Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2013-2014-2015
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SERVICES LEGISLATION AMENDMENT
(MORE GENEROUS MEANS TESTING FOR YOUTH PAYMENTS) BILL 2015
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Hon Scott Morrison MP)
SOCIAL SERVICES LEGISLATION AMENDMENT
(MORE GENEROUS MEANS TESTING FOR YOUTH PAYMENTS) BILL 2015
OUTLINE
This Bill introduces a 2015 Budget measure to provide more generous and
consistent support for families with dependent young people who qualify for certain
youth income support payments. This measure has the following elements:
from 1 January 2016, remove the family assets test and the family actual
means test from the youth allowance parental means test arrangements;
from 1 January 2016, align parental income test exemptions for youth
allowance with existing arrangements for family tax benefit Part A;
from 1 January 2016, remove maintenance income from the youth allowance
parental income test assessment -
o from 1 January 2017, apply a separate maintenance income test for
the treatment of child support like that currently applying to family tax
benefit Part A;
from 1 July 2016, where a family has a dependent child who receives an
individual youth payment that is parentally income-tested and younger siblings
who qualify for family tax benefit, the family pool for the youth parental income
test will include all FTB children.
Financial impact statement
The financial impact of the new means testing arrangements for youth payments is a
cost of $262.7 million over the forward estimates.
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
The statement of compatibility with human rights appears at the end of this
explanatory memorandum.
SOCIAL SERVICES LEGISLATION AMENDMENT
(MORE GENEROUS MEANS TESTING FOR YOUTH PAYMENTS) BILL 2015
NOTES ON CLAUSES
Abbreviations used in this explanatory memorandum
Social Security Act means the Social Security Act 1991
Social Security Administration Act means the Social Security
(Administration) Act 1999
Clause 1 sets out how the new Act is to be cited - that is, as the Social Services
Legislation Amendment (More Generous Means Testing for Youth Payments)
Act 2015.
Clause 2 provides a table setting out the commencement dates of the various
provisions in the new Act.
Clause 3 provides that legislation specified in a Schedule is amended or repealed as
set out in that Schedule.
1
Schedule 1 - Amendments
Summary
This Schedule provides more generous and consistent support for families with
dependent young people who qualify for certain youth income support payments.
This Schedule amends the social security law to:
from 1 January 2016, remove the family assets test and the family actual
means test from the youth allowance parental means test arrangements;
from 1 January 2016, align parental income test exemptions for youth
allowance with existing arrangements for family tax benefit Part A;
from 1 January 2016, remove maintenance income from the youth allowance
parental income test assessment -
o from 1 January 2017, apply a separate maintenance income test for
the treatment of child support like that currently applying to family tax
benefit Part A;
from 1 July 2016, where a family has a dependent child who receives an
individual youth payment that is parentally income-tested and younger siblings
who qualify for family tax benefit, the family pool for the youth parental income
test will include all FTB children.
Background
Part 1 - Parental means testing for youth allowance
The following measures aim to align more closely the parental means testing
arrangements for youth allowance with the arrangements for family tax benefit
Part A.
Remove family assets test
Part 2.11 of the Social Security Act provides for youth allowance.
The payment of youth allowance is subject to an assets test under Part 2.11,
Division 2, Subdivision AB. Youth allowance is not payable to a person if the assets
test applies to the person and the value of the person's assets is more than the
person's assets value limit (section 547A).
From 1 January 2016, the assets test under Part 2.11, Division 2, Subdivision AB will
not apply to non-independent young people.
Remove parental income test exemptions
Subject to Division 5 of Part 2.11, the rate of a person's youth allowance is to be
worked out in accordance with the Youth Allowance Rate Calculator
(Rate Calculator) in section 1067G (section 556).
2
Schedule 1 - Amendments
Step 8 of the youth allowance calculation process involves working out the reduction
for parental income using Module F of the Rate Calculator if the parental income test
applies to the person (point 1067G-A1).
From 1 January 2016, there will be no parental income test exemption for young
people with a parent:
receiving a New Enterprise Incentive Scheme Commonwealth allowance; or
who qualifies for a low income health care card.
Remove from parental income test maintenance paid to the parent
Step 3 of the parental income test provided for in Module F of the Rate Calculator
involves working out the person's combined parental income (point 1067G-F1).
A parent's combined parental income for a tax year is increased by an amount equal
to any maintenance paid during the year to the parent (point 1067G-F21).
From 1 January 2016, a parent's combined parental income will not be increased by
any maintenance paid to the parent.
The parent's combined parental income will continue to be reduced by any
maintenance paid by the parent (point 1067G-F20).
