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Social Services Legislation Amendment (Welfare Reform) Bill 2017 [2017] AUSStaCSBSD 245 (9 August 2017)

Social Services Legislation Amendment (Welfare Reform) Bill 2017

Significant matters in delegated legislation (Schedule 12)^[25]

1.40 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,^[26] with the intention that the circumstances in which such a notice may be given to be provided in the drug test rules.^[27]

1.41 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.^[28]

1.42 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'.^[29] The committee notes that no time limit is set in the bill on the period that the trial could be extended via legislative instrument.

1.43 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).

Broad delegation of administrative power (Schedule 12)^[30]

1.44 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'.^[31] Additionally, a person will not be subject to the income management regime if the contractor has withdrawn or revoked its notice,^[32] 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'.^[33] These provisions appear to give the contractor the power to determine who should be subject to the income management regime.

1.45 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'.^[34] 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'.^[35] 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.^[36]

1.46 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)^[37] 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.

1.47 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.

1.48 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.

1.49 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.

Restriction on judicial review (Schedule 12)^[38]

1.50 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.

1.51 However, proposed subsection 123UFAA(1D) makes it clear that the Secretary has no duty to even consider whether or not to exercise this power.

1.52 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.^[39] 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.

1.53 '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.^[40]

1.54 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.

Broad delegation of legislative power (Schedule 14)^[41]

1.55 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^[42] 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.

1.56 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.^[43]

1.57 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.

1.58 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).

Significant matters in delegated legislation (Schedule 15)^[44]

1.59 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);^[45]

• 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.

1.60 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.

1.61 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.

1.62 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).

Merits review (Schedule 15)^[46]

1.63 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.

1.64 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.

1.65 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.

[25] 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.

[26] Schedule 12, item 18, proposed section 64A.

[27] Explanatory memorandum, p. 76.

[28] See explanatory memorandum, p. 76.

[29] Explanatory memorandum, p. 76.

[30] 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.

[31] See Schedule, item 18, proposed paragraph 64A(3)(b) and item 24, proposed paragraph 123UFAA(1A)(c).

[32] See Schedule, item 24, proposed paragraph 123UFAA(1A)(d), together with item 18, proposed paragraph 64A(3)(c).

[33] See Schedule 12, item11, proposed subsection 1206XA(5).

[34] Explanatory memorandum, p. 73.

[35] Explanatory memorandum, p. 76.

[36] Explanatory memorandum, p. 74.

[37] Schedule 12, item 18.

[38] 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.

[39] Explanatory memorandum, p. 77.

[40] 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.

[41] 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.

[42] 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)).

[43] Explanatory memorandum, p. 85.

[44] 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.

[45] Schedule 15, item 1, proposed section 42AC(1)(e).

[46] 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.