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Social Security Legislation Amendment (Parenting and Other Measures) Bill 1997
Date Introduced: 2 October 1997
House: House of Representatives
Portfolio: Social Security
Commencement: There are numerous different dates of commencement
for different Schedules and Parts. The commencement dates are set out
as part of the Main Provisions.
To:
The parenting allowance has been available since 1 July 1995 to a parent who is a member of a couple caring for children at home.The payment replaced the Home Child Care Allowance (HCCA).HCCA had its origins as the dependent spouse tax rebate.
Payments are made in respect of a PgA child who is under 16 and dependent on the person who is in receipt of the allowance (that child is a PgA child).The PgA child must live in Australia with the person to whom the payment are made.
If a person is in receipt of a social security pension, a rehabilitation allowance, an AUSTUDY allowance that includes a dependent spouse rebate allowance or is an armed services widow or widower, the person is entitled to a non-benefit PgA.The amount payable in these circumstances is $65.10 per fortnight.This allowance is subject to an income test but not an assets test.
The maximum amount payable to a person who is entitled to a benefit PgA (i.e. where the person is not entitled to one of the allowances referred to in the preceding paragraph) is $290.10 per fortnight.Where couples are separated by illness or a partner is in gaol, the maximum rate is $347.80 per fortnight.This allowance is subject to an income and assets test.
Recipients of a benefit PgA may also be eligible for a pharmaceutical allowance, rent assistance and a remote area allowance if they qualify under the Social Security Act 1991 (SS Act) .
SPP has its origins as the Supporting Mother's Benefit which was introduced in 1973.Supporting Mother's Benefit was changed to the SPP in November 1977 allowing payment to any person with a dependent child, including, male sole parents.
A person is qualified for a SPP if:
The basic rate of a SPP is $347.80 per fortnight.That pension is subject to income and assets tests.Recipients of a SPP may also be eligible for a pharmaceutical allowance, rent assistance, guardian allowance and a remote area allowance if they qualify under the SS Act.
The decision to combine PgA and SPP was made as part of the 1997-98 Budget.An extract of Part 1 of Budget Paper No.2 is as follows:
Parenting Payment simplification and rationalisation package
Function:Social Security and Welfare
Financial Implications ($m)
1997-98 1998-99 1999-00 2000-01 4.0 -1.0 -1.8 -2.1
Explanation
Currently there are two payments for parents who remain at home to care for their children. Sole Parent Pension is available to single parents in this situation while Parenting Allowance is available to partnered parents. Recipients of either payment have similar requirements for government assistance, with some recipients moving between the two payments as their situations change.
This measure, which takes effect from March 1998, moves towards a common income support payment for those with child rearing responsibilities by replacing Sole Parent Pension and Parenting Allowance with a single Parenting Payment.In doing so it will align a number of conditions that currently vary between the two payments:
residency requirements - the length of time people are required to live in Australia before qualifying for payment, will be aligned at two years (a reduction from five years in the case of Sole Parent Pension);
portability provisions - the length of time the payment can be received while the recipient is overseas, will be aligned at 26 weeks (an increase from 13 weeks in the case ofParenting Allowance and a reduction from 12 months in the case of Sole Parent Pension);
an income maintenance period (under which lump sum payments such as accrued annual leave and long service leave are treated as income for a period equal to the number of weeks of unused leave received from their employer), will now be applied to Sole Parent Pensions, in line with the current practice for Parenting Allowance recipients; and
the assets test applied to Sole Parents Pensions will be aligned with the current test for Parenting Allowance recipients (assets over $124,000 for homeowners or $212,500 for non-homeowners will result in a sudden-death cut-off of payment, rather than the tapered cut-off beginning at the same limits that currently applies to Sole Parent Pensioners).
Other differences between Sole Parent Pension and Parenting Allowance, including rates of payment, income testing arrangements, and access to concession cards, are being retained under the new Parenting Payment.
The creation of a single Parenting Payment will simplify and make more consistent income support arrangements for those with child rearing responsibilities, and ease transitions as separation and repartnering occurs.
This proposal is historic in terms of seeing the demise of a sole parent specific income support payment.The new proposed payment is essentially a parent payment (single or partnered); parents being carers of children.