Remove family actual means test
Step 10 of the youth allowance calculation process provides for a person's reduction
for actual means to be worked out using Module G of the Rate Calculator if the
person is not independent and the family actual means test provided for in that
Module applies to the person (point 1067G-A1). The person's reduction for actual
means is then applied in accordance with step 13 of the calculation process
(point 1067G-A1).
From 1 January 2016, there will be no family actual means test in the youth
allowance calculation process.
The amendments made by Part 1 of this Schedule commence on 1 January 2016.
Part 2 - Adding FTB children to the parental pool for youth allowance
A person's rate of youth allowance may be calculated based upon a person's
parental income reduction. The parental income test (under Module F of the Rate
Calculator in section 1067G of the Social Security Act) first identifies a person's
parental income for each of the person's 'parents' for the relevant income year.
The 'parents' of a youth allowance person are the people with whom the youth
allowance person usually lives, which may include a biological parent and their new
partner.
3
Schedule 1 - Amendments
The test then identifies the youth allowance person's parental income free area.
The reduction for parental income exceeding this income free area varies depending
whether the youth allowance person has parental income in common with another
person. This test identifies other people the youth allowance person's parental
income must also support, and shares the parental income as income in common
between the dependants supported by the family pool for the parental income test.
For example, if the youth allowance person's parents also support another youth
allowance person with the same maximum rate of payment as the claimant, then half
the income excess in the pool affects the youth allowance claimant's payment.
Similarly, if the youth allowance claimant's parents support a child receiving payment
under the ABSTUDY scheme or the Assistance for Isolated Children Scheme, such
child is added into the pool and the income excess is further proportionally reduced.
Such dependants are valued at the ABSTUDY or Assistance for Isolated Children
Scheme rate.
Any FTB child of the parents aged 16 or more who is also a senior secondary school
child (as defined in the Family Assistance Act) is also factored into the pool, currently
at youth allowance rates. This measure identifies any children in the family who are
FTB or regular care children of either parent, and adds the family grouping into the
family pool at the maximum rate of FTB Part A which would be payable to either
parent for such children.
The parental income excess which applies to reduce the youth allowance claimant's
potential rate of youth allowance is then proportionally reduced, in recognition of the
reality that parental income must support a larger number of children. This may
result in a higher rate of youth allowance for the claimant.
The amendments made by Part 2 of this Schedule take effect from 1 July 2016.
Part 3 - Maintenance income test for youth allowance recipients
Subject to Division 5 of Part 2.11 of the Social Security Act, the rate of a person's
youth allowance is worked out in accordance with the Youth Allowance Rate
Calculator in section 1067G (section 556).
Step 8 of the youth allowance rate calculation process involves working out the
reduction for parental income (point 1067G-A1). Currently, the reduction for
parental income is worked out in accordance with the parental income test in
Module F of the rate calculator.
This measure introduces a maintenance income test that may apply to factor into the
reduction for parental income, at step 8 of the youth allowance rate calculation
process, maintenance received by the person's parent or the person.
The youth allowance maintenance income test is modelled on the maintenance
income test that applies in the calculation of the rate of family tax benefit Part A
under the Family Assistance Act.
4
Schedule 1 - Amendments
In this way, this measure aims to align more closely the parental means testing
arrangements for youth allowance with those for family tax benefit Part A.
The amendments made by Part 3 of Schedule 2 commence on 1 January 2017.
Explanation of the changes
Part 1 - Parental means testing for youth payments
Amendments to the Social Security Act
Remove family assets test
Items 2, 3, 5, 6 and 7 amend sections 547B, 547C, 547D and repeal section 547G
in order to exclude non-independent people from the application of the assets test
under Part 2.11, Division 2, Subdivision AB. In particular:
Item 2 effectively repeals paragraph 547B(2)(b). Subsection 547B(2)
provides as follows:
A person is excluded from the application of the youth allowance assets
test if:
a) the person is not independent; but
b) in working out the rate of youth allowance payable to the person,
the parental income test is not applied because of point 1067G-F3
(other than paragraph (d)).
Item 3 repeals paragraph 547C(a), which provides that a person's assets
value limit is $407,250 if the person is not independent.
Item 5 omits a redundant reference to paragraph 547C(a).
Item 6 amends section 547D by:
o deleting paragraph 547D(c). Section 547D relevantly provides that the
value of a person's assets is the sum of the following values:
a) the value of the person's assets (disregarding
paragraphs 547D(b) and (c) and Part 3.18);
b) ... .
c) if the person is not independent - the value of the assets of
each person who is a family member of the person
(disregarding Part 3.18).
o omitting redundant references to paragraph 547D(c), section 547G and
family members.
o making consequential amendments to paragraph 547D(b).
