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B16/1993 1992/93 BUDGET REFORMS TO RENT ASSISTANCE : PROCEDURAL CHANGES

Document

DATE OF ISSUE:  22 March 1993

1992/93 BUDGET REFORMS TO RENT ASSISTANCE : PROCEDURAL CHANGES

TABLE OF CONTENTS

page

2              PURPOSE

2-3              BACKGROUND

3              CHANGES FROM 1 APRIL 1993

Thresholds

Maximum amount of assistance

Rate of assistance

Savings provisions

3-4              CLIENT IMPACT

4              EFFECTIVE DATE AND IMPLEMENTATION DATE

4-7              LEGISLATION

Changes to the VEA

Savings Provisions

Loss of saved status

Continuation of savings provisions

Commission discretion to restore saved status

7              RATES

7              ADVICES

7              INDEXATION INCREASE

8              DSS AND DVA TRANSFERS

8              RECORDING OF RENT PAID

8              BRANCH CONTACT OFFICERS

8              CENTRAL OFFICE CONTACT

ATTACHMENTS

9-11A              Examples of impact of income/assets test on frozen RA

12B              Matrix of savings provisions

13-14C              Rates and applicable thresholds

15D              Table 1: Without Children RA rates compared to rent

16Table 2: With 1-2 Children RA rates      "         "    "

17Table 3: With 3+ Children RA rates       "         "    "

18-19E              Wording for Quarterly Advices

20F              Branch Contact Officers

PURPOSE

The purpose of this Departmental Instruction (DI) is to advise you of the procedural changes to, and provide instructions on, the reforms to rent assistance which arose from the 1992-93 Budget.  This DI is additional to the DI on the '1992/93 Budget reforms to Rent Assistance : Systems Aspects'.

BACKGROUND

2.Rent assistance is paid to assist service pensioners in meeting the costs of rental accommodation.

3.Previously rent assistance was paid to eligible pensioners who paid private rent above a $50 per fortnight threshold at a rate of 50 cents per dollar up to a maximum amount of $63.00 (for single or married pensioners combined), with additional amounts payable in respect of children.

4.Since 1989, there have been a number of changes to this payment.  These changes have included increases to the maximum rates, indexation, and adjustment of the rent thresholds.  The aim of these changes has been to target assistance to those most in need.  Despite this, a review of housing affordability among pensioners found that a significant number of pensioners who rent private accommodation continue to pay a high proportion of their income on accommodation.  Single pensioners without children were generally found to be the most disadvantaged group.

5.The 1992-93 Budget reforms are designed to assist those pensioners who are experiencing the greatest housing affordability problems because of the proportion of their income spent on rent, with the greatest assistance directed at single pensioners without children.  The changes are an initial step towards an affordability based approach to rent assistance i.e. assistance based on total pensioner income.  The new thresholds vary according to family circumstances and have been set at around 20% of maximum basic rates of pension (plus additional amounts for children).

THE CHANGES FROM 1 APRIL 1993

6.Thresholds. The single rent threshold will be changed to four new thresholds as follows :

.$60/fortnight (i.e. $1560/year) for single pensioners without children;

.$80/fortnight (i.e. $2080/year) for single pensioners with children;

.$100/fortnight (i.e. $2600/year) for couples without children; and

.$120/fortnight (i.e. $3120/year) for couples with children.

7.These four new rent thresholds will be indexed every 6 months in conjunction with other CPI pension adjustments, commencing September 1993.

8.Maximum amount of assistance. The maximum amount of rent assistance payable to single pensioners without children will be increased by $4.00 over and above any indexation adjustment as a "one off" increase;

9.Rate of assistance. The rate of assistance above the applicable rent threshold will increase from 50 cents per dollar to 75 cents per dollar of rent paid up to the maximum amount payable; and

10.Savings provisions. A savings provision is to be provided for clients who currently receive rent assistance and would otherwise be reduced under the proposed changes.  (Details of the savings provisions are provided later in this DI.)

CLIENT IMPACT

11.As at 7 November 1992, there were 30,019 service pensioners in receipt of rent assistance.

