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2002
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (FURTHER SIMPLIFICATION OF INTERNATIONAL PAYMENTS) BILL 2002
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Family and Community Services, Senator the Hon Amanda Vanstone)
FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (FURTHER SIMPLIFICATION OF INTERNATIONAL PAYMENTS) BILL 2002
This Bill gives effect to the 2001-2002 Budget
initiative to further simplify international payments and will also equalise the
treatment of debts that result from overpayments of Australian pensions to
people who receive lump sum payments from
overseas.
The required period of
“Australian working life residence” that people must meet in order
to continue to receive a full Australian social security pension while overseas
on a long-term basis, will be more closely aligned with international standards.
The required residence period is extended from 25 years to 30
years.
The Bill also allows people to accrue
Australian working life residence after they reach age pension age. People
registered with the Pension Bonus Scheme will be able to add bonus periods under
the Scheme to their Australian working life residence accrued before they
reached age pension age.
The Australian working
life residence initiative only applies to a person who leaves Australia after
the commencement day of the amendments — 1 April 2002 if the
Bill receives the Royal Assent by then, otherwise 1 July 2002. It
will apply to people who are overseas on the commencement day only if they
return to Australia for a continuous period of 26 weeks or more and then again
depart Australia.
The Bill will also
standardise the recovery of debts that result from the overpayment of an
Australian social security payment to a person who receives an arrears payment
of foreign income. Debt recovery currently only occurs when a person receives a
lump sum payment of foreign pension from a country with which Australia has an
international social security agreement.
The
changes to standardise the recovery of debts only apply from the commencement
day.
Financial
impact:
If the commencement day is 1 April
2002:
2001-02 - $0.3m
(savings)
2002-03 - $6.1m
(savings)
2003-04 - $6.6m
(savings)
If the commencement day is 1 July
2002:
2001-02 - $1.4m
(costs)
2002-03 - $6.1m
(savings)
2003-04 - $6.6m
(savings)
The measures in this Bill impact on
the Social Security Act 1991.
PRELIMINARY
Clause 1 of the Family and Community
Services Legislation Amendment (Further Simplification of International
Payments) Bill 2002 sets out how the Act is to be
cited.
Clause 2 provides that sections
1, 2 and 3 of the Act commence on the day the Bill receives the Royal Assent and
that Schedule 1 of the Act commences on 1 April 2002 if the Royal Assent is
received on or before 1 April 2002 or if not, 1 July
2002.
Clause 3 provides that each Act
specified in a Schedule is amended or repealed as set out in the applicable
items in that Schedule.
The following amendments are made by Part 1 of
Schedule 1:
• point 1221-C1 of the
Social Security Act 1991 (the Social Security Act) is amended to
extend the period of Australian working life residence (AWLR) from 25 years to
30 years; and
• point 1221-C2 of the
Social Security Act is repealed and substituted to extend a person’s
residence factor from 25 years to 30 years.
The
proposed amendments will achieve the required extension of a person’s AWLR
from the current 25 years to 30 years in the calculation of a person’s
residence factor.
Module C of section 1221 of the Social Security Act
provides for the calculation of a person’s residence factor. The
residence factor is calculated by determining the period of the person’s
AWLR. If a person’s residence factor is 1 then that person receives a
full social security pension if that person departs Australia and remains
overseas for longer than 26 weeks.
Item
1 amends point 1221-C1 of the Social Security Act by omitting 300 months (25
years) and substituting 360 months (30 years). This means that the residence
factor is 1 if the period of AWLR is 30
years.
Item 2 repeals and substitutes
point 1221-C2 of the Social Security Act to provide that the calculation of a
person’s residence factor is the period of that person’s AWLR
divided by 360 (being 30 years converted to months) but only if the
person’s AWLR is less than 30
years.
These measures commence on 1 April 2002,
if the Bill receives the Royal Assent on or before that day or if not, 1 July
2002.
Part 2 of Schedule 1 makes amendments to the
Social Security Act to include any bonus periods accrued by the person under
Part 2.2A of the Social Security Act (the pension bonus scheme) in the period of
AWLR that would normally apply, that is, from the age of 16 years to pension age
(see subsection 23(5A), (5B), (5C) and (5D) of the Social Security
Act).
In addition, an application provision is
added to Schedule 1A of the Social Security Act to clarify when the amendments
made by Schedule 1 apply.
Item 3 amends point 1221-B2 of the Social
Security Act so that the number of months to be calculated in determining a
person’s AWLR includes not just the number of months over a person’s
working life during which the person has been an Australian resident but also
the number of months in bonus periods that have accrued to the person under Part
2.2A.
Item 4 adds an application
provision to the end of Schedule 1A of the Social Security Act ensuring that the
amendments of points 1221-B2, 1221-C1 and 1221-C2 only apply to a person after
the commencement day (either 1 April 2002 or 1 July 2002 depending
upon when the Royal Assent is given). If a person is absent from Australia on
the commencement day, that person will need to return to Australia for a
continuous period of 26 weeks or more since the commencement day for the
amendments that have been made to apply.
These
measures commence on 1 April 2002, if the Bill receives the Royal Assent on or
before that day or if not, 1 July 2002.
Part 3 of Schedule 1 makes amendments to the
Social Security Act to allow a debt incurred because of the receipt by a person
of a comparable foreign payment, to be legally recoverable.
Item 5 repeals superfluous notes at the end of
subsection 1221(1) of the Social Security
Act.
Item 6 inserts a new table item
(15A) in the table at subsection 1222(2) of the Social Security Act to specify
that a debt under new section 1228A (see item 7) is recoverable by
deductions, legal proceedings, garnishee notice or repayment by
instalments.
New subsection 1228A of the Social
Security Act is inserted by item 7. This section enables a debt to arise
if a person receives a lump sum arrears of a comparable foreign payment that
would have resulted in a reduction of that person’s social security
payment if that lump sum payment had been paid by way of periodical payments.
The amount by which the social security payment would have been reduced over the
period represented by the lump sum arrears payment is a debt due to the
Commonwealth.
These measures commence either on
1 April 2002, if the Bill receives the Royal Assent on or before that day or 1
July 2002.