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EXPLANATORY MEMORANDUM

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					                          EXPLANATORY STATEMENT

                          Select Legislative Instrument 2005 No. 26

            Issued by the Authority of the Minister for Veterans’ Affairs

                          Veterans' Entitlements Act 1986

       Veterans’ Entitlements (DFISA-like Payment) Regulations 2005


Section 216 of the Veterans’ Entitlements Act 1986 (the Act) provides, in
part, that the Governor-General may make regulations, not inconsistent
with the Act, prescribing all matters which are by the Act required or
permitted to be prescribed, or which are necessary or convenient to be
prescribed for carrying out or giving effect to the Act.

From 20 September 2004, an allowance called the Defence Force Income
Support Allowance (DFISA) was introduced under Part VIIAB of the Act
(section 118N), payable to people whose social security income support
payment is reduced or not payable because of certain service-related
disability benefits (referred to as adjusted disability pension).

The amount of DFISA payable equals the difference between the amount
of social security payment (including a nil amount) a person actually
receives and the amount of social security payment the person would
have received if their adjusted disability pension was exempted from their
assessment but included in the calculation of any rent assistance
entitlements. DFISA was introduced by amendments to the Act.

The DFISA amendments could not also provide for beneficiaries of
Commonwealth income support payments paid under schemes or
legislation other than the Social Security Act 1991(SSA) because these
other income support payments were based on, but not necessarily
identical to, the calculation of the SSA payments. Therefore, the DFISA
amendments also included an amendment to enable these beneficiaries to
be compensated by benefits made pursuant to regulations under the Act
(section 118NJ).

The purpose of the Regulations is to enable DFISA-like payments to be
paid to people who are eligible for income support payments (primary
payment) under certain Commonwealth programs but who miss out on
those benefits either totally or partially because they or their partner
                                                                             2


receive adjusted disability pension and these benefits are included as
income in the means test for the primary payment.

The Regulations make provision for DFISA-like payments. DFISA-like
payments represent the difference between the amount of income support
payment (including a nil amount) a person actually receives (primary
payment) and the amount of income support payment the person would
receive if adjusted disability pension was not included in the assessment,
but was included in the calculation of any rent assistance entitlements.

The Regulations also provide for two other types of benefits to be made
available to DFISA-like payment recipients whose primary payment is
reduced to nil because of the adjusted disability pension:

 The first type consists of a financial payment that is equivalent to any
  amount that would have been payable to a person (as a secondary
  benefit) if the person had received the primary payment.

 The second type consists of non-financial benefits such as Health Care
  Cards that would have been provided to the person (as a secondary
  non-financial benefit) if the person had received the primary payment.

Further details of the operation of the DFISA-like payment scheme are at
Attachment A.

Details of the Regulations are set out in Attachment B.

The Act specifies no conditions that need to be met before the power to
make the Regulations may be exercised.

The Regulations would be a legislative instrument for the purposes of the
Legislative Instruments Act 2003.

The Regulations would be taken to have commenced on
20 September 2004 in order to ensure that DFISA-like payments are
payable on and from the same date that DFISA payments were payable.

For the purposes of subsection 12(2) (retrospective legislative
instruments) of the Legislative Instruments Act 2003 the Regulations
would not disadvantage a person or impose liabilities on a person.

For the purposes of the definition of “explanatory statement” in
subsection 4(1) of the Legislative Instruments Act 2003 (documents
                                                                           3


incorporated in legislative instruments) the documents incorporated-by-
reference in the Regulations are:

   (i)     Aboriginal and Torres Strait Islander Study Assistance Scheme
           (ABSTUDY);
   (ii)    Farm Household Support Act 1992;
   (iii)   Social Security Act 1991;
   (iv)    Taxation Administration Act 1953;
   (v)     Veterans’ Entitlements Act 1986.

These documents are available on the website (COMLAW
http://www.comlaw.gov.au/) of the Australian Government Attorney-
General’s Department.

   (vi)    interim income support guidelines;

The program is outlined on the Department of Agriculture, Farms and
Fisheries' website at:

http://www.daff.gov.au/

   (vii) Overall Living Allowance Rate Calculator;

The Calculator is referred to on the Department of Education, Science
and Training's website at:

http://www.dest.gov.au/schools/indigenous/abstudy_2005/abstudy2005/c
alculating_ABSTUDY_rates.htm

   (viii) Sugar Industry Reform Program 2004 Guidelines.

