What’s Happening When? Overview of recent social security & family assistance law changes - March 2015
Changes to portability the disability support pension and student payments
Portability refers to the rules with respect to social security and family assistance payments continuing when a person is overseas.
The rules relating to portability of the disability support pension have changed. The disability support pension may now be paid only for temporary absences of up to 28 days in a 12 month period. After payments have been made for 28 days in a 12 month period, a person may only receive payments for additional periods overseas (up to a maximum of 28 days):
- to seek eligible medical treatment; or
- attend to an acute family crisis; or
- for a humanitarian purpose.
The new rules apply to absences from 1 January 2015, unless travel was booked and paid for before 14 May 2014.
Under Department of Social Services policy at the time of writing, travel in excess of these limits will initially result in suspension of payments.
Current exceptions for disability support pensioners, including for those with a terminal illness or a permanent and severe impairment or an entitlement under an International Social Security Agreement, continue.
The portability rules for student payments (Austudy and youth allowance) have also changed. These payments may now only be paid for a temporary absence to seek eligible medical treatment or attend to an acute family crisis. Payments may continue for as long as needed to seek treatment or attend to the family crisis, but only up to a maximum of 6 weeks.
Existing exceptions for student payment recipients, including those with students studying overseas as part of their course, continue.
Clean energy supplement renamed and indexation ceased
The clean energy supplement will now be called the energy supplement. Its rate has now been frozen indefinitely.
Freeze on indexation of asset test limits
From 1 July 2015, the asset test cut off point for allowances, student payments and parenting payment single has been frozen for two years.
From 1 July 2017, the asset test free area limit for pensions has been frozen for three years.
Changes to the income test and portability rules for the Commonwealth Seniors Health Card
From 1 January 2015, untaxed superannuation income is included for the purpose of the income test for the Commonwealth Seniors Health Card. Grandfathering arrangements apply to existing cardholders as at 1 January 2015.
Also from 1 January 2015, the card is now valid for periods of travel overseas of up to 19 weeks.
Restriction of relocation assistance for students
Relocation scholarships to help students move for the purpose of study are no longer available for students relocating within or between major cities. Scholarships continue to be available, for example to students relocating from a regional town or city to a major city for study.
Changes to family tax benefit payments for large families and income testing
The following changes have been made to family tax benefit from 1 July 2015:
- the family tax benefit (Part A) supplement to families with three children has been abolished, and is now available only to families with four or more children;
- lowering the income test cut-off point for family tax benefit (part B), which applies to single parents or the higher income earner in two parent families, from $150,000 per year to $100,000 per year; and,
- removing variations to the income test for family tax benefit (part A) based on number of children.
Changes to the disability support pension
There have been several changes with respect to the disability support pension.
New compulsory participation requirements for some under 35s
There are new rules with respect to continued eligibility for the disability support pension for certain under 35s. If a person is under 35 and receiving the disability support pension, they may have to participate in a program of support. A program of support is a comprehensive, individually tailored program of activities designed to build work capacity. Currently the requirement to participate in a program of support only applies to new claims for the disability support pension.
The new rules apply to recipients under 35 who began to receive the disability support pension between 2008 and 2011. Before a requirement to participate in a program of support may be imposed, the person must first have their medical conditions reassessed. The requirement to participate in a program of support applies if the outcome of that assessment is that:
- they are still eligible for the disability support pension; and
- do not have a severe impairment; and
- have a work capacity of at least eight hours per week.
There is an exception for recipients with a child under six.
If required to participate in a program of support, the person must “actively” participate in order to remain qualified for the disability support pension. Participation will usually be for at least 18 months. It is evident that the person’s capacity to work and eligibility for the disability support pension will be reassessed at that point.
Under current Department of Social Security policy, if a person has compulsory requirements and fails to comply with them, the following consequences apply (unless the person is exempt):
- they will be suspended after the first instance of non-compliance, but will have their payments restored with backpay if they begin to comply;
- they will be suspended after the second instance of non-compliance in 12 months, but will have their payments restored if they begin to comply, without backpay;
- their payment will be cancelled after the third instance of non-compliance in 12 months, and they will have to successfully reclaim the disability support pension in order to have their payments restored.
This new program of support requirement for under 35s applies in addition to existing participation requirements for some disability support pension recipients. Disability support pension recipients under 35 are already subject to certain requirements (unless exempt), including:
- a compulsory requirement to undertake at least one work related activity (eg work experience);
- if they have a psychological or psychiatric condition, a compulsory requirement to undertake a treatment/rehabilitation or work or social skills related activity;
- if aged up to 22, a compulsory requirement to undertake an education or employment related activity.
Changes to the definition of program of support
The requirement to participate in a program of support applies to new claimants for the disability support pension and certain current recipients under 35 (see above).
From 3 January 2015, only participation in programs wholly or partly funded by the Commonwealth will count for the purpose of meeting this requirement. Participation in a program of support a person started before 3 January 2015 continues to count.
A program of support will now exclude, for example, a person counting participation in activities such as rehabilitation through a State or Territory workers compensation scheme.
Changes to the medical assessment process for the disability support pension
Currently, a person claiming the disability support pension is issued with a Centrelink medical report form for their treating doctor. The form asks a range of questions about the diagnosis, treatment, clinical history and functional impact of a person’s medical conditions designed to elicit information relevant to assessing medical qualification for the disability support pension.