12.It is estimated that approximately 13,000 single pensioners paying private rent of more than $80.00/fortnight will receive increases in rent assistance of up to $17.00/fortnight.  Up to 15,000 service pensioners, mainly married couples will have their assistance frozen at their current rate.

EFFECTIVE DATE AND IMPLEMENTATION DATE

13.The effective date for these reforms is 20 March 1993 which is the commencement date of the legislation and aligns with DSS legislation.  The pay-day for implementation is 1 April 1993.

LEGISLATION

14.The Veterans' Affairs Legislation Amendment Bill (No:2) 1992 incorporated changes to :

.Module C of section 41 - Service Pension rate calculator where there are no dependent children;

.Module D of section 42 - Service Pension rate calculator where there are dependant children;

.Module D of section 43 - Service Pension rate calculator for Blinded Veterans;

.Module C of section 44 - Service Pension rate calculator for widows, widowers and non-illness separated spouses; and

.Section 59 - CPI indexation table.

15.A savings provision is also included under Section 111 of the Bill.

16.The Bill received Royal Assent on 24 December 1992.

17.The savings provision applies to a pensioner who was in receipt of service pension prior to 20 March 1993, where the person's service pension included a rent assistance component, and that rent assistance component would result in a reduction or loss under the new rules.

18.The saved amount will not be protected from fluctuations in the person's ordinary income and assets that affect the person's overall rate of service pension.  This means that a pensioner's overall rate of service pension could be an amount less than the rate of rent assistance at which he/she has been frozen at.  Examples of this are provided at Attachment A.

19.If a saved pensioner loses payment of the rent assistance component from their overall pension assessment due to an increase in income or assets, the savings provision will continue to apply whilst any amount of pension (for example, a child related component of service pension, the Pharmaceutical Allowance or Remote Area Allowance) is still payable.  In other words, saved status is maintained whilst pension payability remains.

20.The savings provision will extend to a pensioner where there is a decision after 20 March 1993 which retrospectively entitles the person to rent assistance prior to 20 March 1993.

21.The savings provisions extend to a pensioner who had saved status under the Social Security Act 1991 and commenced receiving service pension under the Veterans' Entitlements Act 1986 or vice versa.

22.The savings provisions also provides for situations where the person who is covered by the savings provision subsequently becomes a member of a couple.

23.The savings provisions will not apply to a pensioner if he/she:

.ceases to be eligible for payment of service pension,

.ceases to be eligible for rent assistance,

.would receive an equal or greater amount of rent assistance under the assessment rules in force after 20 March 1993; or

.the Commission considers that there is a 'significant' change in the pensioner's circumstances which would affect the amount of rent assistance that is payable.

24.There is no definition of 'significant change' in the legislation.  Instead, administrative rules have been established in conjunction with DSS to define what would be deemed as 'significant'.  These are included in the list below.

25.Loss of saved status.  Once a pensioner is saved, they will lose their saved status where:

.rent paid is less than or equal to $50.00 per fortnight (combined for couples);

.the pensioner commences payment of Government rent;

.there is a reduction in rent of $20.00 (combined for couples) or more per fortnight.  (NB : reductions in rent of less than $20 will not have any affect on their saved amount or saved status);

.the pensioner is imprisoned;

.the pensioner travels overseas for greater than 42 days; or

.the pensioner goes into Respite Care for greater than 42 days.

26.The disability pension rent test continues to apply in the usual manner, however, loss of saved status will occur from 20 March 1993, where:

.a single pensioner is granted or increased to a disability pension of 100% or greater; or

.a pensioner who is a member or a couple is granted or increased to EDA rate or above.

.both members of the couple are veterans and one member of the couple is in receipt of 100% or greater and the other member is then granted or increased to 100% or greater, or

.both members of the couple are veterans and either member of the couple is granted EDA or above.

27.Loss of saved status will also occur where a pensioner changes accommodation from boarder and lodger to any other rent type, or the converse of this situation where a pensioner in any other rental accommodation changes to boarder and lodger.  (NB : A change from boarder and lodger to another type of board and lodging or renter to another rented accommodation does not constitute significant change unless there is a significant variation in the rent amount (i.e. $20 or more)).