The proposal aims to resolve the inherent tensions arising from the different rules and means testing that apply between pension based and allowance based payments.Pension based payments, which are usually longer term than allowance payments, have traditionally had more generous means testing, rates of payment and fringe benefits.
The main differences currently between the SPP and PgA arrangements are in the areas of:
income and assets tests;
rates of payment - mainly arising from the means testing, but SPP recipients also receive guardian allowance;
paydays (this is largely addressed by the proposal in this Budget to standardise all payday regimes from July 1999);
portability rules; and
residence requirements.
What is proposed is a new hybrid payment that has some elements of both payments.This process together with the cost considerations inevitably involves compromises resulting in 'winners and losers'.The results as proposed are:
a non-tapered assets test as currently applies to allowance payments - SPP previously having the more generous pensions tapered test (it is estimated 900 current SPP recipients will be cancelled);
the application of the Income Maintenance period (IMP) - which commences for PgA from September 1997 - SPP currently has no waiting period (it is estimated in full year 7300 SPP recipients will serve an IMP averaging two weeks - hardship provision will apply);
portability (i.e. taking the payment overseas) restricted to 26 weeks - SPP is currently portable for 12 months and PgA for 13 weeks; and
a residence requirement of 2 years for claimants separated outside Australia - SPP currently requires 5 years.
The conditions to be retained for sole parents are:
the SPP income test, i.e. the pensions test which is more generous that the PgA income test in terms of free area and taper; and
access to Pensioner Concession Card, PgA recipients receive the Health Care Card.
The benefits of rationalisation are consistency and equity of rules and their application between like payments.This is important given one of the main reasons sole parents relinquish SPP is re-partnering.Other benefits include reduced administrative costs in terms of transferring people from one payment to another and reduced complexity resulting in less confusion and inquiries from customers.
Child Disability Allowance (CDA)
The purpose of CDA is to provide financial assistance to parents providing care to a disabled child in their home where the child's care needs are substantially more than another child of the same age without the disability.The expectation is that the allowance will encourage care at home rather than in an institution.
A person is qualified for a child disability allowance for a young person if:
the young person is a disabled child of the person, and
the young person receives care and attention from the person or the person's partner (if the person is a member of a couple) in a private home that is the residence of the person and the young person.
The allowance is only payable in respect of a 'young person'.'Young person' is defined by the SS Act (in section 5(1)) as a person who has not turned 16 or a person who is between 16 and 25 and who is receiving full-time education at a school, college or university.
Section 952 contains the criteria which must be satisfied before a young person will be regarded as a disabled child.Essentially the young person must suffer a physical, intellectual or psychiatric disability and must require substantially more care and attention than a child of the same age who does not have the disability.
There are certain conditions which are regarded as manifest.That list is reproduced in the Appendix to this Digest.Where a child is diagnosed as suffering one of those manifest conditions an assessment in accordance with section 952 test is not necessary.
The main concern about the rapid growth in the CDA population in the 1990s, is that the focus and targeting of the payment has drifted away from providing financial assistance to parents where the child has these substantial extra care needs, to cases where the care needs are not much more than that for a child without a disability.This applies in the cases like mild seasonal asthma, diabetes in older children and some Attention Deficit Disorder cases.
Currently, the parent with a child with very severe disability(s), and consequently substantially more care needs, gets the same assistance as the parent with a CDA qualifying child with very minimal extra care needs.
The purpose of CDA has not been to cover the extra costs of care and in many cases the presence of the child's disability does not result in extra costs.Where there are extra costs it is commonly for medication.These costs are usually covered by the Health Care Card (HCC) that is attached to CDA qualification.Access to the HCC is in many cases a significant impetus for parents to claim CDA.
The rapid increase in numbers also presents increased cost to Government both in terms of program outlays and in the costs associated with the HCC.The program outlays in 1991/92 for CDA were $103.8 million and by 1996/97 had grown to $240.2 million.
Manifest cases are the minority of cases.
As is mentioned above, the decision as to whether the applicant qualifies commonly relies on evidence and reports from the claimant, the child's treating doctor and occasionally a Commonwealth Medical Officer.It is the difficulty and contentiousness of this decision and its associated elements and processes that has indirectly driven the numbers upwards.