From 1 January 2015 this medical report form will be abolished. New claimants will be given a checklist of types of primary medical evidence (such as hospital records or x-rays) that they may wish to supply with their claim.
This change will be applied to under 35s from 1 January 2015 and all new claimants from 1 July 2015.
Also from 1 January 2015, new claimants for the disability support pension may have the medical assessment of their claims subject to review by a medical professional contracted by the Department of Human Services for this purpose.
Under the current process, medical assessment of disability support pension claims is conducted by Department of Human Services’ staff employed as “job capacity assessors”. In practice, they make the decision about a person’s medical eligibility for the disability support pension.
The second review by the new “government-contracted doctors” will be called a “disability medical assessement” and will apply if the job capacity assessor determines that a person is medically eligible for the disability support pension.
From 1 January 2015, the new “disability medical assessment” will apply to new claimants under 35 in metropolitan areas. It is intended to apply to all new claimants from 1 July 2015.
Changes to job seeker compliance rules
The following changes have been made to the job seeker compliance rules.
From 1 January 2015, if a job seeker fails to attend a compulsory appointment (without reasonable excuse), their payments are suspended until they attend a rescheduled appointment, instead of the current rule where suspension ends on the day the person makes the rescheduled appointment.
However, the suspension ends on the day the person is required to attend the rescheduled appointment if the rescheduled appointment is not within two business days.
Also from 1 January 2015, if a job seeker misses an appointment part way through a fortnight and is suspended, any entitlement to payment for the period up to the missed appointment may be withheld until the suspension is lifted.
Finally, from 1 July 2015, there will be a new financial penalty for non-attendance at appointments (without reasonable excuse). A penalty may be imposed for each day following a missed appointment, starting from the day the person is notified of the suspension of their payments (which may be later than the day the appointment was missed) and ending when the suspension is lifted (by attending a rescheduled appointment).
Change to deeming rates
Social security law has rules for calculating income from financial investments. As a person’s actual return is ignored, these are known as deeming rules. Income is deemed on a person’s total financial assets using a “below threshold rate” and an “above threshold rate”. For a single person the below threshold rate applies up to $48,000, for pensioner couples it applies up to $79,600 and for couples who are both on allowances up to $39,800. The current below threshold rate is 2%, and the above threshold rate is 3.5%. From 20 March 2015, these rates will reduce to 1.75% and 3.25%.
Proposed changes including bills before Parliament
At the time of writing there are a number of proposed changes to social security and family assistance before Parliament.
Budget measures related to social security and family assistance
The changes to social security law proposed by the government in the May 2014 budget were originally contained in two main bills, the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. As a result of opposition in the Senate, the government reintroduced these measures split between four bills: the Social Services and Other Legislation Amendment (Seniors Supplement Cessation) Bill 2014, the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014, Social Services and Other Legislation Amendment (2014 Budget Measures No. 5) Bill 2014 and Social Services and Other Legislation Amendment (2014 Budget Measures No. 6) Bill 2014. The main measures in the original bills are mostly unchanged in substance. The Social Services and Other Legislation Amendment (2014 Budget Measures No. 6) Bill 2014 has now passed the Parliament, but not the other three bills. The measures in these other bills include: abolition of the seniors supplement, freezing of income free areas, changes to indexation arrangements, an increase in the age pension age to 70 and a six month waiting period for job seekers under 30.
Interest charges for certain student payment debts and introduction of student loans
The Social Services and Other Legislation Amendment (Student Measures) Bill 2014 amends social security law to allow for interest charges to be applied to certain debts incurred by recipients of student payments. Interest charges may be applied where the debtor does not have, or is not keeping to, an acceptable repayment arrangements. Although there is an existing legislative framework for applying interest charges, it has not ever been used.
The bill would also abolish the existing student startup scholarships, automatically paid to recipients of student payments to help with the up-front costs of study, and replace them with a loan. There are no grandfathering provisions for existing students. Students in higher education and receiving student payments are eligible to apply twice yearly for loans of $1025 to assist with the costs of study. Repayment is contingent on income and on the same basis as repayment of loans under the Higher Education Loan Program.
Proposed abolition of disability support pension for persons in psychiatric detention
Although disability support pension is generally not payable to a person who is imprisoned, there is an exception for persons charged with a criminal offence and, as a result, in psychiatric confinement and undergoing a course of rehabilitation.
In the 2014-2015 Mid-Year Economic and Fiscal Outlook (MYEFO) the government proposes to abolish this. A bill to give effect to this proposal has yet to be put before Parliament.
Commonwealth tribunals amalgamation bill
The Tribunals Amalgamation Bill 2014 is currently before Parliament. It will combine the Administrative Appeals Tribunal, Social Security Appeals Tribunal, Migration Review Tribunal and Refugee Review Tribunal into a single tribunal, still called the Administrative Appeals Tribunal.
There is no change to current appeal rights in relation to social security and family assistance law decisions. Review by the Social Security Appeals Tribunal is to be known as “AAT first review”, and review by the Administrative Appeals Tribunal is to be known as “AAT second review”.
At AAT second tier review (the equivalent of the current AAT), the tribunal may deal with a matter on the papers without the consent of the parties, a power the AAT does not presently have.
This summary was compiled by Matthew Butt, Principal Lawyer at the Welfare Rights Centre (NSW).