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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 respond to the impacts of the COVID-19 pandemic on the
early childhood education and care sector and families,
by expanding the
circumstances in which the Commonwealth can pay business continuity payments to
approved child-care providers
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Portfolio
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Education
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Introduced
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House of Representative on 17 February 2021
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Bill status
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Before the House of Representatives
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2.34 In Scrutiny Digest 4 of 2021 the committee requested the minister's advice as to:
• why it is considered necessary and appropriate to leave significant matters such as the manner in which emergency business continuity payments (BCPs) may be made and the determination of circumstances in which a debt will be due to the Commonwealth to delegated legislation;
• whether the bill can be amended to include at least high-level guidance regarding these matters on the face of the primary legislation.[14]
Minister's response[15]
2.35 The minister advised:
Proposed emergency Business Continuity Payments (BCPs)
As noted in the Explanatory Memorandum to the Bill, the purpose of emergency BCPs is to 'extend the range of strategies available to the Australian Government to respond to disasters and emergencies', by 'expanding the circumstances in which business continuity payments can be made to approved child care providers'.
To put these amendments in context, the Government moved quickly at the start of the COVID-19 pandemic to put in place the Early Childhood Education and Care Relief Package, (Relief Package) which operated from 6 April to 12 July 2020. The foundation of the Relief Package was the payment of BCPs to approved providers under the existing mechanism in Division 6 of Part 8A of the A New Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance Administration Act).
The current section 205A of the Family Assistance Administration Act requires that the Minister make Minister's rules prescribing the circumstances in which those BCPs are payable (paragraph 205A(l)(c)), and the method of determining the amount of those payments (paragraph 205A(2)(a)), and permits the Minister's rules to 'prescribe any other matters relating to making (BCPs)', (paragraph 205A(2)(b)).
The Hon Dan Tehan MP, former Minister for Education, amended the Child Care Subsidy Minister's Rules 2017 (Minister's Rules) with effect from 6 April 2020 to enable those BCPs to be paid – see the Child Care Subsidy Amendment (Coronavirus Response Measures No. 2) Minister's Rules 2020 (F2020L00406).
However, the current provisions are not well-adapted to enabling BCPs to be paid in emergency circumstances, BCPs are designed largely to enable payment during temporary outages of the information technology systems that support the payment of Child Care Subsidy (CCS), and otherwise assume the ordinary operation of the family assistance law and the CCS scheme. The other amendments to the family assistance law in Part 6 of Schedule 1 to the Bill reflect some of the consequences of utilising BCPs under the current section 205A to provide funding to approved providers in emergency situations.
The proposed section 205C, which will enable the payment of emergency BCPs, does leave a number of matters relating to those BCPs to be specified in the Minister's Rules.
Nevertheless, the section endeavours to set as much detail as reasonably practicable for a discretionary payment mechanism that is intended only to be triggered in response to emergencies.
In particular, paragraphs 205C(1)(a) and (b) set out overarching criteria for the payment of emergency BCPs. The definition of 'emergency or disaster' in subsection (2) links to existing definitions for disaster responses payments under the social security law (noting that other emergencies can be specified in the Minister's Rules). Subsections (3) and (4) set out minimum administrative requirements with which the Secretary must comply when paying emergency BCPs. Beyond these matters, it is not clear what other guidance on the content of the Minister's Rules would be suitable for inclusion in the primary legislation, even at a high level.
The nature of emergency BCPs requires that there be considerable flexibility in their implementation and administration. Any scheme for the payment of emergency financial assistance must be inherently able to be fine-tuned and adapted to the needs of responding to the emergency in question. The assistance must be properly targeted to achieve its intended policy outcome of supporting those in need, and it must also work in conjunction with any other actions or supports that are being undertaken in response to the emergency. A Government response to an emergency involving the payment of emergency BCPs is neither a 'one-size-fits-all' nor a 'set-and-forget' scheme.
Consequently, it is essential that the criteria for eligibility for emergency BCPs, the amounts of payment, and the period in relation to which they are payable, be left to subsidiary legislation. In this respect, section 205C does not depart from the existing section 205A, and is consistent with the operation of legislative provisions in relation to other emergency payments, including disaster recovery allowance (see Part 2.23B of the Social Security Act 1991 (Social Security Act), esp. s 1061KA), and the Australian Government Disaster Recovery Payment (see Part 2.24 of the Social Security Act).
I note that, unlike BCPs payable under section 205A of the Family Assistance Administration Act, emergency BCPs payable under section 205C will be subject to the internal and external review processes available for most decisions of the Secretary under the family assistance law, further ensuring there is appropriate accountability for those decisions.
