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Digest No. 1976

Social Security (Long-term Residential Care – Budget Measures) Amendment Bill 2012

Date of Introduction: 24 May 2012
Portfolio: Social Development
Select Committee: Passed through all stages 25 May 2012
Published: 30 May 2012by John McSoriley BA LL.B, BarristerLegislative AnalystP: (04) 817-9626 (Ext. 9626) Caution: This Digest was prepared to assist consideration of the Bill by members of Parliament. It has no official status.Although every effort has been made to ensure accuracy, it should not be taken as a complete or authoritative guide to the Bill. Other sources should be consulted to determine the subsequent official status of the Bill.

Purpose

The aim of this Bill is to amend the Social Security Act 1964 to change the amount of the annual increase in the applicable asset thresholds used in determining the amount residents in aged residential care have to contribute to the cost of their own care. Current increases of $10,000 each year in the thresholds are replaced with Consumer Price Index (CPI) indexation of the thresholds [1]   .

Background

CPI adjustment

The Bill sets the thresholds for 1 July 2012 to 30 June 2013 to $213,297 and $116,806. (Those amounts are the 2011–12 year thresholds adjusted to reflect the movement in the CPI.) It also requires those amounts to be CPI-adjusted by Order in Council for each later year beginning on 1 July. This Bill also ensures that the thresholds will continue to operate, and to be CPI-adjusted for each year beginning on 1 July, after the close of 30 June 2026 [2]   .

Regulatory impact statement

A regulatory impact statement may be found at:

Main Provisions

Indexation of asset thresholds

The Bill amends the regulations-making powers relating to applicable asset thresholds for a specified purpose. That purpose is to provide for indexation or, in the words in the Bill, “to ensure that the long-term residential care applicable asset thresholds for the year 1 July 2011 to 30 June 2012 are on 1 July 2013, and on every following 1 July, subject to a required annual Consumer Price Index (or CPI) adjustment. The Bill also provides “by way of explanation” that “the applicable asset threshold is the value of assets applied to determine whether a resident assessed as requiring care must use his or her assets to pay the cost of contracted care services provided to the person (Part 1 Clause 4 and Clause 5 (amending Section 155 of the Act relating to the making of regulations)).

Applicable asset thresholds

The Bill amends the Act for the purpose of ensuring “that the long-term residential care applicable asset thresholds for the year 1 July 2011 to 30 June 2012 also apply to all later years beginning on 1 July; but are, for the year 1 July 2012 to 30 June 2013, Consumers Price Index (or CPI) adjusted.

At present the applicable asset thresholds, which differ depending on the resident's circumstances, are to increase by $10,000 for every year beginning on 1 July in 2012 to 2025. The Act as amended by this Bill, applies in respect of residents assessed as requiring care before, on, or after 1 July 2012 and the limit on 2025 ceases to apply (Part 2, Clauses 6 and 7 (amending Schedule 27 to the Act)).

Copyright: © NZ Parliamentary Library, 2012
This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work to the Parliamentary Library and abide by the other licence terms. To view a copy of this licence, visit: http://creativecommons.org/licenses/by/3.0/nz/.

  1. Social Security (Long-term Residential Care – Budget Measures) Amendment Bill, 2012 No 21-1, Explanatory note, General policy statement, p. 1.   [back]
  2. Ibid.   [back]