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2002
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (AUSTRALIANS WORKING TOGETHER AND OTHER 2001 BUDGET MEASURES) BILL 2002
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be moved on behalf of the Government
(Circulated by the authority of the
Minister for
Family and Community
Services,
Senator the Hon Amanda
Vanstone)
FAMILY AND COMMUNITY
SERVICES LEGISLATION AMENDMENT (AUSTRALIANS WORKING TOGETHER AND OTHER 2001
BUDGET MEASURES) BILL 2002
OUTLINE AND FINANCIAL IMPACT STATEMENT
These amendments provide changed commencement dates
for some of the measures in the Bill in light of the delayed passage of the
Bill. They also relate to family assistance payments for customers affected by
the parenting payment participation measure, the treatment of the language,
literacy and numeracy supplement for the purposes of family assistance payments,
certain working credit refinements and certain technical
matters.
Changed commencement
dates
The delay in the passage of the
Bill has meant that the proposed commencement date of 1 July 2002 for Schedule 3
(Personal Support Programme) is not achievable and a new commencement date is
being provided.
Commencement: 28 days after
Royal Assent
Financial implications: There are
no financial implications from this change.
The
delay in the passage of the Bill has meant that the proposed commencement date
of 1 July 2002 for Schedule 7 (miscellaneous amendments) is not achievable and a
new commencement date is being
provided.
Commencement: Royal
Assent
Financial implications: There are no
financial implications from this
change.
Family assistance payments for
customers affected by the parenting payment participation
measure
The effect of the amendment is
to ensure that, where parenting payment would be payable to a person if not for
the application of a ‘participation agreement breach non-payment
period’ or a ‘participation agreement rate reduction period’,
the person can still be treated as receiving parenting payment. This would mean
that the person would not need to separately undergo the income test for the
purposes of family tax benefit or child care
benefit.
Commencement: 1 July
2003
Financial implications: As this would have
been an unintended consequence, there are no financial implications from these
amendments.
Treatment of language,
literacy and numeracy supplement for purposes of family assistance
payments
The amendment rectifies an
unintended consequence. Its effect is to ensure that the language, literacy and
numeracy supplement is treated in a consistent manner with other
‘add-ons’ when calculating a person’s family assistance
payments.
Commencement: Royal
Assent
Financial implications: There are no
financial implications from this
amendment.
Working credit - wife
pensioners
Currently, to continue to
qualify for wife pension, a woman’s partner must be receiving age pension
or disability support pension. These amendments concern wife pensioners who are
about to lose qualification, and therefore payment, because their partners cease
to receive age pension or disability support pension through either the
woman’s or her partner’s employment income. The amendments will
make sure that these wife pensioners will continue to qualify for wife pension
while they use up their working credit
balance.
The amendments will also extend the
easier to resume payment part of the working credit measure (which makes it
easier for customers to resume payment if they lose the payment because of
employment income) to cover wife pensioners who lose qualification in this
way.
Commencement: 28 April
2003
Financial implications: There are no
financial implications from these amendments because they produce an outcome
that was within the original intention and costing for the working credit
measure.
Working credit –
concession cards
These amendments
refine the easier to resume payment part of the working credit measure so that
current concession card arrangements are confirmed for allowance recipients.
Under these arrangements, allowance recipients who lose payment because of
employment income have access to an extended concession card for up to 12 weeks
and then, if they qualify, for an additional 26 weeks. The amendments make
sure that these periods run consecutively, rather than concurrently, and that
the period of up to 12 weeks counts towards any period in receipt of
payment required to qualify for the 26 week
period.
The amendments also confirm current
arrangements so that customers who lose qualification for their payment
(except for the wife pension scenario above or a parenting payment recipient who
no longer has a dependent child) do not have access to the 12 week extended
concession cards.
Commencement: 28 April
2003
Financial implications: The original
intention, and costing, for this part of the measure was to extend the easier to
resume payment arrangements to pensioners and parenting payment recipients. As
such, no changes to the existing arrangements for allowance recipients were
envisaged. Accordingly, these amendments carry no additional
costs.
Technical
amendments
Some minor technical
amendments are being made, commencing along with the primary measures concerned,
and carrying no financial implications.
NOTES ON AMENDMENTS
Amendment
1
This amendment omits the current table in
the Bill that contains the commencement provisions and substitutes a new table
that incorporates the changed commencement dates that are necessary due to the
delayed passage of the Bill. The measures in the Bill for which the
commencement dates will change
are:
• Personal Support Programme
(Schedule 3) - now to commence on
the 28th Day after the day on which this Act
receives the Royal Assent (formerly 1 July 2002);
and
• miscellaneous amendments (Schedule 7) -
now to commence on Royal Assent (formerly
1 July 2002).
The commencement dates
for all other measures in the Bill are not to
change.
