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Australian Senate Standing Committee for the Scrutiny of Bills - Scrutiny Digests |
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Purpose
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This bill seeks to amend the law relating to family assistance, social
security, paid parental leave and student assistance
Schedule 1 introduces a single Jobseeker Payment, to replace seven existing
payments as the main payment for people of working age
Schedules 2, 3, 4 and 5 ceases Widow B Pension; Wife Pension; Bereavement
Allowance; and Sickness Allowance from 20 March 2020
Schedule 6 will close the Widow Allowance to new entrants from
1 January 2018 and will cease on 1 January 2022, when all
recipients
have moved to Age Pension
Schedule 7 ceases Partner Allowance from 1 January 2022
Schedule 8 allows the Minister to make rules of a transitional nature in
relation to the amendments and repeals made by Schedules
1 to 7 to this bill
Schedule 9 amends the activity tests for Newstart Allowance and certain
Special Benefit recipients aged 55 to 59 who engage in voluntary
work for at
least 30 hours
Schedule 10 amends the start day for some participation payments and the
RapidConnect arrangements
Schedule 11 removes intent to claim provisions, resulting in social
security claimants receiving payments from the date they lodge
a complete
claim
Schedule 12 provides for the trialling of drug testing 5000 new recipients
of Newstart Allowance and Youth Allowance in three locations
over two
years
Schedule 13 provides that exemptions from the activity test and
participation requirements will no longer be available in relation
to
circumstances directly attributable to drug or alcohol misuse for certain social
security recipients
Schedule 14 amends the reasonable excuse rules
Schedule 15 introduces a new compliance framework for mutual obligation
requirements in relation to participation payments
Schedule 16 would allow a request to provide a tax file number and/or a
relevant third party's tax file number as part of a claim
for a social security
payment or seniors health card
Schedule 17 allows information and documents obtained by the Department of
Human Services to be used in welfare fraud prosecution
proceedings starting from
1 January 2018
Schedule 18 aligns the social security and disability discrimination
laws
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Portfolio
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Social Services
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Introduced
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House of Representatives on 22 June 2017
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Bill status
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Before House of Representatives
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Scrutiny principle(s)
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Standing Order 24(1)(a)(i), (ii), (iii), (iv) and (v)
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2.135 The committee dealt with this bill in Scrutiny Digest No. 8 of 2017. The Minister responded to the committee's comments in a letter dated 28 August 2017. Set out below are extracts from the committee's initial scrutiny of the bill and the Minister's response followed by the committee's comments on the response. A copy of the letter is available on the committee's website.[79]
Initial scrutiny – extract
2.136 Schedule 12 provides for a two year trial in three regions for the mandatory drug testing of 5,000 recipients of Newstart Allowance and Youth Allowance. Proposed section 38FA provides that the Minister may make rules (legislative instruments) providing for a number of matters relating to the establishment of the drug testing trial. This includes a number of significant matters, such as the confidentiality and disclosure of drug test results and the keeping and destroying of records relating to samples and drug tests. Proposed section 64A also provides that the drug test rules may require contracts for the carrying out of drug tests to meet certain requirements, including provisions requiring the giving, withdrawal or revocation of a notice to the Secretary saying that a person should be subject to income management,[81] with the intention that the circumstances in which such a notice may be given to be provided in the drug test rules.[82]
2.137 In addition, proposed subsection 123UFAA(1B) provides that the Secretary may, by legislative instrument, determine a period longer than 24 months as to when a person may be subject to income management. This would give the Secretary the power, via legislative instrument, to extend the period of income management for longer than the 24 month trial period.[83]
2.138 The committee's view is that significant matters should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this instance, the explanatory memorandum does not explain why the confidentiality and disclosure of drug test results, the keeping and destroying of records relating to samples and drug tests, and requirements regarding the contractual arrangements for drug testing are to be included in delegated legislation rather than set out in the primary legislation. In relation to extending the trial period beyond 24 months, the explanatory memorandum suggests this might be used 'where it is considered to be beneficial to a person's drug rehabilitation outcome to remain on income management for a longer period of time'.[84] The committee notes that no time limit is set in the bill on the period that the trial could be extended via legislative instrument.
2.139 The committee requests the Minister's advice as to:
• why it is considered necessary to leave significant matters of the type referred to above to delegated legislation; and
• the type of consultation that it is envisaged will be conducted prior to the making of rules and determinations and whether specific consultation obligations (beyond those in section 17 of the Legislation Act 2003) can be included in the legislation (with compliance with such obligations a condition of the validity of the legislative instrument).
Minister's response
2.140 The Minister advised:
As described in the House of Representatives Practice (6th Edition), delegated legislation is necessary and often justified by its facility for adjusting administrative detail without undue delay, its flexibility in matters likely to change regularly or frequently, and its adaptability for other matters such as those of technical detail. Once Parliament has laid down the principles of a new law, delegated legislation is the appropriate method through which to work out the application of the law in greater detail within, but not exceeding, those principles. The items on which you seek further advice fall within this category of business.
Drug Test Rules
With respect to Schedule 12 of the Social Security Legislation Amendment (Welfare Reform) Bill 2017 (the Welfare Reform Bill), the introduction of a two year drug testing trial for new claimants of Newstart Allowance and Youth Allowance (other), clause 38FA allows for the creation of Drug Test Rules via legislative instrument that will set out certain details relating to the establishment and operation of the trial. This includes the rules for conducting the tests, including the taking of samples, carrying out of the tests and disclosure of results.