28.Continuation of the savings provisions.  With the exception of the conditions listed above, the savings provision will continue to apply whilst:

.the person's rate of frozen rent assistance, is more than the assessed rate under the new rules;  and

.the person pays private rent of $50.00 per fortnight or above.

29.A matrix of savings provisions is at Attachment B.

30.Commission discretion to restore saved status.  Included in the legislation is a Commission discretion to restore saved status when it is lost for a period in excess of a statutory period of 42 days.  The discretion to extend saved status beyond this period should only be exercised where a person is liable to pay rent on their normal accommodation throughout the entire period of absence.  Extensions will be considered by the delegate in the Branch.

31.An instrument of authorisation to exercise Commission discretion under  subsections 111(5) and (6) of the transitional and savings provisions of the Veterans' Affairs Legislation Amendment Act (No.2) 1992, will be formalised in due course.  Branches will receive notification when this is formalised.

RATES

32.A table of rates and applicable thresholds is provided at Attachment C.

33.The increased single rate without children (i.e. $67.20) and the $60 threshold also applies where:

.a pensioner couple (without children only) are separated due to ill health or placed in respite care for a period in excess of 14 days; or

.a separated spouse/widow/er (with or without children).

34.The maximum rent assistance payable for illness separated or Respite Care couples with 1-2 children is $73.80 each.  For 3 or more children, the rate is $84.20 each.  The threshold for these pensioners is $80.00 each.

35.Tables reflecting rent paid and amount of rent assistance payable under both the old and new rules are at Attachment D.

ADVICES

36.The advices, scheduled for publication on 26 March 1993, will be sent to all service pensioners in receipt of rent assistance.  They will receive this advice on 1 April 1993.

37.The paragraphs will be varied, depending on whether a pensioner is saved, increased, or unchanged.  Pensioners will be advised that there have been changes to the assessment process for rent assistance.  They will be provided with a summary of these changes which will be incorporated in the body of the letter.  A copy of the paragraphs used is provided at Attachment E.

INDEXATION INCREASE

38.Maximum rent assistance payable has increased by 20 cents.  Because  this increase is minimal, no reference is drawn to the amount of the increase in the advices.  This increase is not a part of the Budget changes but is part of the normal course of indexation.  Branch offices may receive phone calls from pensioners affected by the 20 cents increase.

DSS AND DVA TRANSFERS

39.DSS are aware of the requirement for changes to the DVA/ Pension Benefit clearance form 'SA131' to enable a saved rate of rent assistance to be recorded.  However, as all existing forms are currently under review at DSS, no changes will be made for some time.  In the interim, DVA officers involved in filling out these forms are to record on the form, in red pen, if the pensioner was in receipt of frozen rent assistance and the rate of assistance.  DSS will follow the same procedure for pensioners transferring across to DVA.

RECORDING OF RENT PAID

40.Previously, the system did not allow recording rent paid below $50.00 per fortnight (combined for couples).  In future, even though rent assistance would not be payable in these circumstances, all rent amounts paid by a pensioner are to be recorded on the system.  This information will be useful in providing a complete profile on a pensioner's circumstances.

BRANCH CONTACT OFFICERS

41.A list of the Branch Contact officers for Rent Assistance is at Attachment  F.

CENTRAL OFFICE CONTACT

42.Enquiries in relation to this DI can be directed to the project officer, Masuda Sheikh on (06) 289 6442.

Peter Hawker

National Program Director

Benefits

March 1993


ATTACHMENT A

EXAMPLES OF IMPACT OF INCOME AND ASSETS TEST ON FROZEN RA

EXAMPLE ONE

Single veteran : with one child under 13 years

: earns $800 per fortnight

: pays $150 per fortnight rent

Step 1

Maximum basic rate              $306.10

Rent assistance (frozen) ($150.00 - $50.00 threshold) /2               $  50.00

Dependant child add on              $  85.90

Guardians allowance              $  28.70

Pharmaceutical allowance              $    5.20

This is the maximum the veteran can receive              $475.90

Step 2

Total income              $800.00

Less income free area ($86.00 + $24.00) =               $110.00

              $ 690.00

(50 cents in $) therefore $690.00 divided by 2              $ 345.00

This is the excess income

Step 3

(Deduct excess income) therefore $475.90 - $345.00

Benefit payable               $130.90

As the order of reduction is:

1. service pension (SP)

2. rent assistance (RA)

3. guardians allowance (GA)

4. dependant child add on (DCAO)

5. pharmaceutical allowance (PA)

This would mean that the maximum amounts payable would be reduced to the following

maximumpayable due to income

eligible forin excess

SP =               $306.10              nil

RA = (frozen)              $  50.00              $11.10              (frozen RA is reduced)

GA =               $  28.70              $28.70

DCAO =              $  85.90              $85.90

PA =              $    5.20              $  5.20

TOTAL              $475.90              $130.90

EXAMPLE TWO

Pensioner couple: with one child under 13 years

: earns $1300 per fortnight combined

: pays $250 per fortnight rent

NOTE 1 : Fortnightly rates are reflected

NOTE 2 : The same calculation (excluding the dependant child add on) applies to the spouse.

Step 1

Maximum basic rate              $255.30

each

Rent assistance (frozen) ($63.00 + $10.60 per child)/2              $  36.80

Dependant child add on              $  85.90

Pharmaceutical allowance              $    2.60

Maximum the veteran can receive              $380.60

Step 2

Total income ($1300) divided by 2              $650.00

Less income free area($76.00 + $24.00) =               $100.00

              $ 550.00

(50 cents in $) therefore $550.00 divided by 2              $ 275.00

This is the excess income.

Step 3

(Deduct excess income) therefore $380.60 - $275.00

Benefit payable               $105.60

each

As the order of reduction is:

1. service pension (SP)

2. rent assistance (RA)

3. guardians allowance (GA)

4. dependant child add on (DCAO)

5. pharmaceutical allowance (PA)

This would mean that the veteran is entitled to

maximumpayable due to

eligible forincome in excess

SP =               $255.30              nil

RA = (frozen)              $  36.80              $17.10              (frozen RA is reduced)

DCAO =               $  85.90              $85.90

PA =              $    2.60              $  2.60

TOTAL              $380.60              $105.60

Thus the frozen rate of RA can be reduced by the application of the income and assets tests.

ATTACHMENT B

MATRIX OF SAVINGS PROVISIONS

Savings provisions will only apply where the amount of RA payable pre 20 March 1993 is greater than the amount of RA payable post 20 March 1993.

If the amount of RA payable post 20 March 1993 is greater or equal to the amount of RA payable pre 20 March 1993, than the savings provisions do not apply.

CIRCUMSTANCES WHERE SAVED STATUS IS LOST

1. Rent paid <n> $50/fn

2. DP >100% (single pensioner)

3. DP > EDA rate (member of a couple)

4. Overseas > 42 days

5. Respite care > 42 days

6. Commences payment of Government rent

7. Pensioner imprisoned

8. Rent paid reduces by $20/fn

NOTE 1. Numbers 1, 2, 3 and 8 are Commission discretions for loss of saved status.

NOTE 2. Numbers 4, 5, 6 and 7 are Legislative requirements for loss of saved status.

ATTACHMENT C

RATES AND APPLICABLE THRESHOLDS

Pensioner TypeThresholdsMaximum RA rates/fn

COLUMN 1COLUMN 2

1. NOT A MEMBER OF $60.003/4 X$67.20

A COUPLE(ANNUAL

RENT MINUS

$1560)

2. MEMBER OF A $60.003/4 X $67.20

COUPLE (ANNUAL

RENT MINUS

WHERE THE PARTNER$1560)

DOES NOT RECEIVE A

PENSION WHICH

INCLUDES A

COMPONENT FOR RENT

3. MEMBER OF A $100.003/8 X $63.20

COUPLE      2(ANNUAL        2

RENT MINUS

WHERE THE PARTNER $2600)

RECEIVES A PENSION

WHICH INCLUDES A

COMPONENT FOR

RENT AND HAS NO

DEPENDENT CHILD/REN

4. MEMBER OF A $120.003/8 X $73.80

COUPLE    2(ANNUAL        2

RENT MINUS

WHERE THE PARTNER $3120)

RECEIVES A PENSION

WHICH INCLUDES A

COMPONENT FOR

RENT AND HAS 1-2

CHILD/REN

5. MEMBER OF A $120.003/8 X$84.20

COUPLE     2(ANNUAL      2

RENT MINUS

WHERE THE PARTNER $3120)

RECEIVES A PENSION

WHICH INCLUDES A

COMPONENT FOR

RENT AND HAS 3 OR

MORE CHILDREN

NOTE. The rate payable is the lesser of the rates in column 1 or column 2 unless Disability pension is involved.