The program is outlined on the Department of Agriculture, Farms and
Fisheries website at:

http://www.affa.gov.au/content/output.cfm?ObjectID=3662DAEF-3235-
4FA8-86F13B5961C60A12&contType=outputs

For the purposes of the definition of “explanatory statement”
(consultation) in subsection 4(1) of the Legislative Instruments Act 2003,
the Rule-Maker decided that consultation in respect of the Regulations
was not appropriate because interested parties had been consulted about
the issues leading to the implementation of the DFISA legislation and the
Regulations in the course of the Clarke Review 2004 and in any event the
                                                                            4


Regulations were required as a matter of urgency so as to enable benefits
to be paid to the relevant beneficiaries as soon as possible.



0409987A-050221NT
                                                                             5



                                                    ATTACHMENT A

Under the Act, adjusted disability pension paid under the Act or the
Military Rehabilitation and Compensation Act 2004 is not taken into
account when assessing the rate of income support payment payable to
veterans, their partners and war widow(er)s.

However, adjusted disability pension is included in the assessment of the
rate of social security payments and certain income support payments
made under other Commonwealth legislation or programs.

For those people who qualify for income support payments other than
those made under social security law which are reduced or not payable
because of adjusted disability pension, a payment called the DFISA-like
payment has been created.

The Living Allowance under the ABSTUDY Program is an example of a
means-tested income support payment that is provided other than under
the Social Security Act 1991 (SSA) and that can be reduced or not
payable if the beneficiary or their partner receives income in the form of
adjusted disability pension.

The calculation of income support payments made outside of the social
security law is generally based on social security law payment
calculations. However, as there can be slight differences in those
calculations, it was not viable to include those payments in the DFISA
legislation. Instead, it was decided to provide the DFISA-like payment
by way of regulations under the Act.
                                                                         6




                                                    ATTACHMENT B

Details of the Veterans’ Entitlements (DFISA-like Payment)
Regulations 2005

Part 1   Preliminary

Regulation 1       provides that the name of the Regulations is the
                   Veterans’ Entitlements (DFISA-like Payment)
                   Regulations 2005.

Regulation 2       specifies 20 September 2004 as the date on which the
                   Regulations will be taken to have commenced.

Regulation 3       sets out the purpose of the Regulations, namely that
                   they enable a DFISA-like payment, an associated
                   payment and an associated non-financial benefit to be
                   paid and provided (as the case requires) to eligible
                   persons on or after 20 September 2004.

Regulation 4       defines the terms used in the Regulations.

                   The only definitions that are not self-explanatory and
                   that require further explanation are “adjusted
                   disability pension” and “Commonwealth scheme”

                   “adjusted disability pension” is defined in section
                   118NA of the Veterans’ Entitlements Act 1986 (the
                   Act) and means:

                   (a) a pension under Part II or IV [of the Act] (other
                      than a pension that is payable under section 30 [of
                      the Act] to a dependant of a deceased veteran); or
                   (b) temporary incapacity allowance under Part VI [of
                      the Act]; or
                   (c) a pension payable because of subsection 4(6) or
                      (8B) of the Veterans' Entitlements (Transitional
                      Provisions and Consequential Amendments) Act
                      1986 (other than a pension payable in respect of a
                      child); or
                   (d) a payment (either as a weekly amount or a lump
                      sum) under section 68, 71, 75 or 80 of the MRCA
                                                                           7


                     [Military Rehabilitation and Compensation Act
                     2004] (permanent impairment); or
                  (e) a payment of a Special Rate Disability Pension
                     under Part 6 of Chapter 4 of the MRCA.

                  “Commonwealth scheme” is defined in subsection
                  118NJ(3) of the Act and means:

                  (a) an Act; or
                  (b) regulations or an instrument made under an Act;
                      or
                  (c) a program administered by the Commonwealth.

Part 2   DFISA-like payment

Regulation 5      sets out the eligibility criteria for a DFISA-like
                  payment to a person on a day on or after 20
                  September 2004 (subregulation 5(1)):

                      adjusted disability pension is payable to the
                       person or their partner on the day; and either

                        (i)    a primary payment (defined in regulation
                               4) is payable to the person on the day but
                               because adjusted disability pension is
                               payable to the person or their partner on
                               that day, the primary payment is
                               reduced, including being reduced to a nil
                               amount; or
                        (ii)   if it weren’t for the adjusted disability
                               pension, a primary payment would be
                               payable to the person on that day.