The reason for the use of delegated legislation to set out the rules for conducting the tests is that these technical and more administrative details rely to an extent on the advice of the preferred tenderer for the provision of drug testing trial services as well as other stakeholders. Use of a legislative instrument gives the necessary flexibility to ensure that the arrangements for the drug testing will meet the intention of the legislation but can accommodate practicalities that may have been unknown at time the Bill was drafted.
The Drug Test Rules will also set out the three areas in which the trial will operate. The Government had not finalised the selection of the trial sites at the time the Bill was drafted. Using subordinate legislation to set out these areas gives flexibility for consultation, and consideration of the relevant factors in making this decision, after introduction of the Bill to the Parliament.
The Department has been engaging with stakeholders from the health, alcohol and other drug, and welfare sectors and this consultation will be ongoing. The Department has spoken to all state and territory governments as well as a range of drug and alcohol treatment providers and peak bodies, and related experts across the country. The advice and feedback of stakeholders will be considered in finalising the Drug Test Rules.
Income Management
New paragraph 1(B) of 123UFAA of the Social Security Administration Act 1999 (the Administration Act) will give the Secretary the power to determine a longer period of time than 24 months for a person to remain on Income Management. It is intended that this power would be used where it is considered to be beneficial to the person and/or their drug rehabilitation outcome to remain on Income Management. For example, to return the job seeker to unrestricted welfare payments part way through their rehabilitation could jeopardise their long term outcomes, if the use of Income Management as a tool in helping them to manage their payments is proving successful overall.
Committee comment
2.141 The committee thanks the Minister for this response. The committee notes the Minister's advice that the reason for the use of delegated legislation for details relating to drug testing is that the matters to be included are technical and administrative detail that rely, to an extent, on the advice of the preferred tenderer for the provision of drug testing trial services and other stakeholders.
2.142 However, the committee notes that many of the matters relating to drug testing that will be included in the drug testing rules appear to go beyond merely technical and administrative detail. In particular, the rules are to provide for the confidentiality and disclosure of results of drug tests and the keeping and destroying of records relating to drug tests and samples for use in drug tests.[85] The committee notes that an exposure draft of the Drug Test Rules has been tabled by the Minister in another inquiry.[86] These Rules provide for matters such as when a drug test notice will be considered to be invalid, withdrawn or revoked; how a drug test is to be carried out (i.e. affording reasonable privacy and in a respectful manner); when samples (which contain highly personal information) are to be destroyed; and the steps that occur when a drug test is disputed. The committee does not consider that these matters are technical and administrative detail. The committee considers that these are significant matters that are not appropriate to be left to delegated legislation, which is subject to significantly less parliamentary oversight than primary legislation.
2.143 The committee also notes the Minister's advice that the power of the Secretary to determine that a person may be subject to income management for a longer period than 24 months is intended to be used when it is considered to be beneficial to the person. However, the committee notes that the legislation is not limited in this way: proposed subsection 123UFAA(1B) simply provides that the Secretary may, by legislative instrument, determine a period longer than 24 months. There is also no cap on the length of time that the Secretary could prescribe under this provision.
2.144 The committee draws its scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of including significant matters, such as how a drug test is to be conducted and the confidentiality of that test, and the extension of the period of income management, in delegated legislation.
2.145 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.
Initial scrutiny – extract
2.146 Proposed section 64A provides that the Secretary may enter into contracts for the carrying out of drug tests of drug trial pool members. Such a contract must meet any requirements to be prescribed in rules (legislative instruments). Proposed paragraph 123UFAA(1A)(c) provides that a person will be subject to income management on a number of specified bases, including that the contractor who carried out the drug test has given a written notice to the Secretary 'saying that the person should be subject to the income management regime'.[88] Additionally, a person will not be subject to the income management regime if the contractor has withdrawn or revoked its notice,[89] and a person will not be required to pay for a drug test 'if the contractor who carried out the test gives a written notice to the Secretary that the test should not be taken into account'.[90] These provisions appear to give the contractor the power to determine who should be subject to the income management regime.
2.147 The explanatory memorandum states that if a person's drug test result is positive 'the contractor will give a notice to the Secretary that the person should be subject to income management'.[91] The circumstances under which such a notice may be given are intended to be provided for in the drug test rules 'for instance, if the drug test result is positive'.[92] The explanatory memorandum also notes that the contractor can withdraw or revoke a notice or give notice that a positive drug test should not be taken into account:
For example, if a person requests a second drug test which results in a negative result or if the contractor receives evidence that the person is taking legal medication which could cause a false positive result, the contractor can withdraw or revoke a notice that was previously given a notice under paragraph 123UFAA(1A)(c)
...
For example, if the contractor becomes aware...of a false positive test result such as if the contractor received evidence that the person is taking legal medication which could cause a false positive result, the contractor will be required under the drug testing rules to notify the Secretary that the test should not be taken into account for the purposes of a drug test repayment deduction.[93]
2.148 The bill states that the criteria for guiding when the contractor would give a written notice may be provided in the drug test rules, but no detail is provided in the bill itself. Additionally, proposed paragraph 64A(3)(a)[94] provides that the rules may include provisions noting that any subcontracts should include similar provisions to those set out for contractors, which suggests a subcontractor may also be able to determine if a person is to be subject to income management.