BCPs paid during the Relief Package to be debts in circumstances prescribed in Minister's Rules
The Committee also seeks my advice as to why it is appropriate for the Minister's Rules to set out circumstances in which the BCPs paid during the Relief Package are to be debts. This question relates to the provision at item 36 of Schedule 1 to the Bill.
It should be noted that items 36 and 37 of Schedule 1 operate together. As the Explanatory Memorandum explains, item 37 of Schedule 1 is intended to ensure that BCPs paid during the Relief Package do not need to be automatically offset against other child care payments to approved providers under section 205B of the Family Assistance Administration Act.
Normally, BCPs are not debts, as they must be entirely offset against other payments to providers under section 205B. However, in circumstances where those BCPs are not being offset-as would be the case for BCPs paid during the Relief Package as a consequence of the provision at item 37 of Schedule 1 to the Bill – there does need to be some facility for the Commonwealth to recover those BCPs in appropriate circumstances. These could be where the amount of a BCP paid to a provider exceeded the amount prescribed in the Minister's Rules, or the provider was not eligible for a particular BCP that was paid to them.
For example, a provider may have been paid a supplementary amount of BCP under section 60F of the Minister's Rules, but was not eligible for that supplementary amount in accordance with the Early Childhood Education and Care Relief Package Payment Conditions published by the Department of Education, Skills and Employment that were in force at the time.
As the Relief Package was implemented rapidly at the start of the COVID-19 pandemic, and was continually adapted during its operation to meet the evolving needs of the early childhood education and care sector, the risk of incorrect payments of BCPs was always recognised and factored into the Government's planning. Some incorrect payments were identified during and after the Relief Package, and the Department instituted quick and effective recovery processes. Once the incorrect payments were notified to the providers concerned, most providers voluntarily paid back the excess amounts.
Because the prospect of recovering BCPs paid during the Relief Package is a one-off and the circumstances in which those BCPs may need to be recovered may be quite specific to a small number of providers, and given the almost complete recovery of incorrect payments to date, there is no need for permanent amendment to the family assistance law to address the issue. Indeed, there may yet be no need for the Ministers' Rules to be amended to provide for any BCPs paid during the Relief Package to be debts. The provision at item 36 of Schedule 1 to the Bill is a reserve power that will enable specific overpayments of those BCPs to be recovered in the event that is necessary.
As mentioned in the Explanatory Memorandum in relation to item 36 of Schedule 1, if Minister's Rules are made to give rise to debts, the existing laws and processes for raising and recovering family assistance law debts must be followed.
Committee comment
2.36 The committee thanks the minister for this response.
2.37 The committee notes the minister's advice that proposed section 205C endeavours to set out as much detail as reasonably practicable for a discretionary payment mechanism that is intended only to be triggered in response to emergencies, including the minister's advice that paragraphs 205C(1)(a) and (b) set out overarching criteria for the payment of emergency BCPs.
2.38 The committee also notes the minister's advice that the nature of emergency BCPs requires that there be considerable flexibility in their implementation and administration, and that such schemes need to be able to be fine-tuned and adapted to the needs of responding to the relevant emergency. The minister advised that a government response to an emergency involving the payment of emergency BCP is neither a 'one-size-fits-all' nor a 'set-and-forget' scheme, and that it is therefore essential that matters relevant to the payments are left to delegated legislation. The minister also advised that section 205C is consistent with the operation of legislative provisions in relation to other emergency payments.
2.39 The committee notes that, generally, neither a desire for administrative flexibility, nor the fact that a provision continues or is consistent with existing arrangements is likely to be, of themselves, sufficient justification for including significant matters in delegated legislation. However, in this instance, the committee also notes the minister's advice that emergency BCPs payable under section 205C will be subject to the internal and external review processes available for most decisions of the Secretary under the family assistance law, to further ensure that there is appropriate accountability for these decisions.
2.40 The committee notes the minister's advice with respect to the way in which items 36 and 37 of Schedule 1 work together, and the information provided by the minister relating to background to the payment of BCPs during the relief package.
2.41 The committee also notes the minister's advice that the prospect of recovering BCPs paid during the relief package is a 'one-off', and that the circumstances in which those BCPs may need to be recovered may be quite specific to a small number of providers. Because of this, and the almost complete recovery of incorrect payments to date, the minister advised that there is no need for permanent amendment to the family assistance law to address the issue.
2.42 The minister also advised that there may be no need for the Ministers' Rules to be amended to provide for any BCPs paid during the Relief Package to be debts, and that the provision for the rules to determine circumstances in which these payments will be taken to be debts is a reserve power that will enable specific overpayments of those BCPs to be recovered in the event that is necessary.