In many cases where CDA is not granted, the claimant lodges an appeal.The high incidence of appeals reflects several elements of CDA decision making.Some of these are:
the emotion of being assessed as not having a child with a disability.This is in fact not what has been decided; rather the substantive extra care requirements are not met.However, it is commonly how the claimant sees the decision.The applicant then asks: 'How can it be assessed that the child is not disabled when the treating doctor has provided a contrary opinion?'
many cases are not clear cut and it is common knowledge that on appeal the decision may be reversed.Decision makers aware of the trends and the successes in the appeal processes, tend to give favourable consideration to borderline cases in the belief the claimant will probably be successful on appeal.
no two CDA cases are identical.The result is that benchmarking and the use of precedents in decision making is very difficult leading to significant variations in decisions.
In the past few years, the Department of Social Security has taken significant steps to more tightly target the payment featuring:
improved treating doctor's reports and claimant evidence forms.
staff training.
promotion of more holistic and sophisticated assessment processes through use of CDA assessment teams.
increased and more comprehensive review activities.
improved policy guidelines for staff.
improved information to parents about CDA and the qualification requirements.
The continued rise in the recipient numbers reflects that these measures have had limited success.
With the amendments proposed to s952, the substantial extra care requirements will be replaced with a criteria that focuses on the level of disability of the child and the impact on the family.
The Child Disability Allowance Tool (CDAT) will be introduced.The CDAT is a series of questions to be answered by both the claimant and treating professional.The CDAT attempts to arrive at an assessment of the child and impact on the family by measuring functional ability and level of disability at an age appropriate standard.It also covers special care needs, behavioural issues and emotional state.
Where the CDAT provides a score of zero, it indicates the child has the level of functional ability expected for their age group and no behavioural, emotional state or special care needs.
Where the CDAT provides a negative score, it indicates the child is functioning above the level expected for their age group and if they have any behavioural, emotional state or special care needs they are outweighed by their advanced functional ability.
Where the CDAT provides a positive score, it indicates the child is functioning below the level expected for their age group and/or they have one or more of the behavioural, emotional state or special care needs.
A similar process currently applies where specified manifest conditions are deemed to meet the substantial extra care requirements of section 952 of the legislation.Under the CDAT, the list of manifest conditions is different to the current list having been designed to compl
ement the new disabled child qualification criteria, ie. focussing on the level of disability and impact on the family.The proposed manifest tables have been designed in consultation with an expert medical group.A reproduction of those tables is set out in the Appendix to this digest.
Waiting periods and hardship rules
Currently, most allowance payments have waiting periods that are served after qualification is met to defer the commencement of payment.The waiting periods affected by the proposed changes are Newstart Allowance, Sickness Allowance and Youth Allowance.Youth Allowance is proposed to be introduced from 1 July 1998.
In addition to the universal one week waiting period, there are targeted waiting periods for specific circumstances, e.g. the education leaver deferment period, the liquid assets test waiting period, the 2 year newly arrived resident waiting period.
Generally, a person must serve a waiting period of between one and thirteen weeks before qualifying for Newstart Allowance or Sickness Allowance, if the value of a person's liquid assets exceeds $2,500 ($5,000 if the person is a member of a couple and has no dependent children) on the day on which the person becomes unemployed or incapacitated for work.
The one week waiting period and the liquid assets test waiting period are subject to hardship provisions contained in the legislation which allow the Secretary to consider waiving the period in certain circumstances.The legislation empowers the Secretary to define, as a matter of policy, what the severe financial hardship requirements are.The proposed amendments will now define 'severe financial hardship' in the legislation.
In arriving at an assessment of severe financial hardship, current policy also sets out definitions of 'unavoidable and essential expenditure' and 'reasonable costs of living'.As is proposed for 'severe financial hardship', the amendments will place definitions of these terms in the legislation.By placing the definitions in the legislation, there will be far less room for discretionary decision making on the circumstances and needs of individual cases.
In terms of the definition of severe financial hardship, the proposed amendments are the same as current policy for the one week waiting period, i.e. hardship is met where funds are less than the equivalent of two weeks allowance that would otherwise be paid.
In the case of the liquid assets test deferment period, the definition is slightly tighter.Currently, hardship is met where funds are less than the equivalent of two weeks payment plus the equivalent Family Payment (FP) at the maximum applicable rate.The amendments do not include the FP component and hence apply a slightly tighter test.