ATTACHMENT D

RA RATES COMPARED TO RENT PAID

TABLE 1WITHOUT CHILDREN RA RATES

RATE OF RENT PRE 20/03/93SINGLE PARTNERED

PAIDPOST 20/03/93POST 20/03/93

              $50.00               $0.00               $0.00               $0.00

              $50.09               $0.00               $0.00               $0.00

              $50.10               $0.10(singles only)              $0.00               $0.00

              $50.20               $0.10 (singles)              $0.00               $0.00

$0.20 (partnered)

              $70.00               $10.00               $7.50               $0.00

              $80.00               $15.00               $15.00               $0.00

              $90.00               $20.00               $22.50               $0.00

              $110.00               $30.00               $37.50               $7.50

              $130.00               $40.00               $52.50               $22.50

              $140.00               $45.00               $60.00               $30.00

              $150.00               $50.00               $67.20               $37.50

              $170.00               $60.00               $67.20               $52.50

              $176.00               $63.00               $67.20               $57.00

              $184.00               $63.00               $67.20               $63.00

              $197.20               $63.00               $67.20               $63.20

              $218.00               $63.00               $67.20               $63.20

              $218.14               $63.00               $67.20               $63.20

              $232.00               $63.00               $67.20               $63.20

THRESHOLDS              $50.00               $60.00               $100.00

NB 1. fortnightly rent assistance rates are reflected

NB 2. combined rates for partnered pensioners are reflected

NB 3. figures may not be exact due to rounding

NB 4. indexation increase has been included

FORMULA

CURRENT RULESRA = (RENT - THRESHOLD)/2 up to the maximum RA payable

NEW RULESRA = (RENT - THRESHOLD) X 3/4 up to the maximum RA payable

TABLE 2WITH 1-2 CHILDREN RA RATES

RATE OF RENT PRE 20/03/93SINGLEPARTNERED

PAIDPOST 20/03/93POST 20/03/93

              $50.00               $0.00               $0.00               $0.00

              $50.09               $0.00               $0.00               $0.00

              $50.10               $0.10(singles only)              $0.00               $0.00

              $50.20               $0.10 (singles)               $0.00               $0.00

$0.20 (partnered)

              $70.00               $10.00               $0.00               $0.00

              $80.00               $15.00               $0.00               $0.00

              $90.00               $20.00               $7.50               $0.00

              $110.00               $30.00               $22.50               $0.00

              $130.00               $40.00               $37.50               $7.50

              $140.00               $45.00               $45.00               $15.00

              $150.00               $50.00               $52.50               $22.50

              $170.00               $60.00               $67.50               $37.50

              $176.00               $63.00               $72.00               $42.00

              $184.00               $67.00               $73.80               $48.00

              $197.20               $73.60               $73.80               $57.90

              $218.00               $73.60               $73.80               $73.50

              $218.14               $73.60               $73.80               $73.60

              $232.00               $73.60               $73.80               $73.80

THRESHOLDS              $50.00               $80.00               $120.00

NB 1. fortnightly rent assistance rates are reflected

NB 2. combined rates for partnered pensioners are reflected

NB 3. figures may not be exact due to rounding

NB 4. indexation increase has been included

FORMULA

CURRENT RULESRA = (RENT - THRESHOLD)/2 up to the maximum RA Payable

NEW RULESRA = (RENT - THRESHOLD) X 3/4 up to the maximum RA payable

TABLE 3WITH 3 OR MORE CHILDREN RA RATES

RATE OF RENT PRE 20/03/93SINGLE PARTNERED

PAIDPOST 20/03/93POST 20/03/93

              $50.00               $0.00               $0.00               $0.00

              $50.09               $0.00               $0.00               $0.00

              $50.10               $0.10(singles only)              $0.00               $0.00

              $50.20               $0.10 (singles)               $0.00               $0.00

                            $0.20 (partnered)