2.43 The committee requests that an addendum to the explanatory memorandum containing the key information provided by the minister be tabled in the Parliament as soon as practicable, noting the importance of these explanatory materials 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).
2.44 The committee also draws this matter to the attention of the Senate Standing Committee for the Scrutiny of Delegated Legislation.
2.45 In light of the information provided, the committee makes no further comment on this matter.
2.46 In Scrutiny Digest 4 of 2021 the committee requested the minister's advice as to:
• why retrospective validation is sought in relation to paragraphs 8(1)(h) and (i) and section 47AA of the Child Care Subsidy Minister's Rules 2017; and
• whether any persons are likely to be adversely affected by the retrospective validation of the provisions, and the extent to which their interests are likely to be affected.[17]
Minister's response
2.47 The minister advised:
Paragraph 8(1)(h) of the Minister's Rules precludes an individual being eligible for CCS for a session of care provided by an approved child care service during the period of the Relief Package, from 6 April to 12 July 2020.
Section 47AA of the Minister's Rules imposes a condition on the approval of an approved provider that it not charge fees during the period of the Relief Package, and paragraph 8(1)G) precludes an individual being eligible for CCS for a session of care provided by an approved child care service of a provider that contravened section 47AA (that is charged fees for the session of care).
These provisions were inserted in the Minister's Rules by the Child Care Subsidy Amendment (Coronavirus Response Measures No. 3) Minister's Rules 2020 (FL202000490). The Explanatory Statement for that instrument states in relation to the provisions:
These amendments are intended to ensure that, as part of the Early Childhood Education and Care Relief Package, child care providers are not able to charge fees and receive associated CCS during the period that BCP is payable. In combination with other financial assistance measures announced by the Government, including JobKeeper Payment, extension of absence days and CCCF-SC [grants under the Community Child Care Fund - Special Circumstances program], the Early Childhood Education and Care Relief Package BCP has been structured to ensure the viability of the early childhood education and care sector in circumstances where the COVID-19 pandemic has resulted in decreases in enrolments and a drop in fee revenue for services.
BCPs are made to providers to give a guaranteed income stream, based on a reference period, with providers also able to access supplementary payments in exceptional circumstances as detailed in the Early Childhood Education and Care Relief Package Payment Conditions document. Further, families are offered free child care to encourage them to maintain their enrolments with services and to provide financial assistance to families. Therefore, CCS and ACCS must not be payable due to the stated aim of Government that there are no fees to subsidise.
These amendments acknowledge and are intended to cater for dynamic circumstances during the COVID-19 pandemic, and ensure fee-relief for families. The measures are temporary, only applying to the period in respect of which services are eligible for Early Childhood Education and Care Relief Package BCP.
That is, the provision of fee-free child care was an essential policy outcome of the Government's Relief Package, and as CCS operates as a subsidy for child care fees, no CCS should be payable if no fees are payable. As mentioned in the Explanatory Statement for the amending Rules, a suite of financial support measures were provided to approved providers by Government as an alternative to them charging fees for child care.
Advice to Government indicates that there is a risk that the specific measures enacted by paragraphs 8(1)(h) and (j) and section 47AA of the Minister's Rules may not be fully authorised by the powers in the family assistance law to make Minister's Rules. This risk was acknowledged and accepted at the time the provisions were made, noting the importance of a rapid response to the impacts of COVID-19 on the early childhood education and care sector and the importance of ensuring child care remained open and freely available to children of essential workers, including health workers and others on the front lines of responding to the pandemic.
At the time, a provider's participation in the Relief Package was voluntary- a provider could accept the BCPs that were payable, on condition that they did not also charge fees (and hence no CCS was payable), or could suspend their approval under the family assistance law, and continue to charge fees to their families. Some providers did opt out of the Relief Package and its associated conditions.
The retrospective validation of certain Minister's Rules is not expected to impact families or service providers.
However, the Government recognises the theoretical possibility that imposing a condition on a provider that it not charge fees while in receipt of BCPs and other Government support, or rendering an individual ineligible for CCS while their provider is providing free child care, could amount to an 'acquisition of property' in Constitutional terms. Item 39 of Schedule 1 to the Bill provides that, if that is the case, and the acquisition is not on just terms as required by paragraph 51(xxxi) of the Constitution, the Commonwealth must pay the person reasonable compensation.
Committee comment
2.48 The committee thanks the minister for this response. The committee notes the minister's advice in relation to the context for the insertion of paragraphs 8(1)(h) and (i) and section 47AA into the rules, including that the relevant provisions in the rules were intended to ensure the provision of fee-free child care as part of the Early Childhood Education and Care Relief Package.