The other main impact is for the liquid assets test waiting period, which can extend from one to 13 weeks, depending on the amount of liquid assets.Currently, where severe financial hardship is met, all of the waiting period is waived and arrears may be payable.Under the proposed amendments there will be the discretion to waive all or only part of the waiting period.
Currently, there are hardship provisions for the Income Maintenance Period (IMP) which was introduced in September 1997.During the IMP leave payments are treated as income over a period equal to that to which the leave relates.The IMP applies to Newstart, Partner Allowance, Widow Allowance, Mature Age Allowance, Sickness Allowance and it will apply to Youth Allowance.
Like the provisions applying to the liquid assets test waiting periods, the Secretary is empowered to define, as a matter of policy, the severe financial hardship requirements.See discussion about discretionary decision making above.
Current policy prescribes that part or whole of the IMP may be waived if the delegate is satisfied the IMP would cause severe financial hardship and the hardship was not reasonably foreseeable.Severe financial hardship is the same as applies to the liquid assets test waiting period, i.e. hardship is met where funds are less than the equivalent of two weeks payment plus the equivalent FP at the maximum applicable rate.The proposed amendments do not include the FP component and hence apply a slightly tighter test.
The amendments made by this Bill are incorporated in 6 Schedules.Each schedule deals with a discrete subject.The main provisions will be summarised under those 6 headings.
This Schedule commences on 20 March 1998.
Item 79 repeals Part 2.6 of the SS Act which deals with the Sole Parent Pension (SPP).
Item 86 inserts new Part 2.10 dealing with the PP.Most of the provisions of this new Part already exist in some form or another in the respective Parts dealing with Parenting Allowance (PgA) and SPP. Only the proposed new sections which deal with matters which are not contained in the current provisions will be considered.
There are certain requirements for sponsorship when a person, in certain circumstances, is applying for migration to Australia.The person providing sponsorship must provide an assurance of support for the first two years of the migrant's residence in Australia.
Proposed section 500B deals with the situation where a person is a member of a couple and there is an assurance of support in force in respect of the person.The proposed section provides that a person who is a member of a couple is not qualified to receive a PP if the Secretary of the Department of Social Security is satisfied that an assurance of support is in force in respect of the person and it would be reasonable for the assuree to accept the support.This will allow the Secretary to effectively determine that an assuree must accept the support of a willing assuror in circumstances where the assuree has elected to not accept the support.
SPP is currently portable (i.e. able to be taken overseas) for up to 52 weeks.PgA payments will only be continued for a maximum of 13 weeks.Proposed section 500F provides for the continuance of PP during temporary absences from Australia of up to 26 weeks.
SPP is only payable from the date of the claim, i.e. there is no provision for backdating.A PgA claim can be backdated up to four weeks if the claim is made within four weeks of becoming qualified for the payment.Proposed section 500K makes the PgA rule the applicable rule for PP.
At present, the assets test applicable to those in receipt of SPP is a tapered test.A person's SPP is reduced $3 per fortnight for every $1000 of assets over a certain limit ($125,750 for homeowners and $215,750 for non-homeowners).Under proposed section 500Q, PP will not be payable at all to a person who is not a member of a couple when the person's assets exceed these amounts, i.e. the test will become non-tapered.The non-tapered assets test applicable to recipients of PgA will continue to members of a couple under PP (proposed section 1068B).
Proposed section 514G continues the distinction in the availability of fringe benefits.Fringe benefits refer to Commonwealth benefits and concessions such as the Pensioner Concession Card.PP recipients who are not a member of a couple (i.e. former SPP recipients) qualify for fringe benefits.PP recipients who are a member of a couple (i.e. former PgA recipients) will not qualify unless the person is over 60 years of age.
New Part 3.6A contains the PP rate calculator.The single rate calculator is in proposed section 1068A and the partnered rate calculator is in proposed section 1068B.The income tests applicable to SPP and PgA are retained and applied to single rate PP and partnered rate PP, respectively.Similarly, there is no change in the applicable pension rates when SPP is compared to single rate PP and PgA is compared to partnered rate PP.
All amendments contained in this Schedule except those relating to backdating claims (see below) commence on 1 July 1998.The amendments relating to backdating claims commence on 1 January 1998.
The significant amendment effected by this Schedule is contained in item 9.
Item 9 of Schedule 2 replaces the criteria, under section 952, for assessing whether a young person is a disabled child (i.e. the test of substantially more care and attention) with an assessment and a rating under the Child Disability Allowance Tool (CDAT).