These commencement changes will
themselves commence on Royal
Assent.
Amendment
2
This amendment rectifies an unintended
consequence in relation to family assistance payments for people to whom
parenting payment would be payable if not for the application of a participation
agreement breach non-payment period or a participation agreement breach rate
reduction period.
In broad terms it is
currently the case that a person who is receiving parenting payment does
not need to separately undergo the income test for the purposes of family tax
benefit (FTB) or child care benefit (CCB). The person automatically receives
the maximum rate applicable for those
benefits.
The concept of a person
receiving a payment takes its meaning from whether that payment is
‘payable’ to the person. Significantly, the social security law
provides that a parenting payment is not payable to a person if the
person’s parenting payment rate would be nil. As a result of the changes
being undertaken in Schedule 1, the rate of parenting payment payable to a
person who has incurred a participation agreement breach non-payment period will
be nil and parenting payment will not be ‘payable’ to the person.
Accordingly, the person would not be ‘receiving’ parenting payment.
This would have the unintended effect that the person would no longer be taken
to automatically satisfy the income test for the purposes of FTB and CCB.
Instead, that test would need to be specifically and separately applied to the
person.
Similarly, in situations where
parenting payment would be payable to a person if not for the application of a
participation agreement breach rate reduction period, the legislation as
currently drafted would have the unintended effect that the person would no
longer be taken to automatically satisfy the income test for the purposes of FTB
and CCB. This could arise, for example, if a person already receives a part
rate of parenting payment due to their partner’s income and a rate
reduction penalty has the effect of further reducing the person’s payment
to nil.
To correct that unintended consequence,
Amendment 2 repeals and substitutes the definition of ‘receiving’ in
section 3 of the A New Tax System (Family Assistance) Act 1999 (the FA
Act). Schedule 6 (Working Credit) of the Bill, which commences on
28 April 2003, also repeals and substitutes that definition. As
Schedule 1 commences on 1 July 2003 it will be the definition as
amended by Schedule 6 that will be amended by Amendment 2. In that context, the
practical impact of Amendment 2 is to insert new
paragraph 3(1)(c).
In broad terms, clauses
1 and 17 of Schedule 1, and clause 7 of Schedule 2, of the FA Act are (among
other things) concerned with the application of the income test for the purposes
of family assistance payments in circumstances where a person (or the
person’s partner) is ‘receiving’ a social security payment.
Essentially, paragraph 3(1)(c) provides that,
if a participation agreement breach non-payment period or a participation
agreement breach rate reduction period applies to a person to whom parenting
payment would otherwise be payable then, for the purpose of construing
references to ‘receiving’ in clauses 1 and 17 of Schedule 1, and
clause 7 of Schedule 2, of the FA Act, the determination that the non-payment
period (or rate reduction period, as the case may be) applies to the person is
taken not to have been made. The practical effect of that is that the person
would be taken to be still ‘receiving’ parenting payment and,
accordingly, the person will be taken to automatically satisfy the income test
for the purposes of FTB and CCB.
Amendment
3
In broad terms, one of the effects of the
changes made by Schedule 1 is that a person in receipt of parenting payment may
be required to take reasonable steps to comply with the terms of a participation
agreement. The issue of what constitutes ‘reasonable steps’ is
dealt with in proposed new subsection 501(2). Relevant considerations are
whether the terms ‘have never been appropriate’ or ‘have
become inappropriate’. Proposed new subsection 501(3) seeks to
clarify what matters the Secretary will have regard to in that
context.
Proposed subsection (3) currently
refers to ‘whether the terms of an agreement have always been, or have
become, appropriate’. However, the language used in subsection (2) means
that the word ‘inappropriate’ would be more suitable in this
context. Accordingly, amendment 3 replaces the word ‘appropriate’
with the word
‘inappropriate’.
Amendment
4
Proposed new section 501B in Schedule 1
contains a reference to ‘6 months’. As the word
‘month’ can refer to time periods of different duration, the social
security law no longer uses that terminology. Amendment 4 replaces that
reference with the words ‘26
weeks’.
Amendment
5
Clause 1 to Schedule 3 of the A New
Tax System (Family Assistance) Act 1999 (the FA Act) provides that, in
working out the rate of family tax benefit (FTB) and child care benefit (CCB)
that is payable to a person, the person’s ‘adjusted taxable
income’ is relevant. Clause 2 provides that a person’s
‘adjusted taxable income’ is the sum of several specified amounts,
including the person’s tax free pension or
benefit.
In part, Clause 7 of Schedule 3
defines which social security payments are ‘tax free’. Clause
2 provides that those tax free payments form part of the person’s adjusted
taxable income. One such payment is disability support pension (DSP). However,
while Clause 7 operates to make DSP itself ‘tax free’ for the
purposes of FTB and CCB, paragraph 7(j) makes it clear that that approach does
not extend to ‘add-ons’ such as bereavement payment, pharmaceutical
allowance, rent assistance and remote area
allowance.