Item 7 repeals section 547G, which is made redundant by item 6.
Section 547G only applies if paragraph 547D(c) applies.
5
Schedule 1 - Amendments
Item 4 removes references in section 547C to a person being independent. Such
references are unnecessary as a result of the amendments made by items 2, 3, 5, 6
and 7, which have the consequence that section 547C applies only to independent
people.
Items 17 and 18 repeal table item 33A in section 1190 and table item 24 in
section 1191(1), which are redundant as a consequence of the amendments made
by items 2, 3, 5, 6 and 7.
Item 19 omits the reference in section 1192(5AAB) to table item 24 in
subsection 1191(1) which is redundant as a consequence of the amendment made
by item 18.
Remove parental income test exemptions
Item 12 repeals paragraph 1067G-F3(e) to remove the parental income test
exemption for people with a parent who qualifies for a low income health care card.
Paragraph 1067G-F3(e) provides that the parental income test does not apply to a
person while a parent of the person is a person to whom section 1061ZO applies.
Section 1061ZO provides for qualification for a health care card.
Item 11 is consequential to the amendment made by item 12.
Item 16 repeals table item 11 in Module L of the Rate Calculator in section 1067G in
order to remove the parental income test exemption for people with a parent
receiving a New Enterprise Incentive Scheme Commonwealth allowance
(see paragraph 1067G-F3(a)). Paragraph 1067G-F3(a) relevantly provides that the
parental income test does not apply to a person while a parent of the person is
receiving payments referred to in Module L. Item 11 of the table in Module L
specifies Commonwealth allowance (New Enterprise Incentive Scheme).
Remove from parental income test maintenance paid to the parent
Item 14 repeals point 1067G-F21 to remove from the parental income test any
maintenance paid to the parent. Point 1067G-F21 provides that a parent's combined
parental income for a tax year is increased by an amount equal to any maintenance
paid during the year to the parent.
Item 13 removes the reference to point 1067G-F21, which is redundant as a result of
the amendment made by item 14.
Remove family actual means test
Items 8, 9, 10 and 15 amend point 1067G-A1 and repeal Module G of the Rate
Calculator in section 1067G to remove the family actual means test from the youth
allowance calculation process. In particular:
6
Schedule 1 - Amendments
Item 8 removes step 10 from the youth allowance rate calculation process.
Step 10 provides for a person's reduction for actual means to be worked out
using Module G of the Rate Calculator if the person is not independent and
the family actual means test provided for in that Module applies to the person
(point 1067G-A1).
Items 9 and 10 amend step 13 of the youth allowance rate calculation
process so that it no longer factors in the person's reduction for actual means.
Item 15 repeals Module G, which is made redundant by item 8.
Item 1 repeals the family actual means test definitions. This item is consequential to
the amendments made by items 8, 9, 10 and 15.
Application of provisions
Item 20 provides that the amendments made by this Part apply in relation to working
out whether youth allowance is payable, or the rate of youth allowance, for days on
or after 1 January 2016.
Part 2 - Adding FTB children to the parental pool for youth allowance
Amendments to the Social Security Act
Item 22 repeals and replaces points 1067G-F31 and 1067G-F32, and adds new
points 1067G-F33, 1067G-F34 and 1067G-F35.
New point 1067G-F31 includes each person who is an FTB child or regular child of
a parent of the youth allowance claimant as a person (a relevant sibling) who has
parental income in common with the recipient. Parent is defined in section 5 of the
Social Security Act and, for this purpose, covers only the parent with whom the youth
allowance claimant normally lives, but also includes their parent's partner if they
normally all live together. It can also include any other person on whom the youth
allowance claimant is wholly or substantially dependent, generally where the youth
allowance claimant does not normally live with a parent.
The formula at point 1067G-F28 reduces a person's reduction for parental income by
factoring in the maximum payment rate of each person who has parental income in
common with the youth allowance claimant. New paragraph 1067G-F31(b) provides
that, in using the formula in point 1067G-F28 for the youth allowance claimant,
the maximum payment rate for relevant siblings is 14/365 of the amount worked out
in point 1067G-F32. This reduces the annual rate produced by point 1067G-F32 to a
fortnightly rate, to reflect the fact the Rate Calculator produces a fortnightly amount.