                  There are some times when DFISA-like payment is
                  not payable to an eligible person on a day on or after
                  20 September 2004 (subregulation 5(2)):

                      the payment would be a nil amount;
                      the Department of Veterans’ Affairs (DVA)
                       requested the person to nominate a bank
                       account (into which DFISA-like payments
                       could be made) within 28 days and the person
                       failed to do so;
                                                        8



    before the day, the potential recipient of the
     payment had notified DVA in writing that he
     or she did not want a payment and the person
     had not revoked this notification.

A potential recipient of a DFISA-like payment may
decide he or she does not want a DFISA-like
payment or wishes to revoke their election not to
receive DFISA-like payments. In this situation the
Regulations provide as follows (subregulation 5(3)):

 the person must notify DVA in writing in
  accordance with section 5T of the Act; and
 the day on which the notification takes effect will
  be ascertained in accordance with section 5T.

The Regulations make provision for a person in the
situation where a (final) instalment of Exceptional
Circumstances Relief Payment or Farm Help Income
Support under the Farm Household Support Act 1992
(FHSA) (defined in subregulation 4(1))(hereinafter
these two payments are referred to as "primary farm
help payment") that is otherwise payable to a person
is deemed to be not payable to the person if the
person dies. Instead the final instalment is payable to
the person’s estate

The difficulty here is that eligibility for DFISA-like
payment is dependent on a primary payment being
payable to a person (ie in this case the primary farm
help payment) but because the FHSA states that the
primary payment that a person is otherwise eligible to
receive is deemed to be not payable to the person
where the person dies then the eligibility rules for the
DFISA-like payment do not, prima facie, apply and
unless special provision was made in respect of the
situation a DFISA-like payment would not be
payable in those circumstances. Accordingly the
Regulations address this situation (subregulation
5(4)):

 by providing that despite the FHSA deeming an
  instalment of primary payment otherwise payable
                                                                          9


                      to be not payable, for the purpose of making a
                      DFISA-like payment the primary payment is
                      taken to have been payable to the person.

                  The result of this would be that one of the eligibility
                  rules for the DFISA-like payment would have been
                  satisfied and the DFISA-like payment may be made to
                  the deceased person’s estate.

Part 3   Associated Benefits

Regulation 6       describes the means for working out the rate of the
                   DFISA-like payment, namely via the Method
                   Statements in Schedule 1 to the Regulations.

Regulation 7       enables DFISA-like payment to be paid in arrears and
                   by instalments and specifies the payday that the
                   instalment is to be paid.

                   It does this by applying section 121 of the Act to
                   DFISA-like payment as if the payment were pension
                   and as if the reference to "DFISA" in subsection
                   121(6A) were a reference to DFISA-like payment.

                   Subsection 121(6A) deals with "rounding" and
                   modifies the application of a number of subsections
                   in section 121 to DFISA (and therefore, by virtue of
                   this Regulation, to DFISA-like payments).

Regulation 8       deals with eligibility for associated payments.
                   Associated payments are payable to a person to
                   whom DFISA-like payments are payable but whose
                   primary payment is not payable because of adjusted
                   disability pension. Associated payments are paid in
                   lieu of secondary payments that would have been
                   payable to the person if the primary payment had
                   been payable.

                   The eligibility criteria for an associated payment for a
                   person on a day on or after 20 September 2004 is:

                       a primary payment (defined in regulation 4) is
                        not payable to the person on the day but only
                                                                      10


                     because adjusted disability pension was
                     payable to the person or the person’s partner
                     on that day and it was regarded as ordinary
                     income for the purpose of the means-test for
                     the primary payment; and
                    a secondary payment is not payable to the
                     person on the day but only because the primary
                     payment is not payable to the person on that
                     day; and
                    DFISA-like payment is payable to the person
                     on that day.

Regulation 9    states that the rate of an associated payment for a
                person eligible for such a payment on or after 20
                September 2004 is the same rate as that for the
                secondary payment that would have been payable to
                the person but for the primary payment not being
                payable to the person because adjusted disability
                pension was payable to the person or the person's
                partner.