              $70.00               $10.00               $0.00               $0.00

              $80.00               $15.00               $0.00               $0.00

              $90.00               $20.00               $7.50               $0.00

              $110.00               $30.00               $22.50               $0.00

              $130.00               $40.00               $37.50               $7.50

              $140.00               $45.00               $45.00               $15.00

              $150.00               $50.00               $52.50               $22.50

              $170.00               $60.00               $67.50               $37.50

              $176.00               $63.00               $72.00               $42.00

              $184.00               $67.00               $78.00               $48.00

              $197.20               $73.60               $84.20               $57.90

              $218.00               $84.00               $84.20               $73.50

              $218.14               $84.00               $84.20               $73.60

              $232.00               $84.00               $84.20               $84.00

              $232.30               $84.00               $84.20               $84.20

THRESHOLDS              $50.00               $80.00               $120.00

NB 1. fortnightly rent assistance rates are reflected

NB 2. combined rates for partnered pensioners are reflected

NB 3. figures may not be exact due to rounding

NB 4. indexation increase has been included

FORMULA

CURRENT RULESRA = (RENT - THRESHOLD)/2 up to the maximum RA payable

NEW RULESRA = (RENT - THRESHOLD) X 3/4 up to the maximum RA payable

ATTACHMENT E

WORDING FOR QUARTERLY ADVICES

Rules and wording - Rent Assistance

All clients who receive Rent Assistance will receive an advice informing of the Budget changes.

The Advices program will identify all RA recipients, and distinguish between those whose Rent Assistance has been :

(a) saved at the current rate;

(b) increased therefore not saved; and

(c) unchanged therefore not saved.

Paragraph contents

The advices will contain three paragraphs for rent assistance recipients.

Paragraph 1 is common to all cases and will read as follows:

Rent Assistance

In the August 1992 Budget, changes were announced to rent assistance eligibility.  The changes take effect from 1 April 1993 and are explained separately in this letter.

Paragraph 2 will vary depending on the pensioner's circumstances.

The 3 variations of Paragraph 2 are provided below.

(a) Saved at the current rate, paragraph 2 will be as follows:

Under these changes, your rent assistance would have been reduced, however, it was decided that your rent assistance should be maintained at the current rate.  You will continue to receive your current rate of rent assistance until your rental circumstances change.

(b) Increased therefore not saved, paragraph 2 will be as follows:

As a result of these changes, your rent assistance has been increased.

(c) Unchanged therefore not saved, paragraph 2 will be as follows:

However, the changes have not affected the actual amount of rent assistance you currently receive.

Paragraph 3 is common to all cases.

Paragraph 3 will read as follows:

CHANGES TO RENT ASSISTANCE

Rent Threshold    The rent threshold is the minimum amount of rent you must pay before you can receive any rent assistance.  The previous threshold of $50 for all pensioners has been replaced with four new thresholds.

$60for a single pensioner without children

$80for a single pensioner with dependent children

$100for a veteran and a partner without dependent children

$120for a veteran and a partner with dependent children

These thresholds will be indexed in line with the consumer price index (CPI) every six months commencing September 1993.

Rate Of Assistance   Previously rent assistance was paid at a rate of 50 cents in the dollar for each dollar of rent paid above the rent threshold, up to the maximum rent assistance payable.  Under the new rules, you will be paid rent assistance at a rate of 75 cents in the dollar for each dollar of rent you pay above the rent threshold, up to the maximum rent assistance payable.

Maximum Rent Assistance    The maximum rent assistance payable to single pensioners without children has increased by an additional $4.00 over and above the indexation increase.

ATTACHMENT F

BRANCH CONTACT OFFICERS FOR RENT ASSISTANCE

NEW SOUTH WALESADELE MILLER              (02) 213 7239

VICTORIALILIAN NANUT              (03) 284 6230

WESTERN AUSTRALIATONY PATRONI              (09) 425 8245

QUEENSLANDCLARE McCORRY              (07) 223 8835

SOUTH AUSTRALIAPETER FEINLER              (08) 213 2433

TASMANIADOUG McLEAN               (002) 216 684