7
Schedule 1 - Amendments
New point 1067G-F32 adds into the formula in point 1067G-F28 the amount that is,
at the time the recipient's rate of youth allowance is worked out, the parent's
maximum rate of family tax benefit Part A. The rate is either under step 1 of the
method statement in clause 3 of Schedule 1 to the Family Assistance Act (having
regard only to clauses 7 and 11 for the purposes of paragraph (a) of that step)
or, if the only relevant sibling is a regular care child, under step 1 of the method
statement in clause 28A of Schedule 1 to the Family Assistance Act. The rate is
based upon actual family circumstances in the parent's household, including the
number and age of FTB children and the percentage of shared care provided for the
children within that household, whether or not the children were born during the
same multiple birth, and any rent paid in order to add in the correct amount of rent
assistance. However, the rate is not adjusted for income or other factors which
ordinarily affect family tax benefit rate.
New point 1067G-F33 then provides for some assumptions to apply in working out
the parent's maximum rate for the purposes of point 1067G-F32. The rate is to be
calculated notionally, regardless as to whether the parent has in fact made a claim
for family tax benefit. It is to be assumed that the parent has made a claim for
payment of family tax benefit by instalment in accordance with the Family Assistance
Administration Act. It is also to be assumed that the parent has not made an election
under subsection 58A(1) of the Family Assistance Act to receive energy supplement
quarterly. Provision is made for the Minister, by legislative instrument, to specify any
other assumptions which may in future need to be made to allow this calculation to
give the correct outcomes, if it becomes apparent there is the need for additional
assumptions once it is being applied in practice.
New point 1067G-F34 requires that the notional FTB Part A rate amount is worked
out under point 1067G-F32 for one parent only. Various provisions of the Family
Assistance Act enable either parent to be eligible for all the children in their family,
whether the family consists entirely of children of both parents, or is a blended
family. This means that one parent's rate of family tax benefit Part A will include all
children within the family, such that, at least for this notional purpose, it is not
necessary to repeat the calculation for the other member of the couple.
New point 1067G-F35 clarifies that the amount worked out under point 1067G-F32
is to be counted only once in using the formula in point 1067G-F28 for a recipient,
regardless of how many relevant siblings the recipient has.
Item 21 is consequential to the amendments effected by item 22, amending the note
at point 1067-F26 to include reference to point 1067G-F31 as extending the
situations in which a person will have parental income in common with other
persons.
Item 23 provides that the amendments will apply in working out rates of youth
allowance for days on or after 1 July 2016.
8
Schedule 1 - Amendments
Part 3 - Maintenance income test for youth allowance recipients
Amendments to the Social Security Act
Item 24 amends step 8 of the method statement in point 1067G-A1 to reflect the
insertion by item 25 of a new Module E, which provides for how to work out a
person's reduction for parental income.
Item 25 inserts a new Module E, which provides a method statement
(point 1067G-E1) for working out a person's reduction for parental income for the
purposes of the method statement in point 1067G-A1 (method of calculating youth
allowance rate). This method incorporates a maintenance income test.
Clause 3 of Schedule 1 to the Family Assistance Act provides a method statement
for calculating the family tax benefit Part A rate. Under this method, the application
of the maintenance income test cannot result in a person's family tax benefit Part A
rate falling below the base family tax benefit Part A rate provided for in clause 4.
In broad terms, Module E transposes into the method of calculating the rate of youth
allowance (point 1067G-A1) this concept of a base rate below which a person's rate
cannot fall as a result of the application of the maintenance income test (MIT).
It does this by providing for a MIT reducible amount (see step 1 of point 1067G-E1
and points 1067G-E2 and 1067G-E3), which operates as a cap on the reduction for
parental income that may be taken away from the maximum payment rate at step 13
of the method statement for calculating a person's rate of youth allowance
(point 1067G-A1).
Under the method in Module E:
The maintenance income test only applies if the parental income test result
(Module F) is less than the MIT reducible amount. If the parental income test
is equal to or more than the MIT reducible amount, a person's reduction for
parental income is the parental income test result (step 3 of point 1067G-E1).
If the maintenance income test does apply, it cannot result in a reduction for
parental income that exceeds the MIT reducible amount (steps 4 to 7 of
point 1067G-E1).
Item 26 amends the heading to Submodule 1 of Module F of the Youth Allowance
Rate Calculator to reflect Submodule 1 providing for the parental income test
result. This item is consequential to the insertion of the method statement in
point 1067G-E1 (Person's reduction for parental income), which applies the parental
income test result.
9
Schedule 1 - Amendments
Item 27 repeals point 1067G-F1, which provides a method statement for the parental
income test. It is substituted with a new point 1067G-F1, which provides a method
statement for working out the parental income test result. This item is consequential
to the insertion of the method statement in point 1067G-E1 (Person's reduction for
parental income), which applies the parental income test result.
New point 1067G-F1 largely replicates the method statement for the parental income
test that is being repealed.