2.149 The explanatory memorandum provides no details as to who is likely to be contracted to perform the task of determining which social security recipients are to be subject to income management, and what their qualifications must be. Contractors will not be subject to the same level of accountability and oversight that apply to members of the public service. For example, the APS Code of Conduct applies only to employees of the Australian Public Service.
2.150 There is also nothing in the primary legislation, nor any indication that it will be in the rules, as to how the contractor is to 'receive evidence', for example that a person is taking legal medication. There is no information in the bill or explanatory materials as to what are the review rights of a person who is made subject to income management based on a contractor's written notice. It appears that a person will be made subject to income management automatically once certain criteria is met, including that a contractor has given written notice to this effect. It is unclear whether the contractor's provision of a notice to the Secretary stating that a person should be subject to income management is a 'decision' that would be reviewable.
2.151 The committee requests the Minister's advice as to:
• the appropriateness of allowing contractors to make a determination as to who is to be subject to income management;
• the qualifications to be required of such contractors;
• any accountability or oversight mechanisms that contractors will be subject to (covering matters such as the protection from unauthorised disclosure of personal information obtained by a contractor); and
• the availability of review of a contractor's decision to give, vary or revoke a written notice to the Secretary subjecting a person to income management or a refusal to vary or revoke such a notice.
Minister's response
2.152 The Minister advised:
Referral to Income Management and Review of this Referral
The drug testing provider does not make determinations as to who is subject to Income Management. The contracted provider will be contracted by the Department of Human Services (DHS) to drug test individuals and to notify DHS of test results under the drug testing trial. The circumstance in which the drug test provider is to provide DHS with a notice of the test results will be if the individual returns a positive drug test. DHS then cross reference the results of the drug test with customer information to confirm the drug test relates to a specific customer.
The notice of decision that an individual will be placed on Income Management is provided in a letter sent by DHS to the individual requiring attendance at an initial Income Management interview. At this initial interview, an individual can request a wellbeing review if being placed on Income Management will be a serious risk to the person's mental, physical or emotional wellbeing. DHS officers can then refer the individual to DHS social workers to review whether this would be the case. While the drug testing provider is responsible for the drug testing and the notification of test results to DHS, the decision to place an individual on Income Management will be a decision made by a DHS officer under social security law.
This safeguard has been strengthened in response to comments made by the Senate Standing Committee for the Scrutiny of Bills in Scrutiny Digest No.8 of 2017. These comments noted it might be appropriate to review the provisions in the Social Services Legislation Amendment 5 (Welfare Reform) Bill 2017 governing when and how the Secretary might make determinations to remove people from Income Management. In response, the Government made amendments to the provisions in the Bill to limit the Secretary's discretion to make determinations to remove people from Income Management.
The drug testing provider will also be required to notify DHS to revoke a person's referral to Income Management if they subsequently become aware that the positive test result was in error. This may be because:
• the job seeker requested a re-test and the sample was subsequently found to return a negative result;
• the drug test provider was given evidence (by the job seeker or their representative) of legal medications or other circumstance which would, in their professional opinion, produce a positive drug test result without the consumption of illicit drugs; or
• they became aware of any other error within their testing process for that person's sample.
These circumstances and requirements will be stipulated in the Drug Test Rules.
Referral of a person to Income Management by an external party is already an established process under existing Income Management provisions in the Administration Act. For example, the local child protection authority or, in Queensland, the Families Responsibility Commission can refer people to Income Management under certain circumstances.
The decision that a person is subject to Income Management, based on a referral from a third party (such as the drug testing provider) is a decision under social security law. Any decision made under social security law, including implementation of the drug test provider's referral of a person to Income Management, may be appealed in accordance with existing review and appeal provisions. Under existing review and appeal mechanisms in the Administration Act, recipients can request a review of the decision by a DHS Authorised Review Officer and, if they disagree with the decision by this officer, can appeal the decision to the Administrative Appeals Tribunal.
Qualifications of the Drug Test Provider
The minimum requirements, including qualifications, of the drug test provider and its officers will also be set out in the Drug Test Rules. It is intended that the drug testing provider will need to deliver testing services in accordance with the relevant Australian Standards (where these exist) being AS/NZS 4308:2008 Procedures for specimen collection and the detection and quantitation of drugs of abuse in urine and AS4760: 2006 Procedures for specimen collection and the detection and quantitation of drugs in oral fluid. It is also intended that the provider will also be required by the Rules to utilise authorised laboratories – those accredited by the National Association of Testing Authorities, Australia - and to use authorised analysts for the purposes of analysing the results of samples taken for drug testing. The final details of the Drug Test Rules may be subject to further consultation with stakeholders.
Privacy
With respect to privacy concerns, there are existing privacy safeguards in place under the Privacy Act 1988 and the confidentiality provisions in Division 3 of Part 5 of the Administration Act.
These confidentiality provisions stipulate that protected information, including any personal information such as health information, can only be accessed, used or disclosed in limited circumstances. This includes for the purposes of administering the social security law; for research, statistical analysis or policy development; and where it has been certified as being in the public interest.
These existing safeguards will apply to any information gathered as part of this trial, including that obtained or generated by the drug test provider. Any accessing, use or disclosure of this information, including test results, will only occur in accordance with these existing laws.
