Details of the Financial Framework (Supplementary Powers) Amendment

(Treasury Measures No. 1) Regulations 2022

 

Section 1 - Name

 

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Treasury Measures No. 1) Regulations 2022.

 

Section 2 - Commencement

 

This section provides that the Regulations commence on the day after registration on the Federal Register of Legislation.

 

Section 3 - Authority

 

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

 

Section 4 - Schedules

 

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.

 

Schedule 1 - Amendments

 

Financial Framework (Supplementary Powers) Regulations 1997

 

Item 1 - In the appropriate position in Part 4 of Schedule 1AB (table)

 

This item adds a new table item to Part 4 of Schedule 1AB to establish legislative authority for government spending on an activity to be administered by the Department of the Treasury (the department).

 

New table item 556 establishes legislative authority for government spending on the Youpla Group Funeral Benefits Program (the program). The program aims to meet the immediate cost of funeral claims for recently deceased fund members whose death was covered by an eligible funeral insurance policy issued by a company in the group of companies known as the Youpla Group, in circumstances where the policy has been affected by the collapse and liquidation of those companies.

 

On 25 July 2022, the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP and the Minister for Indigenous Australians, the Hon Linda Burney MP jointly announced the Government's intention to support Youpla Group collapse families. The media release is available at https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/help-youpla-group-collapse-families.

 

The Youpla Group of companies, including the four funeral funds of the Youpla Group (Aboriginal Community Benefit Fund Pty Ltd, Aboriginal Community Benefit Fund No 2 Pty Ltd, ACBF Funeral Plans Pty Ltd and Community Funeral Plans Pty Ltd), were placed into liquidation in March 2022 by its directors, causing uncertainty and distress for its members who are now left without funeral cover. At the date of liquidation, the Youpla Group was providing funeral cover for 14,500 fund members who are almost all First Nations people. As at mid-June 2022, the liquidator of the Youpla Group, had on hand more than 35 unpaid funeral claims from fund members dating back to 1 December 2021.

 

The Youpla Group's recent entry into liquidation triggered an urgent need to allow the families of deceased Youpla Group fund members to mourn their loved ones and conduct Sorry Business with the dignity that had been intended. The Government's support ensures national consistency and removes the need for affected families to rely on state and territory government arrangements for pauper's funerals.

 

The program aims to pay for funeral expense claims relating to a deceased Youpla Group fund member's death (that had otherwise not been paid) for policies that were active as at or after 1 April 2020. This will include claims made to the liquidator of the Youpla Group prior to the commencement of the program. The Youpla Group failed to obtain an Australia Financial Services License and was subsequently unable to issue new policies from 1 April 2020. Many members were left without cover from this point as they cancelled their policies due to concerns for the Youpla Group's viability.

 

The Government will provide support through a grant payment for an amount up to the cover limit in the fund member's policy. The cover limit is typically $8,000 but can range between $3,000 and $15,000. A fund member's cover limit may not meet the full costs of a funeral and Sorry Business.

 

Payments will be made for funeral claims received up to 30 November 2023. This will provide a reasonable opportunity for Youpla Group fund members to transition into more appropriate products, including allowing for the expiry of a typical one year waiting period.

 

The department will deliver the program through a demand driven grants process in accordance with the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013 (PGPA Act) and the Commonwealth Grants Rules and Guidelines 2017 (CGRGs).

 

The department would administer an initial tranche of payments, including the assessment of approximately 40 claims the liquidator currently has on hand. This would allow the families of recently deceased Youpla fund members to mourn their loved ones as quickly as possible. The remaining grant funding will be administered by the Business Grants Hub within the Department of Industry, Science and Resources on behalf of the department.

 

Grant opportunity guidelines will be developed, agreed and published on business.gov.au and GrantConnect (www.grants.gov.au). An initial tranche of applications (i.e., claims) will be assessed by the department and remaining applications will be assessed by the Business Grants Hub. Applications will be assessed against the eligibility criteria set out in the grant opportunity guidelines. Information on grants, including grant award will be made available on GrantConnect in accordance with the CGRGs.

 

Funding decisions would be made by a delegate of the Secretary of the department. For the administration of the initial tranche of payments, the delegate will be at the Senior Responsible Officer level within the department. For the administration of the remaining payments, the delegate will be at the Senior Responsible Officer level within the Business Grants Hub. Decision making at this level will ensure the efficient processing of claims given the expected number of claims, the relatively small grant amount and the assessment of eligibility against criteria set out in the grant guidelines. The delegates will have the relevant skills, qualifications and expertise, and will be able to perform relevant functions in accordance with the PGPA Act and the Financial Framework (Supplementary Powers) Act 1997.