2.49 The committee also notes the minister's advice that advice to government indicates that there is a risk that the specific measures enacted by paragraphs 8(1)(h) and (j) and section 47AA of the rules may not be fully authorised by the powers in the family assistance law to make Minister's Rules. The committee further notes the minister's advice that the retrospective validation of these provisions is not expected to impact families or service providers.
2.50 The committee requests that an addendum to the explanatory memorandum containing the key information provided by the minister be tabled in the Parliament as soon as practicable, noting the importance of these explanatory materials 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).
2.51 In light of the detailed information provided, the committee makes no further comment on this matter.
2.52 In Scrutiny Digest 4 of 2021 the committee requested the minister's advice as to:
• why it is necessary to allow the secretary's powers under section 85GA of the Family Assistance Act to be delegated to an official of any non-corporate Commonwealth entity at any level; and
• whether the bill can be amended to provide legislative guidance as to the categories of people to whom those powers might be delegated.[19]
Minister's response
2.53 The minister advised:
The Explanatory Memorandum to the Bill provides a reasonably comprehensive rationale for the amendment to section 221 of the Family Assistance Administration Act that would allow the Secretary to delegate their power under section 850A of the Family Assistance Act to enter into, vary and administer funding agreements in relation to child care. As noted there, the power is analogous to the powers of accountable authorities in section 23 of the Public Governance, Performance and Accountability Act 2013 (POPA Act) and 32B of the Financial Framework (Supplementary Powers) Act 1997 (FF(SP) Act) to enter into, vary and administer arrangements between persons and the Commonwealth under which payments can be made.
Accountable authorities are able to delegate their powers under section 23 of the POPA Act and section 32B of the FF(SP) Act to officials of any Commonwealth agency at any level (see, respectively, subsection 110(1) of the POPA Act and subsection 32D(3) of the FF(SP) Act).
The power in section 85GA of the Family Assistance Act is a routine administrative power to manage Commonwealth grants. Commonwealth grants processes are subject to considerable regulation and oversight through mechanisms that stand outside of the delegation process. I direct the Committee's attention to the significant body of information about the framework for Commonwealth grants management on the Department of Finance's website at www.finance.gov.au.
In practice, the power to administer grants cannot be limited to Senior Executive Services (SES) officers or officers holding particular statutorily-designated positions. Grants administration is a widespread task undertaken at all levels of the Australian Public Service, and limiting decision-making in relation to grants to SES officers would have a significant adverse effect on the efficiency and coordination of grants processes.
In short, limiting the scope of delegation of the section 85GA power to SES officers or officers holding particular designated positions is neither feasible nor, given the established framework for Commonwealth grants, necessary to ensure proper oversight of and accountability for grants management.
Committee comment
2.54 The committee thanks the minister for this response. The committee notes the minister's advice that grants administration is a widespread task undertaken at all levels of the Australian Public Service, and limiting decision-making in relation to grants to SES officers would have a significant adverse effect on the efficiency and coordination of grants processes.
2.55 The committee also notes the minister's advice with respect to the administration of other Commonwealth grants processes, including that these processes are subject to considerable regulation and oversight through mechanisms outside of the delegation process.
2.56 The minister advised that limiting the scope of delegation of the section 85GA power to SES officers or officers holding particular designated positions is neither feasible nor, given the established framework for Commonwealth grants, necessary to ensure proper oversight of and accountability for grants management.
2.57 The committee requests that an addendum to the explanatory memorandum containing the key information provided by the minister be tabled in the Parliament as soon as practicable, noting the importance of these explanatory materials 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).
2.58 In light of the information provided, the committee makes no further comment on this matter.
[12]13 Items 17 and 36. The committee draws senators’ attention to these provisions pursuant to Senate Standing Order 24(1)(a)(iv).
[14] Senate Scrutiny of Bills Committee, Scrutiny Digest 4 of 2021, pp. 5-6.
[15] The minister responded to the committee's comments in a letter dated 10 March 2021. A copy of the letter is available on the committee's website: see correspondence relating to Scrutiny Digest 5 of 2021 available at: www.aph.gov.au/senate_scrutiny_digest.
[16] Item 38. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(i).
[17] Senate Scrutiny of Bills Committee, Scrutiny Digest 4 of 2021, pp. 6-7.
[18] Item 29. The committee draws senators’ attention to this provision pursuant to Senate Standing Order 24(1)(a)(iii).
[19] Senate Scrutiny of Bills Committee, Scrutiny Digest 4 of 2021, pp. 7-9.
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