Social Services Legislation Amendment (Drug Testing Trial) Bill 2018 [2018] AUSStaCSBSD 65 (21 March 2018)

• Social Services Legislation Amendment (Drug Testing Trial) Bill 2018
• Significant matters in delegated legislation54
• Broad delegation of administrative power61

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Social Services Legislation Amendment (Drug Testing Trial) Bill 2018

Purpose	This bill seeks to establish a trial of drug testing for 5,000 new recipients of Newstart Allowance and Youth Allowance (other) from 1 July 2018 in three discrete locations over two years
Portfolio	Social Services
Introduced	House of Representatives on 28 February 2018

1.66 This bill is substantially the same as Schedule 12 of the Social Services Legislation Amendment (Welfare Reform) Bill 2017 (Welfare Reform Bill), on which the committee previously commented and corresponded with the then Minister for Social Services.^[52] As this bill raises the same issues as the committee previously commented on, the committee restates its comments, and sets out the former minister's response, in relation to this bill (with updated references to the relevant item numbers of this bill).^[53]

Significant matters in delegated legislation^[54]

Initial scrutiny – extract

1.67 Schedule 1 provides for a two year trial in three areas 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,^[55] with the intention that the circumstances in which such a notice may be given to be provided in the drug test rules.^[56]

1.68 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.^[57]

1.69 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'.^[58] The committee notes that no time limit is set in the bill on the period that the trial could be extended via legislative instrument.

1.70 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

1.71 The former Minister for Social Services advised, in relation to equivalent provisions in the Welfare Reform Bill:

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's previous comment

1.72 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.

1.73 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.^[59] The committee notes that an exposure draft of the Drug Test Rules has been tabled by the minister in another inquiry.^[60] 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.

1.74 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.

1.75 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.

1.76 The committee also draws this matter to the attention of the Senate Standing Committee on Regulations and Ordinances for information.

Broad delegation of administrative power^[61]

Initial scrutiny – extract

1.77 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'.^[62] Additionally, a person will not be subject to the income management regime if the contractor has withdrawn or revoked its notice,^[63] 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'.^[64] These provisions appear to give the contractor the power to determine who should be subject to the income management regime.

1.78 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'.^[65] 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'.^[66] 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.^[67]

1.79 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)^[68] 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.

1.80 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.

1.81 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.

1.82 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

1.83 The former Minister for Social Services advised, in relation to equivalent provisions in the Welfare Reform Bill:

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's previous comment

1.84 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.

1.85 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.

1.86 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.^[69] 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.

1.87 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'^[70] 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.^[71]

1.88 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'.^[72]

1.89 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.^[73] 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.^[74]

1.90 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.

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[52] Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest No. 8 of 2017 and Scrutiny Digest No. 10 of 2017 available at: www.aph.gov.au/senate_scrutiny_digest.

[53] The committee notes that Schedule 1, item 24, proposed subsections (1C) and (1D) differs from that originally contained in Schedule 12 of the Welfare Reform Bill. Amendments were made to these provisions in response to scrutiny concerns raised by the committee in its Scrutiny Digest No. 8 of 2017 and addressed by the former minister's response in Scrutiny Digest No. 10 of 2017 at pp. 91-3. As such, the committee has omitted reference to these comments in relation to the current bill.

[54] Schedule 1, 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 Senate Standing Order 24(1)(a)(iv) and (v).

[55] Schedule 1, item 18, proposed section 64A.

[56] Explanatory memorandum, p. 17.

[57] See explanatory memorandum, p. 17.

[58] Explanatory memorandum, p. 20.

[59] Schedule 1, item 3, proposed paragraphs 38FA(f) and (h).

[60] 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.

[61] Schedule 1, item 18, proposed section 64A and item 24, proposed paragraph 123UFAA(1A)(c). The committee draws senators' attention to these provisions pursuant to Senate Standing Order 24(1)(a)(ii).

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

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

[64] See Schedule 1, item 11, proposed subsection 1206XA(5).

[65] Explanatory memorandum, p. 17.

[66] Explanatory memorandum, p. 19.

[67] Explanatory memorandum, p. 17.

[68] Schedule 1, item 18.

[69] See Part 4 of the Social Security (Administration) Act 1999, relating to decisions of 'officers'.

[70] Australian Government, Guide to Social Security Law, version 1.235, released 14 August 2017, Chapter 11.9.7.

[71] Australian Government, Guide to Social Security Law, version 1.235, released 14 August 2017, Chapter 11.9.7.10. Emphasis added.

[72] Emphasis added.

[73] 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.

[74] 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.