Schedule 2 of the AWT Bill provides
for the fortnightly payment of a language, literacy and numeracy supplement
(LLNS) of $20.80 while a person is participating in the LLN programme and is
receiving a ‘designated social security payment’, which includes
DSP. The broad effect of proposed new section 1050 is that, like other
‘add-ons’, the supplement is added to a person’s social
security payment. However, as currently worded, the effect of the FA Act
provisions referred to above is that the supplement would be part of a
person’s ‘tax free pension’ for the purposes of FTB and CCB.
This was never intended and creates an inconsistency in the treatment of the
LLNS. Accordingly, amendment 5 amends paragraph 7(j) of the FA Act so that the
treatment of the LLNS is consistent as for other
‘add-ons’.
Amendments 6 and
7
Item 5 of Part 3 of Schedule 2 repeals
and substitutes the table appearing at section 52-15 of the Income Tax
Assessment Act 1997. The broad effect of section 52-15 is to provide for
the taxation treatment of various ‘supplementary’ payments made
under the social security law. As currently drafted, the word ‘and’
has been omitted from paragraph (d) of Item 2 of the Table and also from
paragraph (c) of Item 3. Amendments 6 and 7 correct that omission.
Amendments 8 to
24
These amendments refine the working
credit measure in relation to wife pensioners and concession
cards.
Working credit – wife
pensioners
One of the features of working
credit is that customers can use up their available working credit balance
before their employment causes them to lose payment. Although that very
employment could normally cause a customer to lose qualification for
certain payments, new section 1073J makes sure that the qualification is
preserved for as long as is necessary for the customer to use up the working
credit balance.
However, the new section does
not cover wife pensioners, whose qualification depends on their partners
receiving age pension or disability support pension. If the partner
loses payment because of employment income (whether after using up a working
credit balance or not), the woman also loses qualification for wife pension,
even if she still has some working credit balance left. New section 1073J
is now to be amended so that such a woman will continue to be qualified for wife
pension for as long as is necessary for her to use up her working credit
balance. New subsection 1073J(2), added to the Bill by amendment 24,
provides the extended qualification
rule.
Furthermore, the easier to resume payment
part of this measure (which makes it easier for customers to resume payment if
they lose the payment because of ordinary income wholly or partly consisting of
employment income) is now to be extended to cover wife pensioners who lose
qualification in this way. This is already addressed for wife pensioners who do
not lose qualification in this way, along with other workforce age
customers, so that they are able to keep for approximately 12 weeks certain
additional benefits that are normally available only to people who are
receiving social security payments. Also, they are able to have payment
resumed without the need to re-claim if they lose their job within that
12 week period. This refinement is provided by new paragraphs 23(4A)(g)
and 1061ZEA(2)(ga) and (k) – see amendments 8, 17 and 18
– note that amendment 8 will also allow the family tax benefit and
child care benefit income test concessions, made available in the family
assistance legislation by the amendment made by item 1 of Schedule 6, to
flow through.
Working credit –
concession cards
One of the easier to
resume payment rules being made available under this measure to customers who
lose payment because of ordinary income wholly or partly consisting of
employment income is extended access to a concession card for up to about 12
weeks. Some customers already qualify for an extended concession card for 26
weeks, which is often based on their receipt of a qualifying payment for a
certain length of time. The Bill currently provides for these two periods to
run concurrently, so that the card will be available to people qualified on both
bases only for 26 weeks in total.
However,
current arrangements for allowance recipients are that the extended concession
card is made available first for the period of up to 12 weeks and then for the
26 week period (ie, the two periods run consecutively, not concurrently).
Current arrangements also recognise that the period of up to 12 weeks
counts towards any qualifying receipt requirement for the 26 week
period.
Amendments 9 to 16, 19 and 20
refine the amendments made by the Bill so that these current arrangements are
confirmed for allowance
recipients.
Amendments 17, 18, 21 and 22
also clarify the original intention that recipients of payments who lose
qualification for their payment (except for the wife pension scenario
above) do not have access to the 12 week extended concession cards (as they do
not have access to the other additional benefits). Again, this retains the
existing arrangements for allowance recipients, where they currently lose
eligibility for the easier to resume payment rules if they have taken a
full-time job and they are no longer ‘unemployed’. The only
exception to this will be where a parenting payment recipient no longer has a
dependent child in their care. In this case, the person will still keep access
to their concession card, consistent with the existing 26 week card extension
rules for this payment.
Amendment 23 is
a technical amendment to section 1061ZN to complete a cross-reference to a
relevant provision.
These working credit
amendments commence along with the rest of the working credit measure, on 28
April 2003.