assessable assets. This
will reduce support to pensioners with higher levels of assets who
have greater capacity to support themselves.
Pensioners who lose pension entitlement on 1 January 2017 as a result of
the changes will be automatically issued with a Commonwealth Seniors Health
Card, or a Health Care Card (for those under age pension age), without the
need to meet the usual income requirements. Veterans whose service pension
is cancelled under this measure will retain their Veterans' Affairs Gold
Card.
The assets test limits for social security allowance will also increase as
a result of the measure, in line with the increase in the pension free
areas. Accordingly, from 1 January 2017, people with asset holdings under
the new free areas may become eligible for an allowance payment.
Human rights implications
The Bill engages the following human rights:
Right to social security
The Bill is consistent with supporting the right to social security.
The effect of the Bill will be that the pension rate will increase for many
part-rate pensioners with moderate assets due to the increases in the
assets test free areas, while pensioners with higher levels of assets will
be subject to a reduction in their pension payments.
There will also be an increase in the assets test limits for social
security allowance payments, such as newstart and sickness allowance,
austudy and parenting payment. This will allow more people, with modest
levels of assets under the new higher assets test limits, to access
assistance.
For pensioners with assets above the assets test free areas, their pension
payment will be reduced at a higher rate. However, payments will not be
reduced unless a pensioner has substantial levels of assets, in addition to
their home. Those affected have the capacity to be more self-reliant, and
it is appropriate that they use their assets to support themselves. People
with higher levels of assets have the capacity to draw down on those assets
to support themselves in retirement. Those most affected by the changes
would only have to draw down a maximum of 1.84 per cent of their assets to
make up for the loss of their part pension.
Pensioners who will no longer be eligible for any pension as a result of
the changes will be automatically eligible for a Commonwealth Seniors
Health Card, or Health Care Card (for those under Age Pension age), without
the need to meet the usual income requirements. Veterans who would
otherwise lose their Gold Card on implementation of this measure will
retain their Gold Card.
These changes will have a positive impact on more vulnerable people with
lower levels of assets, as well as improving the sustainability of the
pension system into the future. Improving the long-term sustainability of
the pension system is important to ensure the pension system will continue
to provide an adequate level of support to those in need over the long
term.
Conclusion
The amendments in the Bill are compatible with human rights because they do
not limit access to social security.
[Circulated by the authority of the Minister for Social Services,
the Hon Scott Morrison MP]
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