 

Independent merits review is not considered suitable for decisions made in connection with the payments as such decisions are automatic or mandatory in nature. The decision to make a payment under the program will be very limited and procedural, such as confirming the identity of and the eligibility of the policy. The Administrative Review Council has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 3.8 to 3.11 of the guide, What decisions should be subject to merit review?).

 

The department consulted with key stakeholders internal and external to the Commonwealth on the design and development of the program. This includes: the Save Sorry Business Coalition, the Youpla Group liquidator, the National Indigenous Australians Agency, the Australian Government Actuary, the Australian Securities and Investments Commission, the Department of Finance, the Department of the Prime Minister and Cabinet and the Department of Industry, Science and Resources. Stakeholders consulted welcomed Government action in relation to the collapse of the Youpla Group and broadly supported the specifications and delivery mechanism of the program.

 

Funding of $7.2 million over two years from 2022-23 for the program will be included in the October 2022-23 Budget and the Portfolio Budget Statements, Treasury portfolio. Funding will come from Program 1.1: Department of the Treasury, which is part of Outcome 1.

 

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

*         the insurance power (section 51(xiv));

*         the bankruptcy and insolvency power (section 51(xvii)); and

*         the race power (section 51(xxvi)).

 

Insurance power

 

Section 51(xiv) of the Constitution empowers the Parliament to make laws with respect to 'insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned'.

 

The program will make payments to beneficiaries of insurance policies with respect to individuals that were insured by the Youpla Group's funeral funds. These payments will be attributable to the conduct of insurance business by the Youpla Group.

 

Bankruptcy and insolvency power

 

Section 51(xvii) of the Constitution empowers the Parliament to make laws with respect to 'bankruptcy and insolvency'.

 

The program will make payments to beneficiaries of policies who are unable to make a claim as a consequence of the insolvency of the Youpla Group.

 

Race power

 

Section 51(xxvi) of the Constitution empowers the Parliament to make laws with respect to 'the people of any race for whom it deemed necessary to make special laws'.

 

The majority of beneficiaries who will be receiving payments through this program are First Nations people.

Statement of Compatibility with Human Rights

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Financial Framework (Supplementary Powers) Amendment (Treasury Measures No. 1) Regulations 2022

 

This disallowable legislative instrument 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 legislative instrument

 

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FF(SP) Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the FF(SP) Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the FF(SP) Regulations specify the arrangements, grants and programs. The powers in the FF(SP) Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non-corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

 

The Financial Framework (Supplementary Powers) Amendment (Treasury Measures No. 1) Regulations 2022 (the Regulations) amend Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on the Youpla Group Funeral Benefits Program (the program). The program will be administered by the Department of the Treasury.

 

The program aims to meet the immediate cost of funeral claims for recently deceased fund members whose death was covered by an eligible funeral insurance policy issued by a company in the group of companies known as the Youpla Group, in circumstances where the policy has been affected by the collapse and liquidation of those companies.

 

The funeral funds of the Youpla Group were placed into liquidation in March 2022 by its directors, causing uncertainty and distress for its members who are now left without funeral cover. At the date of liquidation, the Youpla Group was providing funeral cover for 14,500 fund members who are almost all First Nations people.

 

The Government will establish a grant program to pay a funeral claim relating to a deceased Youpla Group fund member who had an active policy as at or after 1 April 2020, including claims made to the liquidator of the Youpla Group prior to the commencement of the program. Funding will be made as a grant payment for an amount up to the cover limit in the fund member's policy. The cover limit is typically $8,000 but can range between $3,000 and $15,000. The program will pay funeral claims received up to 30 November 2023.

 

Funding of $7.2 million over two years from 2022-23 will be available for the program.

 

 

Human rights implications

 

This disallowable legislative instrument engages the right under Article 12 of the United Nations Declaration on the Rights of Indigenous Peoples.

 

Article 12 of the United Nations Declaration on the Rights of Indigenous Peoples provides that indigenous peoples have the right to manifest, practise, develop and teach their spiritual and religious traditions, customs and ceremonies; the right to maintain, protect, and have access in privacy to their religious and cultural sites; the right to the use and control of their ceremonial objects; and the right to the repatriation of their human remains.

 

At the date of liquidation, the Youpla Group was providing funeral cover for approximately 14,500 fund members who are almost all First Nations people.

 

Sorry Business is of the deepest cultural importance to First Nations people. This disallowable legislative instrument ensures that indigenous people have the support required to allow the families of deceased Youpla Group fund members to mourn their loved ones and conduct Sorry Business with the dignity that had been intended.

 

Conclusion

 

This disallowable legislative instrument is compatible with human rights because it promotes the protection of human rights.

 

 

 

 

Senator the Hon Katy Gallagher

Minister for Finance