Item 28 amends the heading to Submodule 2 of Module F of the Youth Allowance
Rate Calculator so that it refers to 'exemption from' rather than 'application of'
the parental income test. This reflects the language used in step 1 of the method
statement in point 1067G-F1 (Parental income test result): 'Work out whether the
person is exempt from the parental income test using Submodule 2'.
Item 29 repeals point 1067G-F2, which provides that '[s]ubject to point 1067G-F3,
the parental income test applies to the person if the person is not independent'.
Point 1067G-F2 is unnecessary in light of step 8 of the method statement in
point 1067G-A1 (see item 24), which provides: 'If the person is not independent,
work out the person's reduction for parental income using Module E'. Step 1 of the
method statement in Module E for working out a person's reduction for parental
income provides: 'Apply the parental income test in Module F to work out the
parental income test result for the person'.
That is, step 8 of point 1067G-A1 establishes that a necessary condition for the
application of the parental income test to a person is that the person is not
independent.
Item 30 replaces the words 'The parental income test does not apply to the person'
with 'A person is exempt from the parental income test'. This is consistent with the
language used in step 1 of the method statement in point 1067G-F1 (Parental
income test result): 'Work out whether the person is exempt from the parental
income test using Submodule 2'.
Item 31 repeals note 1 of point 1067G-F10, which, from 1 January 2016, provides:
'The combined parental income may be affected by amounts of maintenance paid
(see point 1067G-F20)'.
Item 32 repeals the heading 'Submodule 6 - Reduction for parental income'
and substitutes the heading 'Submodule 6 - If person's combined parental income
exceeds parental income free area'. This amendment is consequential to the
insertion of the method statement in point 1067G-F1 for how to work out the parental
income test result. In particular, step 6 of this method statement provides that, 'If the
person's combined parental income exceeds the person's parental income free area,
then the parental income test result for the person is the amount worked out using
Submodule 6'.
10
Schedule 1 - Amendments
Items 33, 34 and 36 substitute references to 'reduction for parental income' in
points 1067G-F27, 1067G-28 and 1067G-F31 with 'parental income test result'.
These items are consequential to the amendments made by item 27
(new point 1067G-F1 (Parental income test result)).
Item 35 amends the heading to point 1067G-F29 from 'Rounding the reduction for
parental income' to 'Rounding the parental income test result'. This amendment is
consequential to the amendments made by item 27 (new point 1067G-F1).
Item 37 inserts a new Module GA into the Youth Allowance Rate Calculator to
provide for the maintenance income test.
Submodule 1 of point 1067G-GA1 provides a method statement for working out the
maintenance income test result for the purposes of the method statement in
point 1067G-E1 (Person's reduction for parental income). The method statement
generally follows the method statement for working out an individual's reduction for
maintenance income under clause 20 of Schedule 1 to the Family Assistance Act.
However, step 6 of the method statement in point 1067G-GA1 involves dividing the
result by 26. This ensures the maintenance income test result is a fortnightly,
as opposed to annualised, amount.
Submodule 2 of point 1067G-GA2 aligns the youth allowance maintenance income
test with the maintenance income test that applies under clause 20 of Schedule 1 to
the Family Assistance Act by providing for the same exemption to the maintenance
income test that applies to the maintenance income test under the Family Assistance
Act.
Submodule 3 of point 1067G-GA3 provides for how to work out the annualised
amount of maintenance income for a parent of a person for the purposes of step 2 of
the method statement in point 1067G-GA1 (Maintenance income test result).
Point 1067G-GA3 aligns the youth allowance maintenance income test with the
maintenance income test under clause 20 of Schedule 1 to the Family Assistance
Act by providing for the annualised amount of maintenance income to be worked out
'as if step 1 of the method statement in clause 20 of Schedule 1 to the Family
Assistance Act applied'.
However, only maintenance income received in relation to the person is to be taken
into account (1067G-GA3(c)). Paragraph 1067G-GA3(d) provides that, in working
out whether maintenance income is received in relation to the person, regard is to be
had to the considerations that would apply under the Family Assistance Act. This
provision picks up, for example, clause 19A of Schedule 1 to the Family Assistance
Act, which provides for an extended meaning of receiving maintenance income.
Submodule 4 of point 1067G-GA3 sets out the rules for working out the
maintenance income free area, which is the amount of maintenance income that is
disregarded under the youth allowance maintenance income test.
11
Schedule 1 - Amendments
Point 1067G-GA4 provides the main rule. The maintenance income free area for a
parent will be the amount specified for item 1 in column 2 of the table in clause 22 of
Schedule 1 to the Family Assistance Act (currently $1,543.95) unless another point
in Submodule 4 applies. The amount specified in item 1 in column 2 would apply
where the parent receives maintenance for the child receiving youth allowance and
there are no other siblings.