Committee comment
2.153 The committee thanks the Minister for this response. The committee notes the Minister's advice that the drug testing provider does not make determinations as to who will be subject to income management. Rather, the Minister advises that the decision to place an individual on income management will be a decision made by a DHS officer under social security law, and an individual can request a wellbeing review. The committee also notes the Minister's advice that referral of a person to income management by an external party is already an established process under the existing income management provisions in the Social Security (Administration) Act 1999 (the Administration Act). The committee notes the advice that the decision that a person is to be subject to income management 'based on a referral from a third party (such as the drug testing provider)' is a decision that may be appealed in accordance with existing review and appeal provisions.
2.154 However, the committee notes that the only relevant decision that is subject to review under the Administration Act is the decision that determines whether the conditions in proposed subsection 123UFAA(1A) have been met, namely that, at or before the test time:
• the person is an eligible recipient of a relevant welfare payment;
• there was a positive drug test for the person;
• the contractor who carried out the test gave the Secretary a written notice saying that the person should be subject to the income management regime, and that notice has not been withdrawn or revoked;
• the person is not covered by a determination that the person should not be subject to the income management regime; and
• any payment nominee is not an excluded nominee and the person is otherwise subject to income management.
2.155 In relation to the contractor's decision that the person should be subject to income management, there appears only to be a requirement that the DHS officer is satisfied that a written notice has been provided. The decision as to whether the notice has been provided would be a reviewable decision under the Administration Act.[95] However, there is no right of review under the Administration Act of the contractor's decision to issue the notice. Similarly, the fact of whether there was a positive drug test would appear to simply require the DHS officer to be satisfied that the drug test was positive, but would not enable to officer to look behind whether the test results were accurate.
2.156 As the Minister's response notes, the contractor's notice is analogous to the existing referral to income management by a third party. The government's Guide to Social Security Law notes that a review of a decision to impose income management when there is a referral by a third party, is a review as to whether the legislative conditions have been met, but the decision of the third party whether to issue the notice is 'not made under the social security law'[96] and is therefore not reviewable under the Administration Act. As the Guide states in relation to referrals by State or Territory authorities:
The decision by the recognised state or territory officer or employee to issue the notice is not reviewable under the social security law, although the question of whether or not the notice was actually given is reviewable. The decision by the a recognised state or territory officer or employee to give the notice to the Commonwealth may be able to be appealed or reviewed in the relevant state or territory jurisdiction.[97]
2.157 In this instance there is no applicable State or Territory jurisdiction by which a decision of the contractor to refer a person to income management can be reviewed. The committee notes the Minister's response that the contractor will be required to notify DHS to revoke the referral if they subsequently become aware the positive test result was in error because the contractor was 'given evidence (by the job seeker or their representative) of legal medications or other circumstance which would, in their professional opinion, produce a positive drug test result without the consumption of illicit drugs'.[98]
2.158 From a scrutiny perspective, the committee is concerned that it appears that the only way a person subject to income management under this proposed provision could seek review of the results of the drug test itself is by asking the contractor to review its own processes. The committee notes that an exposure draft of the Drug Test Rules has been tabled by the Minister in another inquiry.[99] This draft suggests that there will be a process by which an affected person can provide evidence to the contractor about the drug test and the contractor will need to satisfy itself, having regard to that evidence, as to the validity of the drug test. The details of this process, as to how a person will apply to the contractor and how the contractor will assess any submissions or evidence, do not appear to be set out in legislation. Indeed, the draft explanatory statement accompanying the exposure draft of the rules states that the rules only set out 'high level requirements' and that more detailed requirements will be set out in the government's contract with the selected providers.[100]
2.159 The committee has significant scrutiny concerns about private contractors making a referral as to who will be subject to income management. The committee notes that private contractors are not subject to the same level of accountability and oversight that apply to members of the Australian Public Service. The committee's scrutiny concerns are heightened by the fact that it does not appear that the contractor's decision to make the referral will be subject to any form of merits or judicial review, as only the question of whether or not the notice was actually given appears to be reviewable under the Administration Act. The committee also has scrutiny concerns that the process by which an affected person can seek to challenge a positive drug test is not contained in any legislation. The committee draws these significant scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of this proposed approach.
Initial scrutiny – extract
2.160 Proposed subsection 123UFAA(1C) provides that the Secretary may determine that a person is not subject to the income management regime if the Secretary is satisfied that being subject to the regime poses a serious risk to the person's mental, physical or emotional wellbeing.
2.161 However, proposed subsection 123UFAA(1D) makes it clear that the Secretary has no duty to even consider whether or not to exercise this power.
2.162 The explanatory memorandum states that the Secretary is not required to actively take steps to assess every trial participant, who is referred to income management, but will consider making this determination once he or she is made aware of facts which indicate that being subject to income management may seriously risk a person's mental, physical or emotional wellbeing.[102] However, the committee notes, even if the Secretary has been made aware of such facts, proposed subsection 123UFAA(1D) makes clear there is no duty on the Secretary to consider this.
2.163 'No-duty-to-consider' clauses do not by their terms oust the High Court or Federal Court's judicial review jurisdiction. However, they do significantly diminish the efficacy of judicial review in circumstances where no decision to consider the exercise of a power has been made. Even where a decision has been made to consider the exercise of the power, some judicial review remedies will not be available.[103]
2.164 The committee notes that the no-duty-to-consider clause has not been thoroughly justified in this case. The explanatory memorandum indicates that once the Secretary is made aware of facts which indicate income management may seriously risk a person's well-being, the Secretary will consider making a determination. The committee considers it may be appropriate to amend the no-duty-to-consider clause to ensure it does not apply where the Secretary is made aware of facts that indicate that income management may risk a person's well-being. The committee requests the Minister's response on this matter and an explanation as to why proposed subsection 123UFAA(1D) is otherwise considered necessary and appropriate.