Regulation 10   deals with eligibility for associated non-financial
                benefits. These are benefits of a non-financial nature
                (eg health care card) that would have been provided
                to the person if the primary payment was payable to
                the person. For this regulation to apply, the primary
                payment must be not payable because of adjusted
                disability pension and a DFISA-like payment must be
                payable to the person.

                The eligibility criteria for an associated non-financial
                benefit for a person on a day on or after 20
                September 2004 is:

                    a primary payment (defined in regulation 4) is
                     not payable to the person on the day but only
                     because adjusted disability pension was
                     payable to the person or the person’s partner
                     on that day and it was regarded as ordinary
                     income for the purpose of the means-test for
                     the primary payment; and
                    a secondary non-financial benefit is not
                     provided to the person on the day but only
                                                                         11


                         because the primary payment is not payable to
                         the person on that day; and
                        DFISA-like payment is payable to the person
                         on that day.

Regulation 11       states that the associated non-financial benefit for a
                    person eligible for such a benefit on or after 20
                    September 2004 is the secondary non-financial
                    benefit that would have been provided to the person
                    but for the primary payment not being payable to the
                    person because adjusted disability pension was
                    payable to the person or the person's partner.

Part 4   General

Regulation 12      operates where the Repatriation Commission
                   (Commission), under section 122 of the Act (the
                   provision setting out procedures for paying pension),
                   determines (under subsection 122(4)) that DFISA-like
                   payment or an associated payment ("the payments") is
                   to be paid into a beneficiary’s bank account. In this
                   situation Regulation 12 provides as follows:

                    the Commission may direct that the payments be
                     paid at certain intervals into a bank account
                     nominated by the beneficiary.
                    a nominated bank account must be an account
                     maintained by the beneficiary either as a sole
                     account or as a joint account or an account-in-
                     common.
                    where an eligible person fails to nominate a bank
                     account as requested by the Commission, within 28
                     days or such longer period allowed by the
                     Commission (relevant period), then DFISA-like
                     payment ceases to be payable to the person.
                    if an eligible person does nominate a bank account
                     after the expiry of the relevant period then DFISA-
                     like payment is payable again from the date the
                     person nominates the bank account.

Regulation 13      deals with the situation where the Commissioner of
                   Taxation issues a notice to deduct tax from a person’s
                   DFISA-like payment or associated payment. In this
                                                                      12


                situation the Repatriation Commission must, in
                accordance with Subdivision 260-A in Schedule 1 to
                the Taxation Administration Act 1953, direct the
                relevant officials in DVA to make the appropriate
                deductions from instalments of DFISA-like payment,
                or from an amount of associated payment, payable to
                the beneficiary concerned and pay the amount
                deducted to the Commissioner of Taxation.

                Subdivision 260-A in Schedule 1 to the Taxation
                Administration Act 1953 enables the Commissioner of
                Taxation to, among other things, give notice to an
                entity (eg the Repatriation Commission) by whom
                money is due or accruing to the debtor (eg recipient of
                DFISA-like payment or an associated payment) to pay
                to the Commissioner of Taxation the amount specified
                in the notice.

Regulation 14   imposes obligations on those recipients of DFISA-like
                payment who do not receive any amount of a relevant
                primary payment.

                This Regulation is necessary because people who
                receive primary payments are often required to comply
                with obligations eg to provide certain reports.

                Accordingly, where the amount of primary payment
                payable to a person is nil, the DFISA-like payment is
                basically the equivalent of the primary payment the
                person would otherwise have received and it is
                consistent that the beneficiary should comply with the
                same obligations that would have applied if the person
                had received the primary payment.

                If a recipient received some amount of the primary
                payment in addition to a DFISA-like payment then the
                person would automatically be required to comply
                with the relevant obligations in respect of the primary
                payment that were imposed under the income support
                scheme that governed the primary payment.
                Regulation 14 does not apply in these situations.
                                                                   13


             Accordingly Regulation 14 provides that if a DFISA-
             like payment is payable to a person on a day and the
             rate of primary payment payable to the person on that
             day is nil or is not payable to the person on that day,
             then the person must comply with any requirements
             under the Commonwealth scheme that provides for the
             primary payment as if the person were receiving an
             instalment of the primary payment. In addition, failure
             to do so will have the same consequences as if the
             person were receiving the primary payment and failed
             to comply with their obligations.

Schedule 1   contains the Method Statements for working out the
             rate of DFISA-like payment.