Point 1067G-GA5 applies where the parent of the person is also the parent of an
FTB child in relation to whom the parent receives maintenance income. It also
applies if the parent of the person is also the parent of both an FTB child in relation
to whom the parent receives maintenance income and another person who is
receiving youth allowance. In these circumstances, the maintenance income free
area is the amount specified for item 1 in column 3 of the table in clause 22 of
Schedule 1 to the Family Assistance Act (currently $514.65). This reflects the fact
that the parent may be accessing the maintenance income free area through their
family tax benefit Part A payments.
Point 1067G-GA6 applies if the parent of the person is also the parent of another
person (an other recipient), who is receiving youth allowance and in relation to
whom the parent receives maintenance income, and if the parent of the person is not
the parent of an FTB child in relation to whom the parent receives maintenance
income.
If Point 1067G-GA6 applies, the maintenance income free area for the parent is
worked out using this formula:
the column 2 amount the column 3 amount for each other recipient
1 + the number of other recipients
Point 1067G-GA7 defines column 2 amount and column 3 amount. The column 2
amount is the amount specified for item 1 in column 2 of the table in clause 22 of
Schedule 1 to the Family Assistance Act. The column 3 amount is the amount
specified for item 1 in column 3 of the table in clause 22 of Schedule 1 to the Family
Assistance Act. These amounts are indexed under Schedule 4 to the Family
Assistance Act.
Amendments to the Social Security Administration Act
These amendments support the use of a current year maintenance income test,
and enable the Secretary to vary retrospectively the determination of youth
allowance rate through a process analogous to the reconciliation of family tax benefit
when the Secretary has better information as to the maintenance income received in
the income year.
In broad terms, the process will operate as follows:
12
Schedule 1 - Amendments
During an income year, estimates of maintenance income received by the
parent in relation to the person in receipt of youth allowance will be used to
work out the person's rate of youth allowance. Broadly, the estimate will be
based on information provided by the parent (for example, their child support
assessment or court order) or will be worked out by the Secretary having
regard to information provided to the Secretary about the person's child
support case if it is registered for collection by the Child Support Registrar.
Any change of circumstances in relation to maintenance income for the child
will be required to be notified to the Secretary by notice given to the person
receiving youth allowance under section 68 of the Social Security
Administration Act.
Depending upon the circumstances of a case, the Secretary may make one or
more determinations as to the rate of youth allowance during the income year.
These determinations may increase the rate of youth allowance paid
(favourable determinations) or decrease the rate of youth allowance paid
(adverse determinations).
After the end of the income year, the Secretary will conduct an internal review
to reconcile the person's rate of youth allowance against any maintenance
income verified for the income year.
Favourable determinations
Section 78 of the Social Security Administration Act gives the Secretary the power to
make a rate increase determination (a kind of favourable determination) if the
Secretary is satisfied that the rate at which a social security payment is being, or has
been, paid is less than the rate provided for in the social security law.
The rules governing the date of effect of favourable determinations applying to social
security payments (including youth allowance) are found in Subdivision B of
Division 9 of Part 3 of the Social Security Administration Act.
Item 39 inserts a new section 109A into Subdivision B of Division 9 of Part 3 of the
Social Security Administration Act. New section 109A specifies date of effect rules
applying to a favourable determination under section 78, resulting from the
Secretary's review of a determination of youth allowance rate in relation to
maintenance income required by new section 126A (see item 44). Broadly, the date
of effect is the date that would give full effect to the review decision. However, if that
date is earlier than the first day of the income year before the income year in which
the favourable review decision is made, backdating is limited to the first day of the
income year before the income year in which the decision was made. This is
consistent with backdating rules in the Family Assistance Act applicable to family tax
benefit. Items 38 and 42 are consequential to item 39.
Item 41 inserts a new subsection 110(11A) into section 110 to clarify that the date of
effect of a favourable determination made under section 78 of the Social Security
Administration Act made in response to a revised estimate of maintenance income is
the day on which the revised estimate was made by or given to the Secretary.
Item 40 is consequential to item 41.
13
Schedule 1 - Amendments
Adverse determinations
Section 79 of the Social Security Administration Act provides that, if the Secretary is
satisfied that the rate at which a social security payment is being, or has been, paid
is more than the rate provided for by the social security law, the Secretary is to
determine that the rate is to be reduced to the rate provided for by the social security
law and specify the rate in the determination.
The rules governing the date of effect of adverse decisions applying to social
security payments are found in Subdivision D of Division 9 of Part 3 of the Social
Security Administration Act. Section 118 provides general rules in relation to the
date of effect of an adverse determination applying to social security payments.