Minister's response
2.165 The Minister advised:
The Committee's comments regarding the no-duty-to-consider clause have been noted. I agree to amend new clause 123UFAA(1C) of the Welfare Reform Bill through Government amendments to read that the Secretary will determine that a person is not subject to the income management regime under subsection (1A) if the Secretary is satisfied that being subject to the regime under that subsection poses a serious risk to the person's mental, physical or emotional wellbeing.
Committee comment
2.166 The committee thanks the Minister for this response. The committee welcomes the Minister's advice that government amendments will be made to state that the Secretary will (rather than may) determine that a person is not subject to income management if satisfied that it would poses a serious risk to the person's mental, physical or emotional wellbeing.
2.167 The committee notes that on 5 September 2017, Government amendments were circulated that would ensure that the Secretary must determine that a person is not subject to income management if satisfied that being subject to the regime poses a serious risk to the person's mental, physical or emotional wellbeing, but the Secretary is not required to inquire into whether being subject to income management would pose such a risk. This effectively removes the no-duty-to-consider clause.
2.168 The committee welcomes the proposed Government amendments to the bill which respond to its scrutiny concerns. In light of the amendments that have been circulated, the committee makes no further comment on this matter.
Initial scrutiny – extract
2.169 Currently under Division 3A of the Social Security (Administration) Act 1999 the Secretary is required not to determine that a person has committed a number of specified participation failures[105] if the person satisfies the Secretary that the person has a reasonable excuse for the failure. Current section 42U provides that the Secretary must make a legislative instrument that determine matters that the Secretary must take into account in deciding whether a person has a reasonable excuse for such failures, but this does not limit the matters the Secretary may take into account in making such a decision. Item 7 proposes to amend section 42U to include a power for the Secretary to, by legislative instrument determine matters that the Secretary must not take into account in deciding whether a person has a reasonable excuse.
2.170 The committee notes that there is no limit in the primary legislation on the matters that could be included in such a legislative instrument and is concerned that the matters that the Secretary (and his or her delegates) would be bound not to consider, could be so broad as to undermine the reasonable excuse provisions as set out in the Act. The explanatory memorandum sets out the intention of this provision as follows:
It is envisaged that the Secretary will exercise the new power provided for in this Schedule to make a legislative instrument determining that where a person's abuse of, or dependency on, drugs or alcohol is used once as a reasonable excuse for a relevant participation failure, such abuse or dependency must not be used in relation to determining whether the person has a reasonable excuse for committing a second or subsequent participation failure if they have previously refused available and appropriate treatment.[106]
2.171 The committee notes that it would appear that the current requirement that the excuse be 'reasonable' would sufficiently constrain the use of the excuse provision.
2.172 The committee requests the Minister's advice as to:
• why it is necessary to bind decision-makers via delegated legislation as to what must not be considered a 'reasonable excuse' for a participation failure, given the existing requirement that any excuse be 'reasonable'; and
• the appropriateness of providing a broad and unfettered power to prescribe any matter that must not be considered when determining a reasonable excuse (rather than more specifically limiting this power to provide that drug or alcohol abuse or dependency must not be considered in relation to determining whether a person has a reasonable excuse for committing a second or subsequent participation failure if they have previously refused available and appropriate treatment).
Minister's response
The need for delegated legislation to specify what must not be considered a 'reasonable excuse'
Implementing the measure purely on the basis of what individual
decision-makers believe is reasonable would lead to administrative inconsistency and inequity and may not achieve the policy intent of providing an incentive to job seekers with drug and alcohol issues to try to address those issues.
Without the proposed legislative change allowing the Secretary to determine, by legislative instrument, what factors must not be considered when deciding whether a person had a reasonable excuse, decision-makers would continue to be required to consider drug and alcohol dependency for every failure. This is not consistent with policy intent of the measure. Policy guidelines could be used to specify that decision makers should consider whether a job seeker has turned down treatment in determining whether a job seeker has a reasonable excuse. However, without an instrument specifying the circumstances in which drug and alcohol must and must not be taken into account, the discretion to find a reasonable excuse in circumstances that are inconsistent with the policy intent would remain in place. This would allow inconsistent application of the policy, as different decision-makers will have different views on what is reasonable, depending on their experience and values.
The appropriateness of providing a broad power to prescribe matters that must not be considered when determining 'reasonable excuse'
The alternative to providing a broad power in the primary legislation to specify, in a legislative instrument, matters which must not be taken into account when considering reasonable excuse would be to use the primary legislation itself to specify the circumstances in which drug or alcohol dependency must or must not be taken into account.
This would require the inclusion of an inappropriate level of detail in the primary legislation. Also, using a legislative instrument is preferable because it provides greater flexibility should any refinement to the policy be required, while still allowing appropriate Parliamentary oversight through the disallowance process. This oversight will ensure that the instrument does not include matters that go beyond the Government's declared policy intent.