The proposed new section 952 contains a three step process for assessing whether a child is a disabled child:
The contentious cases will be those non-manifest cases where the CDAT provides a score of zero or negative score meaning the child is not a disabled child and therefore qualification for CDA is not met.
The involvement of the Department of Social Security is in applying the CDAT to the responses provided by the claimant and the treating doctor to arrive at a score.The Bill does not address the circumstances where the child is found to be not a disabled child under the CDAT scoring and the claimant wishes to review or examine their ownresponses and/or those provided by the treating doctor.It may be that the responses are not a complete or an accurate description of the child's disability and as a result the scoring does not reflect an accurate assessment.It is unclear whether judicial review of the 'decision' would be available and it may be that a disaffected applicant's only option is to reapply for the CDA.
Item 45 is a 'grandparenting' provision which provides that only new claimants after 1 July 1998 will be assessed under the CDAT.The current assessment provisions will apply to those to whom an allowance is payable on 30 June 1998 until the allowance ceases to be payable to a person or until 30 June 2003, whichever occurs first.
Under the current CDA criteria at least one child must meet the substantive extra care requirements.The criteria cannot be met where the collective care requirements for two or more children meet the criteria.Item 11 amends subsection 954(2) to recognise situations where the collective care requirements for two or more disabled children are as onerous as one severely disabled child and to allow payment of CDA as if the person has one CDA child.This has been a long-standing issue of concern to parents.
Sections 959 and 960deal with the backdating of claims which are made after the day on which the person became qualified for the CDA.Items 24 and 26 reduce the length of time for which a claim may be backdated from 12 months to 6 months.
This change follows an unsuccessful attempt in 1996 too reduce arrears from 12 to 3 months.Arrears provisions recognise several considerations affecting CDA claimants, the main ones being:
This Schedule commences on 1 April 1998.
The amendments contained in this Schedule effect the change of name from 'family payment' to 'family allowance' and make the necessary consequential changes to other legislation.There are no amendments of substance.
Items 1 to 8 commence immediately after the commencement of the Social Security Legislation Amendment (Youth Allowance) Act 1997 if that Act commences on 1 July 1998.If that Act does not commence on 1 July 1998, items 1 to 8 commence on 1 July 1998.Items 9 to 21 and 24 and 25 commence on 1 July 1999.Items 22 and 23 commence on 1 July 1998.
Item 2 inserts proposed section 19C which defines 'in severe financial hardship' as being a situation where the value of a person's liquid assets is less than the applicable fortnightly amount of the relevant allowance or twice that amount if the person is a member of a couple.
Item 3 and 6 amend subsections 598(5) and 676(6) to provide that for recipients of Newstart and Sickness Allowance respectively, the liquid assets test waiting period may be waived if a person is in severe financial hardship because the person has incurred unavoidable and essential expenditure while serving the waiting period.
Items 11 and 12 amend proposed section 19C to apply the definition of 'in severe financial hardship' to Partner Allowance, Widow Allowance and Mature Age Allowance.
Item 13 amends proposed section 19C to apply to income maintenance periods.
Items 17 to 25 amend the relevant rate calculators to allow the Secretary to make a determination of financial hardship and provide a discretion to reduce the income maintenance period.
This Schedule commences on 1 July 1998.
Item 1 amends the definition of 'disadvantaged person' in section 4CA of the National Health Act 1953 to allow parents of a disabled child, who will not be eligible for the Child Disability Allowance, to maintain their eligibility for a health care card.
Items 2 to 8 extend the period over which a person's income is assessed for the purpose of determining whether they are eligible for a health care card from 4 weeks to 8 weeks.
This Schedule commences on the day on which the Act receives the Royal Assent.
Item 1 amends the definition of 'assistance agency' to provide for the current name of the Department of Health and Family Services, from the Department of Human Services and Health.
Item 8 is an amendment to specifically allow for the transfer of data between matching agencies by on-line computer connections.
Current Manifest conditions for the purpose of determining whether a young person is a disabled child:
Peter Yeend and Lee Jones
31 October 1997
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ISSN 1328-8091
© Commonwealth of Australia 1997
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Published by the Department of the Parliamentary Library, 1997.
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Last updated: 4 November 1997