Item 44 inserts two new subsections into section 118 of the Social Security
Administration Act.
New subsection 118(2D) provides date of effect rules for an adverse determination
under section 79 where the determination is made as a result of a revised estimate
of the amount of maintenance income for a parent of the person (see new
section 123AA, item 45 below)). The date of effect is the day when the estimate was
given to the Secretary by the parent, or person or the day when the Secretary made
the estimate.
New subsection 118(2E) applies if the Secretary makes a rate reduction
determination under section 79 because of a review required by new section 126A,
item 46 below). The date of effect is the date that would give full effect to the
decision on review.
Item 43 is consequential to item 44.
Item 45 adds a new Division 11 at the end of Part 3 of the Social Security
Administration Act. Division 11 applies to the estimate and verification of
maintenance income for the Youth Allowance Rate Calculator in section 1067G of
the Social Security Act. This new Division inserts new sections 123AA, 123AB,
123AC and 123AD into the Social Security Administration Act.
New subsection 123AA(1) clarifies that, in working out the annualised amount of
maintenance income for the parent of a person, the Secretary may have regard to an
estimate of the amount of maintenance income for a period made by or given to the
Secretary, if the Secretary is satisfied that the estimate is reasonable.
The estimate of maintenance income could be determined by the Secretary on the
basis of information provided by the person or their parent (for example, about his or
her child support assessment or court order), or could be produced by the Secretary
based on other information (for example, information provided by another
Commonwealth agency such as the Child Support Registrar).
New subsection 123AA(2) provides that the Secretary will be taken to have regard to
an estimate of nil if the Secretary has no reason to believe that there is any amount
of maintenance income for the parent of the person for the period.
14
Schedule 1 - Amendments
New section 123AB applies where the Secretary is required to conduct an internal
review (in accordance with section 126) of one or more decisions determining a rate
of youth allowance in an income year under section 78 or 79 of the Social Security
Administration Act after the end of the relevant income year because of new
section 126A (see item 46).
Step 1 of the Method Statement requires the amount of maintenance income for the
parent to be worked out using the verified information referred to in
paragraph 126A(c) (see item 46). As for working out the annualised amount of
maintenance income for the parent (see new submodule 3 of Module GA, item 37),
principles from the family tax benefit maintenance income test apply.
New section 123AB sets out rules applicable to the review required by new
section 126A. These rules limit the circumstances in which a previous determination
or determinations of a person's rate of youth allowance can be changed upon
internal review required by new section 126A. First, the actual annual amount of
maintenance is determined using the information referred to in paragraph 126A(c).
Second, the annualised maintenance income free area is determined, applying
the method statement in new section 123AC.
Step 3(a) applies if the actual annual maintenance income is equal to or more than
the annualised maintenance free area but no more than 125 per cent of the
annualised maintenance income free area. In these circumstances, the Secretary
will not be able to change the previous decision or decisions
(see subsection 123AB(2)).
Step 3(b) applies if the actual annual maintenance income is less than the
annualised maintenance income free area. In these circumstances, the Secretary
will be able to change the previous decision or decision (see subsection 123AB(3)).
This is to enable the Secretary to make a favourable determination with date of effect
given by new section 109A (see item 39) to ensure the person receives their full
entitlement to youth allowance for the income year.
Step 3(c) applies where the actual annual maintenance income is more than
125 per cent of the annualised maintenance income free area. In these
circumstances, step 4 applies, and it will be necessary to work out the annual
amount of estimated maintenance income for the parent applying the method
statement in new section 123AD. Step 5(a) clarifies that the Secretary will not be
able to change the earlier decision or decisions if the actual maintenance income is
equal to or more than the annual amount of estimated maintenance income but no
more than 125 per cent of the annual amount of estimated maintenance income.
In any other case, step 5(b) clarifies, by directing the reader to subsection 123AB(3),
that the Secretary will be able to recalculate the person's rate of youth allowance and
change the previous decision or decisions. The Secretary will be able to make an
adverse determination following the review to ensure recovery of any overpayment
of youth allowance. New subsection 118(2E) (see item 44) applies to working out
the date of effect for any adverse determination made as a result of the review.
Any overpayments that arise as a consequence of any adverse determination will be
recoverable under section 1223 of the Social Security Act.
15
Schedule 1 - Amendments
New section 123AC applies to working out the annualised maintenance income free
area for the purposes of step 2 of the method statement in new section 123AB.