Committee comment
2.174 The committee thanks the Minister for this response. The committee notes the Minister's advice that implementing the measure purely on the basis of what individual decision-makers believe is reasonable would lead to administrative inconsistency and inequity. The Minister also acknowledged that policy guidelines could be used to specify that decision-makers should consider whether a job seeker has turned down treatment in determining whether they have a reasonable excuse; however, the Minister considered that this would be inconsistent with the policy intent of providing an incentive to job seekers with drug and alcohol issues to try to address those issues. The committee also notes the Minister's advice that specifying the circumstances in which drug or alcohol dependency must or must not be taken into account would require an inappropriate level of detail in the primary legislation.
2.175 The committee reiterates that there is no limit in the primary legislation on the matters that could be included in a legislative instrument setting out what must not be considered a 'reasonable excuse' for a participation failure. From a scrutiny perspective, the committee therefore remains concerned that the matters that the Secretary (and his or her delegates) would be bound not to consider, could be made so broad as to undermine the reasonable excuse provisions as set out in the Act. The committee draws these scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of this measure.
2.176 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.
Initial scrutiny – extract
2.177 Schedule 15 seeks to introduce a new compliance framework for mutual obligation requirements in relation to participation payments. It is intended that job seekers that repeatedly fail to comply with their employment pathway plan requirements will gradually lose income support payments. A number of significant elements of this proposal appears to be included in delegated legislation:
• proposed section 42AC states that a person commits a mutual obligation failure if the person fails to satisfy the Secretary that the person has undertaken adequate job search efforts (the question of whether a person has undertaken adequate search efforts is to be worked out in accordance with a legislative instrument made by the Secretary);[108]
• proposed section 42AI states that the Secretary must, by legislative instrument, determine matters that the Secretary must, or must not, take into account in deciding whether a person has a reasonable excuse for committing a mutual obligation failure or work refusal failure; and
• proposed section 42AR provides that the Minister must, by legislative instrument, determine the circumstances in which the Secretary must, or must not, be satisfied that a person has persistently committed mutual obligation failures and the circumstances in which a determination is to be made regarding reducing a person's instalments or cancelling their payments.
2.178 The committee's view is that significant matters should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this instance, the explanatory memorandum does not explain why matters are to be set out in legislative instruments in relation to proposed sections 42AC or 42AI. In relation to proposed section 42AR, no information is given as to why it is appropriate to include these matters in delegated legislation; however it does state the intention behind the legislative instrument:
The intention is for the legislative instrument to provide, among other things, safeguards (such as the person having committed a number of failures without a reasonable excuse, the existence of checks having been undertaken by the employment service provider and the Department of Human Services ensuring that the person did not have any undisclosed issues that are affecting their ability to comply with their mutual obligations and/or the suitability of the person's employment pathway plan) to be taken into account by the Secretary before a determination that a person has persistently committed mutual obligation failures can be made.
2.179 The committee notes that significant matters such as safeguards and principles guiding whether a person's social security payments are to be reduced or temporarily cancelled are matters that would appear to be more appropriate for inclusion in primary legislation to allow for greater parliamentary scrutiny of the processes and of any future amendments to them.
2.180 The committee requests the Minister's advice as to:
• why it is considered necessary to leave significant matters of the type referred to above to delegated legislation; and
• the type of consultation that it is envisaged will be conducted prior to the making of rules and determinations and whether specific consultation obligations (beyond those in section 17 of the Legislation Act 2003) can be included in the legislation (with compliance with such obligations a condition of the validity of the legislative instrument).
Minister's response
2.181 The Minister advised:
The use of delegated legislation
The reliance on legislative instruments to specify micro-policy details in relation to the application and administration of the compliance framework is based on the principle that delegated legislation is necessary and justified because it allows administrative and technical detail to be adjusted relatively quickly (compared to provisions of the primary legislation), in the event that shifting policy imperatives give rise to the need to change policy at an administrative level. The use of delegated legislation such as legislative instruments allows policy departments, with appropriate parliamentary scrutiny, to work out the application of the law in greater detail within, but not exceeding, the principles that the Parliament has laid down by statute in the primary legislation.
The targeted job seeker compliance framework is intended to deal with one-off instances of non-compliance through payment suspension (where the job seeker receives full back-payment once they re-engage) and apply penalties only to job seekers who have demonstrated persistent and deliberate non-compliance. It is intended that generally compliant job seekers would be dealt with through administrative processes while those who persist in their non-compliance, for no good reason, will be dealt with through the legislation.
A legislative instrument provides the best mechanism for specifying in detail when a job seeker should move from being primarily subject to the administrative regime to being fully subject to the legislative regime. An instrument will therefore be used to determine when a job seeker is considered to have been persistently non-compliant and, once they are so determined, the level of payment reduction that they would face for any subsequent failure (within constraints imposed in the primary legislation). The instrument will also stipulate that job seekers must have been assessed by the Department of Human Services as able to meet their requirements prior to becoming subject to financial penalties for repeated mutual obligation failures.
Also important is the potential need for future changes to these micro-policy settings. While it is informed by significant research, evidence and modelling, the targeted compliance framework is a new approach to job seeker compliance. Accordingly, some flexibility has been purposely built into the framework to allow rapid adjustment of some policy parameters. The use of legislative instruments to specify these policy parameters will allow such adjustment, while the disallowance process would ensure that Parliament is appropriately able to oversee and approve any particular policy changes.
