22/1993 Release of New Subsidy GOs - Legislation & Policy

Central Office Instruction

amending General Orders (1993 edition)

Instruction No. 22

Date of Effect: 25 October 1993

RELEASE OF NEW SUBSIDY GENERAL ORDERS

LEGISLATION AND POLICY VOLUME

Purpose

The purpose of this instruction is the formal issue of four sections of the new Subsidy General Orders for use by all staff. The four sections are part of the Legislation and Policy volume and cover the subjects of:-

PART 1 ELIGIBILITY

PART 2 ENTITLEMENT

PART 3 ADMINISTRATIVE FRAMEWORK AND DECISION MAKING

PART 4 SUBSIDY ADMINISTRATION

Background

The current General Orders were issued in August 1989 following the restructuring of the Scheme from a lending to a subsidy payment operation in conjunction with Westpac. They are an adaptation of those which had been in use during the time of the DSH Corporation's lending operations. Once the Subsidy scheme had been bedded down it was recognised that there was a need to review the document completely.

The rewrite generally involved taking the existing 1989 General Orders and incorporating the legislative and policy changes which have occurred since. The format has also been completely restructured in an attempt to make the information in the document more easily accessed and understood. Furthermore quotations from the relevant sections of the legislation have been included at the commencement of each chapter for ease of reference for users.

The new 'Legislation Interpretation and Policy' GO's are set out under the following major headings:-

ELIGIBILITY

ENTITLEMENT

ADMINISTRATIVE FRAMEWORK AND DECISION MAKING

SUBSIDY ADMINISTRATION

INSURANCE

Within each chapter the following general format is used:-

LEGISLATION

POLICY

GENERAL PRINCIPLES

INCLUSIONS

EXCLUSIONS

OBSERVATIONS [if applicable]

A separate volume on 'Practice and Procedural Matters' will complement the above when completed.

A total of twenty one Central Office Instructions have been issued since the Subsidy Scheme commenced on 19 December 1988. Their contents have been checked and incorporated into the new General Orders where appropriate.

A comparison of the existing to the new draft GO's has been completed in an effort to ensure that no subject matter has been inadvertently missed in the preparation of the new document. The reasons for leaving existing paragraphs out of the new draft are either that legislative and policy changes over recent years have resulted in them being superseded, or they are no longer required due to the revised format, eg an introductory paragraph from the old document may no longer be necessary in the new because of the revised order or format.

Changes in Policy or Practice

A number of new GO's have been written to clarify matters of concern and where appropriate to incorporate the effect of legal opinions obtained in recent times. An analysis of such changes which have resulted in a difference of policy or practice is as follows:-

Eligibility GO 12.2.3.1

The change in this policy is an explanation that a 'deemed' (ie de facto) widow/widower may remarry without affecting her/his eligibility as a widow/widower and results from a legal opinion obtained on the effects of remarriage on the eligibility of a widow/widower. The effect of this change is that it places 'deemed' widows/widowers in an advantageous position over legal widows/widowers. This anomaly has been recognised for some time, but in view of the almost negligible number of persons affected, the legislation does not warrant being amended in isolation.

Entitlement GO 10.6

Legislative changes effective from 8/1/91 stopped the transfer of loan benefits to ineligible persons. Where a person and spouse are both eligible by virtue of their military service, the legislation allows the transfer of one person's loan benefit to the other following marital separation allowing the potential for three loans to run on two properties. This is not intended and the new GO instructs delegates on how to limit such loans to each individual's loan benefit.

Administrative Framework & Decision Making GO 10.3.1 - Bankruptcy

It is the general policy not to proceed with any action or proposal which would result in the client losing his right, title or interest in the property and to refuse consent to a creditor to levy execution against the property while the applicant is complying with the requirements of the Act. Departures from the policy will normally be made only in exceptional circumstances.

In a recent case before the AAT, a decision of a delegate of the Secretary refusing to give approval for the DSH property to be taken or sold in satisfaction of a judgement debt was set aside. In handing down the judgement the Deputy President of the AAT commented that there is no statement in the General Orders of what are the normal circumstances or what may constitute exceptional circumstances.

Although it might be seen that the drafting of new GO's is an opportune time to change the policy on Bankruptcy to reflect the outcome of the recent AAT decision, any such change would require Ministerial endorsement and extensive consultation with the ex-service community beforehand. Due to the implications of such a course of action it has been decided not to pursue this option in isolation from the broader strategic matters currently before the Minister.

The new GO's therefore do not change the longstanding policy on Bankruptcy but rather attempt to draw the attention of delegates to the implications of the AAT's comments. The AAT's view was that in exercising discretion under Section 45A DSH should distinguish between those debts which have been incurred in the normal course of daily living and the maintenance of the ex-serviceman and his family from those which have been incurred in the course of dealing with other members of the community for the purpose of engaging in commercial activities.

We are unable to define exceptional circumstances in more detail in the absence of the consultative process outlined above.

Reference has also been made to the portability option available to clients affected by an adverse Section 45A decision.

Entitlement Chapters 11 and 12

The range of benefits available to widows/widowers is to be set out in some detail in a table format in Chapter 12 with an introduction in Chapter 11. The table is currently incomplete and will be the subject of a later COI when released.

Subsidy Administration

The section on Subsidy Administration is completely new and provides information on the legislation and the Agreement with the Bank which govern the way we verify, pay and cancel subsidies.

Other new GOs and changes only explain in more detail aspects of the existing policy and operation of the scheme which we felt could be better expressed.

The former Appendix B Schedule 3 list of ships allotted for duty in Vietnam which was deleted by COI 118 effective from 25 May 1986 has been re-inserted as Eligibility GO 5.3.4 to assist delegates in their decisions under the 'Best Evidence' policy. A copy of the Defence Minister's deeming instrument has also been inserted as Eligibility GO 5.3.5.

Policy Instruction

Copies of the new 'Legislation Interpretation and Policy' General Orders have been forwarded under separate cover. They are to replace the 1989 GOs with the exception of the chapter on Insurance which is still to be finalised. Delegates are to be guided in their decisions by the contents of the new volume and are to disregard those superseded.

FELICITY M. BARR

GENERAL MANAGER

18 October 1993