             The main features of the Method Statements are as
             follows:

              the methods used in the income-support scheme
               governing the relevant primary payment to work
               out the primary payment are to be applied.

              any income and assets that, under the income-
               support scheme governing the primary payment,
               are disregarded in working out the primary
               payment are likewise to be disregarded in working
               out the primary payment for the purpose of
               ascertaining the rate of DFISA-like payment.

              In Method Statement 1, the working out of any rent
               assistance payable, or that would be payable, to a
               recipient is to take into account adjusted disability
               pension. This is because adjusted disability
               pension is regarded as income when working out
               rent assistance under the Act and for consistency
               the same should apply when working out rent
               assistance for the purpose of ascertaining the rate of
               DFISA-like payment. Method Statement 2 does
               not have this Step as rent assistance is not payable
               as part of the primary payment for which this
               method statement is applied.
                                                                          14




Part 1   Method Statement 1

                 This Part would apply if the primary payment that
                 applied to an eligible person was the ABSTUDY
                 Living Allowance.

Item 1           introduces definitions for the purposes of Part 1.

                 The only definitions that are not self-explanatory and
                 that require further explanation are as follows:

                 "daily provisional payment rate". This definition
                 refers to a person to whom step 10 of the Overall
                 Living Allowance Rate Calculator (also defined)
                 applies, but to whom step 11 of that Calculator does
                 not apply, and a person to whom step 11 of the
                 Calculator does apply.

                 A person to whom step 10 of the Overall Living
                 Allowance Rate Calculator applies and to whom step
                 11 of the Calculator does not apply is a person who is
                 not independent or who is independent but without a
                 partner. A person to whom step 11 of the Calculator
                 does apply is a person who is independent with a
                 partner.

                 "Excluded amount" has the meaning it has in section
                 118NA of the Act, namely:

                 excluded amount means an amount that is not income
                 for the purposes of the Social Security Act (SSA)
                 because of subsection 8(8) of that Act.

                 Examples of amounts that are not income for the
                 purposes of subsection 8(8) SSA are:

                  a payment under the SSA;
                  any return on a person's investment in a
                   superannuation fund until the person reaches
                   pension age or starts to receive a pension or
                   annuity out of that fund;
                  the value of emergency relief or like assistance.
                                                                      15




Item 2   Method Statement

                This Method Statement would be used as follows:

                When the actual rate of a primary payment that was
                paid or that would have been paid to a person has been
                ascertained (ie being a rate that is nil, or a reduced
                rate, because adjusted disability pension was regarded
                as income in working out the primary payment)(Step
                1) then, in order to ascertain the rate of DFISA-like
                payment payable, the actual rate is subtracted from the
                rate of primary payment that would have been payable
                (notional rate) (Step 2) and the net amount is the rate
                of DFISA-like payment payable (Step 3). The
                notional rate is the amount that would have been
                payable if adjusted disability pension had not been
                regarded as income in working out the primary rate.

Part 2   Method Statement 2

                This Part would apply if the primary payment that
                applied to an eligible person was Exceptional
                Circumstances Relief Payment, Farm Help Income
                Support, Interim Income Support or Sugar Industry
                Reform Program 2004 - Income Support Payment.

Item 1          introduces definitions for the purposes of Part 2.

                The only definition that is not self-explanatory and
                that would require further explanation is the definition
                of "daily provisional payment rate" in that it refers to
                sections 24A and 24B of the Farm Household Support
                Act 1992 (FHSA)

                Section 24A FHSA sets out the method for
                determining the rate of Exceptional Circumstances
                Relief Payment and section 24B FHSA sets out the
                method for determining the rate of Farm Help Income
                Support.
                                                              16




Item 2   Method Statement

         This Method Statement would be used as follows:

         When the actual rate of a primary payment that was
         paid or that would have been paid to a person has been
         ascertained (ie being a rate that is nil, or a reduced
         rate, because adjusted disability pension was regarded
         as income in working out the primary payment)(Step
         1) then, in order to ascertain the rate of DFISA-like
         payment payable, the actual rate is subtracted from the
         rate of primary payment that would have been payable
         (notional rate) (Step 2) and the net amount is the rate
         of DFISA-like payment payable (Step 3). The
         notional rate is the amount that would have been
         payable if adjusted disability pension had not been
         regarded as income in working out the primary rate.

				
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