The Bill would also introduce an instrument-making power for determining whether a job seeker has undertaken adequate job search. In the current job seeker compliance framework there is no such instrument-making power and no legislated definition of adequate job search. Using an instrument to specify this level of policy detail will therefore provide greater clarity regarding what does and does not constitute adequate job search, while not burdening the primary legislation with administrative detail. It will also provide greater flexibility should any refinement to the policy be warranted, while still allowing appropriate Parliamentary oversight through the disallowance process.
With regard to the instrument-making power relating to reasonable excuse decisions, the requirement to make an instrument specifying matters that must be taken into account reflects current arrangements. This power was introduced in 2006, as a result of Senate amendments to the Family and Community Services Legislation Amendment (Welfare to Work) Bill 2005. The requirement to specify matters that must not be taken into account will reflect the arrangements that will be in place on 1 July 2018, if Schedule 14 is passed and commences on 1 January 2018. The need for this latter power is outlined in the above response regarding Schedule 14.
Consultation
As part of the development of the targeted job seeker compliance framework, the Department of Employment consulted and worked with the Department of Human Services, the Department of Social Services and the Department of the Prime Minister and Cabinet. Other Australian Government Departments were also consulted as part of usual Budget processes. In addition, the Department of Employment continually seeks and reflects on feedback it receives regarding its policies and programmes. Views and evidence from other stakeholders, including welfare sector organisations, employment service providers and job seekers, were therefore able to be considered as part of the policy development process.
The Department of Employment will consult with other Government Departments and other affected parties on the specific content of the instruments. However, the inclusion of specific consultation obligations in the legislation is unprecedented in job seeker compliance legislation and the Government sees no value in including such a requirement in this Bill.
Committee comment
2.182 The committee thanks the Minister for this response. The committee notes the Minister's advice that a legislative instrument provides the best mechanism for specifying in detail when a job seeker should move from primarily administrative processes to being subject to legislative requirements for non-compliance. The committee notes the advice that an instrument will be used to determine when a job seeker is considered to be persistently non-compliant and the level of payment reduction they face for that non-compliance (within the constraints of the primary legislation). The committee also notes the advice that there is a potential need for future changes to these policy settings and there may need to be rapid adjustment of some policy parameters.
2.183 The committee also notes the Minister's advice that details about determining whether a job seeker has undertaken an adequate job search will be set out in an instrument to provide greater clarity regarding what does and does not constitute adequate job searches. The Minister also notes that the power to make an instrument in relation to the circumstances that must or must not be taken into account in determining whether a person has a reasonable excuse are based partly on existing powers regarding reasonable excuse and on the basis of the reasoning the Minister set out above at paragraph [2.173].
2.184 The committee also notes the Minister's advice that the Department consulted with a number of other government departments in developing the targeted job seeker compliance framework and will consult with government departments and other affected parties on the specific content of the instruments, but that the government sees no value in including consultation requirements in the bill.
2.185 The committee considers that it would be possible for the primary legislation to set out some high level guidance on what would constitute a persistent mutual obligation failure, with more specific details being left to delegated legislation. The committee also reiterates its scrutiny concerns, as set out above at paragraph [2.175] regarding the power for an instrument to prescribe matters that must not be taken into account in considering whether a person has a 'reasonable excuse' for a participation failure.
2.186 In addition, the committee takes this opportunity to reiterate its general view that where the Parliament delegates its legislative power in relation to significant regulatory schemes it is appropriate that specific consultation obligations (beyond those in section 17 of the Legislation Act 2003) are included in the bill and that compliance with these obligations is a condition of the validity of the legislative instrument.
2.187 The committee requests that the key information provided by the Minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
2.188 The committee draws its scrutiny concerns to the attention of Senators and leaves to the Senate as a whole the appropriateness of including these significant matters in delegated legislation.
2.189 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.
Merits review (Schedule 15)[109]
Initial scrutiny – extract
2.190 Currently, sections 131 and 145 of the Social Security (Administration) Act 1999 provide that if an adverse decision is made in relation to a social security payment which depends on the exercise of a discretion or the holding of an opinion (or which would result in the application of a compliance penalty period), and a person has applied for merits review of that decision, the Secretary may declare that the payment is to continue pending the determination of the review. In effect this would allow a person to continue to have their social security payments paid to them while awaiting the determination of the review process. Items 25 and 27 seek to amend these sections to provide that this will not apply in relation to adverse decisions made under proposed new Division 3AA relating to compliance with participation payment obligations.
2.191 The effect of these proposed items would be that a person who has sought merits review of a decision made under Division 3AA to suspend or cancel their welfare payments would not be able to have their payments continue while awaiting that review. The committee notes that merits review, particularly review by the Administrative Appeals Tribunal, may take many months to complete. For welfare recipients on limited income the practical operation of these items appears to diminish the effectiveness of the right to seek merits review. The explanatory memorandum provides no justification for the proposed amendments.
2.192 The committee requests that the Minister's advice as to why it is considered necessary and appropriate to remove the Secretary's ability to ensure that certain welfare payments continue to be paid pending the outcome of merits review.
Minister's response
2.193 The Minister advised:
Under the new compliance framework, while job seekers are able to appeal any financial penalty, they will not be paid pending the outcome of the appeal (payment pending review). However, job seekers will be back paid if their appeal is successful.
Under the current compliance framework, in practice payment pending review is only available for eight week serious failure penalties and unemployment non-payment periods, which will no longer exist under the new framework. Payment pending review is currently not available for the majority of penalty types.
