Justine Elliot (Richmond, Australian Labor Party, Assistant Minister for Social Services) Share this | Hansard source

I'm pleased to be summing up on behalf of the Minister for Social Services. The Social Services and Other Legislation Amendment (Military Invalidity Payments Means Testing) Bill 2024 amends the Social Security Act 1991 and the Veterans' Entitlements Act 1986 to establish a clear legal basis for means testing the income from military invalidity payments affected by the Full Federal Court's 2020 Douglas decision when recipients of those payments also seek support through our income support system.

As the Minister for Social Services outlined in her second reading speech, as a result of the Douglas decision, we can no longer treat invalidity benefit payments from the Defence Force Retirements and Death Benefits Scheme and the Military Superannuation Benefits Scheme as asset-test-exempt defined benefit income streams in the social security means test. When we apply the framework used to assess income types in the Social Security Act and the Veterans' Entitlements Act, it is apparent that there's actually no explicit alternative means-testing treatment for these payments that we can use instead.

The only alternative identified in existing legislation is clearly not intended for statutory superannuation benefits of this type, and analysis shows this alternative has significant legal risk and uncertainty, is unclear and would create inequities in the system, including amongst veterans themselves. That's why we need to establish a clear legal basis for means testing these payments in the social security system.

One option would have been for the government to make amendments to classify these invalidity benefit payments as lump sums for the purposes of income support legislation. This would be similar to the way the payments were classified in tax law following the Douglas decision. But the Social Security Act and Veterans' Entitlements Act are not bound by the way different types of payments are classified in the tax system. In fact, if the lump-sum treatment were applied to these payments in the social security means test, these veterans would actually be worse off because it would have the effect of reducing recipients' rates of support, leaving them with less money in their pockets.

That's why, with this bill, the Minister for Social Services is introducing a new classification of military invalidity pension income stream in the Social Security Act and Veterans' Entitlements Act, to cover the military invalidity payments that are impacted and affected by the Douglas decision. The assessment of the military invalidity pension income stream within the means test is designed to produce the same result as the historical assessments of the affected invalidity payments.

In addition, the bill provides for military invalidity pension income streams to be considered asset-test-exempt income streams under the acts, ensuring the payments remain exempt from the assets test for income support. In almost every case, the bill results in no change to the rate of income support veterans or their partners are currently receiving. Importantly, it would also mean veterans and their partners will continue to receive income support at a rate that is consistent with entitlements for other income support recipients under existing arrangements, including other DFRDB and MSBS veterans who receive retirement defined benefit income streams.

In addition, the bill validates past assessments of the affected invalidity payments under the previous treatment, which may be invalid in light of the Douglas decision. It also gives the secretary of the Department of Social Services and the Repatriation Commission the power to create instruments under relevant acts to set out conditions under which other income stream payments can be classified as military invalidity pension income streams if this is required down the track.

On behalf of the Minister for Social Services, I want to thank the member for Deakin and the opposition for indicating the bipartisan approach and support that has been taken by the coalition, and also the member for Deakin for engaging so positively and constructively with the minister's office and the minister herself on this really important legislation. With this bill, we are establishing a clear legal basis where currently there isn't one for means testing the income from those payments affected by the Douglas decision when recipients of these payments also seek support through our income support system.

It's so important to give our veterans certainty. For those who have served our nation, this change maintains equality in a way different income support recipients are means tested and gives that certainty to it. Again, I acknowledge the bipartisan support from across the parliament on this very important change.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.

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