If there has been no change to circumstances and the maintenance income free
area (the maintenance income free area) was the same for all days in the income
year then the maintenance income free area (MIFA) is the annualised maintenance
income free area (see Step 1 of the Method statement)
Steps 2, 3 and 4 of the Method statement in section 123AC are relevant if there is a
change of circumstances and the MIFA for the parent was not the same on all days
in the income year. In these circumstances, the MIFA share for each period is
determined by multiplying each MIFA by the number of days in the period and
dividing by the number of days in the income year. The annualised maintenance
income free area is worked up by adding up the maintenance income free area
share for each period in the income year.
New section 123AD applies to working out the annual amount of estimated
maintenance income for Step 4 of the method statement contained in section 123AB.
Step 1 requires the annualised estimate to be determined for each estimate that
applied during the income year. This is calculated by multiplying the amount of each
estimate by the number of days in the income year and dividing by the number of
days in the income year for which the estimate applied.
Step 2 requires the period estimate to be worked out for each annualised estimate.
This is determined by multiplying the annualised estimate by the number of days in
the income year for which the estimate applied, and dividing by the number of days
in the income year.
Step 3 provides that the annual amount of estimated maintenance income is
determined by adding up the period estimates worked out in step 2.
Section 126 of the Social Security Administration Act gives the Secretary discretion
to review decisions internally, including a decision of an officer under the social
security law if the Secretary is satisfied that there is sufficient reason to review the
decision. Item 46 inserts a new section 126A into the Social Security Administration
Act that imposes an obligation on the Secretary to conduct an internal review under
section 126 if:
the decision is a determination of the rate of youth allowance payable for a
person for a period in an income year; and
the Secretary had regard to an estimate of the amount of maintenance income
for a parent of a person (the estimate could be produced by the Secretary or
be based on information provided by the person or their parent); and
after the end of the relevant income year, the Secretary has sufficient
information to work out the annualised amount of maintenance income for the
parent without regard to an estimate.
16
Schedule 1 - Amendments
Item 47 clarifies that the amendments made by Part 3 of Schedule 2 apply to
working out rates of youth allowance for days on or after 1 January 2017.
17
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
SOCIAL SERVICES LEGISLATION AMENDMENT
(MORE GENEROUS MEANS TESTING FOR YOUTH PAYMENTS) BILL 2015
This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
The Bill will amend the social security law to simplify and improve the complex
parental means tests for youth payments, and more closely align them with the
family tax benefit Part A means test in the family assistance law. It will also provide
more generous and consistent support for families with dependent young people
who qualify for certain youth income support payments.
From 1 January 2016 -
Remove the family actual means test and family assets tests from youth
allowance parental means test arrangements, aligning youth payments means
test arrangements with those applying to family tax benefit Part A.
Remove maintenance income from the youth allowance parental income test
assessment. From 1 January 2017, the treatment of child support will be further
reformed by applying a separate maintenance income test like that currently
applying to family tax benefit Part A.
From 1 July 2016 -
Youth allowance will include all family tax benefit children in the family pool for
the youth parental income test. This will soften reductions in youth allowance as
family income increases.
Human rights implications
The Bill engages the following human rights:
Right to social security
The Bill is consistent with supporting the right to social security.
The Bill will remove the family actual means test and family assets test from
1 January 2016; and include family tax benefit siblings in the family pool for the youth
parental income test from 1 July 2016, thereby easing the income test taper and
increasing the income test cut-outs. These changes will allow some dependent
young people, who are currently not entitled, to receive youth allowance or other
youth payments.
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Statement of compatibility with human rights
From 1 January 2016, the Bill will allow youth allowance and other youth payments
which are subject to parental income testing to be subject to only one parental
income test, not multiple tests producing the lowest result. Further, from
1 July 2016, the Bill will ease the income test taper rate by including all children for
which the parents have financial responsibility in the family pool for the youth
parental income test. The effect of this will be to increase the amount paid to some
dependent part-rate recipients of youth allowance or other youth payments.
From 1 July 2016, the Bill will also reduce the amount of youth allowance paid to a
small number of recipients whose parents have shared care of older family tax
benefit or regular care children, as the family pool for the youth parental income test
will now take into account actual levels of care provided by the parents,
commensurate with their financial responsibility.
From 1 January 2016, the Bill will remove maintenance income from the youth
allowance parental income test. This effect of this will be to cease reductions in
youth allowance due to child maintenance, usually received for siblings rather than
the youth allowance recipient, and to increase the amount of youth allowance paid to
some part-rate recipients.
From 1 January 2017, maintenance income will be assessed under a new
maintenance income test for youth allowance. The effect of this change will be to
decrease the amount of youth allowance paid to some recipients, in line with the
maintenance the parents receive specifically for them.
Conclusion
The amendments in the Bill are compatible with human rights because they do not
limit access to social security.
[Circulated by the authority of the Minister for Social Services,
the Hon Scott Morrison MP]
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