Under the new framework, the appeal processes that will apply for all penalties will be the same as those that currently apply for all but eight week penalties. However, the longest penalty applicable under the new framework, which will apply only to those with a record of deliberate and persistent non-compliance, will be four weeks.
Before a job seeker faces any financial penalty under the new framework, they will have missed a minimum of five requirements in six months, without reasonable excuse, or will have refused work (and will therefore be demonstrably capable of obtaining work). The job seeker's capabilities will also generally have been assessed twice, by both their employment services provider and Human Services, before any penalties are applied. These arrangements are intended to ensure that only those job seekers who are fully capable of meeting their requirements but deliberately choose not to do so will lose payment. The intention is to provide such job seekers with a strong incentive to change their behaviour or find work. Allowing payment pending review for such job seekers would significantly undermine this incentive effect.
Committee comment
2.194 The committee thanks the Minister for this response. The committee notes the Minister's advice that in practice payment pending review is only available for eight week serious failure penalties and unemployment non-payment periods, which will no longer exist under the new framework, and that payment pending review is currently not available for the majority of penalty types. The committee also notes the Minister's advice that allowing payment pending review for job seekers under the new compliance framework would significantly undermine the incentive for such job seekers to change their behaviour or find work.
2.195 The committee requests that the key information provided by the Minister be included in the explanatory memorandum, noting the importance of this document as a point of access to understanding the law and, if needed, as extrinsic material to assist with interpretation (see section 15AB of the Acts Interpretation Act 1901).
2.196 In light of the information provided, including that in practice payment pending review is not currently available for the majority of penalty types, the committee makes no further comment on this matter.
[79] See correspondence relating to Scrutiny Digest No. 10 of 2017 available at: www.aph.gov.au/senate_scrutiny_digest.
[80] Schedule 12, item 3, proposed section 38FA; item 18, proposed section 64A; and item 24, proposed subsection 123UFAA(1B). The committee draws Senators' attention to these provisions pursuant to principle 1(a)(iv) and (v) of the committee's terms of reference.
[81] Schedule 12, item 18, proposed section 64A.
[82] Explanatory memorandum, p. 76.
[83] See explanatory memorandum, p. 76.
[84] Explanatory memorandum, p. 76.
[85] Schedule 12, item 3, proposed paragraphs 38FA(g) and (i).
[86] See Senate Standing Committee on Community Affairs, inquiry on the Social Services Legislation Amendment (Welfare Reform) Bill 2017, Additional Documents, tabled on 30 August 2017 by the Department of Social Services.
[87] Schedule 12, item 18, proposed section 64A and item 24, proposed paragraph 123UFAA(1A)(c). The committee draws Senators' attention to these provisions pursuant to principle 1(a)(ii) of the committee's terms of reference.
[88] See Schedule, item 18, proposed paragraph 64A(3)(b) and item 24, proposed paragraph 123UFAA(1A)(c).
[89] See Schedule, item 24, proposed paragraph 123UFAA(1A)(d), together with item 18, proposed paragraph 64A(3)(c).
[90] See Schedule 12, item11, proposed subsection 1206XA(5).
[91] Explanatory memorandum, p. 73.
[92] Explanatory memorandum, p. 76.
[93] Explanatory memorandum, p. 74.
[94] Schedule 12, item 18.
[95] See Part 4 of the Social Security (Administration) Act 1999, relating to decisions of 'officers'.
[96] Australian Government, Guide to Social Security Law, version 1.235, released 14 August 2017, Chapter 11.9.7.
[97] Australian Government, Guide to Social Security Law, version 1.235, released 14 August 2017, Chapter 11.9.7.10. Emphasis added.
[98] Emphasis added.
[99] See Senate Standing Committee on Community Affairs, inquiry on the Social Services Legislation Amendment (Welfare Reform) Bill 2017, Additional Documents, tabled on 30 August 2017 by the Department of Social Services.
[100] Explanatory statement to the exposure draft of the Social Security (Drug Test) Rules 2017, p. 1. See Senate Standing Committee on Community Affairs, inquiry on the Social Services Legislation Amendment (Welfare Reform) Bill 2017, Additional Documents, tabled on 30 August 2017 by the Department of Social Services.
[101] Schedule 12, item 24, proposed subsection 123UFAA(1D). The committee draws Senators' attention to this provision pursuant to principle 1(a)(iii) of the committee's terms of reference.
[102] Explanatory memorandum, p. 77.
[103] For example, certiorari will be futile given that mandamus could not issue to compel the re-exercise of the power, even if it had been unlawfully exercised.
[104] Schedule 14, item 7. The committee draws Senators' attention to this provision pursuant to principle 1(a)(iv) of the committee's terms of reference.
[105] Namely, a 'no show no pay' failure (see paragraph 42C(4)(a)); a connection failure (see paragraph 42E(4)(a)); a reconnection failure (see paragraph 42H(3)(a)); a serious failure (see paragraph 42N(2)(a)); or a non-attendance failure (see subsection 42SC(2)).
[106] Explanatory memorandum, p. 85.
[107] Schedule 15, item 1, proposed sections 42AC, 42AI, 42AR. The committee draws Senators' attention to these provisions pursuant to principles 1(a)(iv) and (v) of the committee's terms of reference.
[108] Schedule 15, item 1, proposed section 42AC(1)(e).
[109] Schedule 15, items 25 and 27. The committee draws Senators' attention to these provisions pursuant to principles 1(a)(i) and (iii) of the committee's terms of reference.
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