- Parliamentary Business
- Senators & Members
- News & Events
- About Parliament
- Visit Parliament
Community Affairs Legislation Committee
Social Services and Other Legislation Amendment Bill 2013
- Parl No.
- Committee Name
Community Affairs Legislation Committee
Moore, Sen Claire
Siewert, Sen Rachel
Brown, Sen Carol
Boyce, Sen Sue
- System Id
Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Table Of ContentsDownload PDF
Community Affairs Legislation Committee
(Senate-Tuesday, 10 December 2013)
Senator CAROL BROWN
CHAIR (Senator Boyce)
Senator CAROL BROWN
ACTING CHAIR (Senator Siewert)
Senator CAROL BROWN
- Mr Thomas
Content WindowCommunity Affairs Legislation Committee - 10/12/2013 - Social Services and Other Legislation Amendment Bill 2013
BERKELEY, Ms Brendalyn Anne, General Manager, Indirect, Philanthropy and Resource Tax, Department of the Treasury
BROWN, Mr Philip, Branch Manager, Parental Payments and Family Research Branch, Department of Social Services
CADDICK, Mr Oliver, Director, Student Payment Program Performance Section, Payment Integrity and Performance Information Branch, Department of Social Services
CAVALLI, Mr Sam, Manager, Financial Markets Section, Seniors and Means Test Branch, Department of Social Services
HUTCHINSON, Mr Peter, Manager, Portability Policy and International Agreements, Social Security Relationships and International Branch, Department of Social Services
JOYCE, Mr Ian, Acting Manager, Seniors and Means Test Branch, Department of Social Services
KAY, Ms Jennifer, Section Manager, Program Service Branch, Department of Social Services
KIMBER, Mr Murray, Branch Manager, Payment Integrity and Performance Information Branch, Department of Social Services
LAFFAN, Ms Amy, Acting Branch Manager, National Gambling Branch, Department of Social Services
LINDENMAYER, Ms Diana, Branch Manager, Family Payments and Child Support Branch, Department of Social Services
PALMER, Mr Bryan, Group Manager, Housing, Homelessness and Gambling, Department of Social Services
PIPER, Ms Sue, Manager, Philanthropy and Exemptions Unit, Revenue Group, Department of the Treasury
ROBERTSON, Ms Amanda, Manager, Age Pension Policy Section, Seniors and Means Test Branch, Department of Social Services
WOJCIECHOWSKI, Ms Dilreene, Parental Payments and Family Research Branch, Department of Social Services
WOOLLEY, Ms Trish, Branch Manager, Program Service Branch, Department of Social Services
CHAIR: I welcome the officers of the Department of Social Services and the Department of the Treasury. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I remind witnesses that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and should be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. I now invite you to make an opening statement and at the conclusion of your remarks I will be asking members of the committee to put their questions.
Mr Hutchinson : Thank you, Chair. I do not think we need to make an opening statement.
CHAIR: Senator Moore, would you start the questions.
Senator MOORE: Mr Hutchinson, you are specifically here for the going overseas bit, aren't you?
Mr Hutchinson : Yes, schedule 4.
Senator MOORE: On the issue of raising it from 25 to 35 years, has the department received any complaints about this? It was raised as a probability in our government's budget 12 months ago, so it was out there then. It has now come back on the table. There has been a period of time when people who have concerns have had the ability to raise them. Has your branch received concerns?
Mr Hutchinson : Very few. We have been putting information out about the proposed changes, subject to the passage of legislation, since the original announcement, in correspondence when we are replying to people's letters that raise subjects relevant to payment of pensions overseas. The only complaint, I guess, that I can recall is a fairly recent one, from about a month or maybe six weeks ago. I could not tell you the name now, I am sorry, but it was a letter to the minister and a petition signed by about 10 to 12 people. It was basically saying: do not proceed with this legislation.
Senator MOORE: On the basis that they have either 25 years residence or are coming close to 25 years residence and they would expect that this will now disadvantage them?
Mr Hutchinson : Yes.
Senator MOORE: We heard from COTA, and it has been in some of the other things I have read, that this particular change brings us into line with other countries. One thing I would like to see, and you do not have to do it straight away, is a schedule showing the different countries that we compare ourselves with and what their rules are in this area. Over the last 18 months to two years we have had a number of changes around things like the ability to move overseas and maintain payments, and a question that is always raised is whether we are going out on a limb, whether Australia is harsher. On this one in particular we have had a number of pieces of evidence that say this is quite a common standard. To the best of your knowledge, is that true? Do you have access to data that would show comparative rates?
Mr Hutchinson : Our system is quite different to most other systems.
Senator MOORE: The contributions systems.
Mr Hutchinson : Yes, generally they are contributory.
Senator MOORE: It is more a super system.
CHAIR: People pay their money in and they are getting their own money back, whereas in Australia we hand over other taxpayers' money .
Mr Hutchinson : Exactly. In the contributory systems often there is not an upper limit, in the sense that you contribute for as long as you contribute and that is your ultimate pension. New Zealand has a similar residence based system. They have 45 years as the basis for payment overseas.
Senator MOORE: So we have a goal there, Mr Hutchinson?
Mr Hutchinson : Sorry?
Senator MOORE: We have a goal of 45 years.
Mr Hutchinson : So yes—
Senator MOORE: That was offering an opinion, Mr Hutchinson.
Mr Hutchinson : Basically, yes, a person in Australia can accrue up to 49 years working off residence at the moment. It will be 51 years after pensioner age becomes 67 in 2023. I think the view is pretty widely accepted that 35 years is not an unreasonable period, given a person does not have to work or pay taxes or contribute at all—just has to live in Australia.
Senator MOORE: Once they have reached that 35 years, they can come in and out at will?
Mr Hutchinson : They can come in and out at will with 10 years. The general requirement for a full pension in Australia is 10 years' residence, at any age, but payments outside a base strictly on working life residence, which, despite the name, is only residence during what would be expected to be a person's working life, so residence between 16 and pension age. So, yes, providing a person has got their 10 years, they can come and go and get a proportional pension based on that 10 years. We do have agreements with 29 countries now, I think, under which people can claim a pension, having left Australia before pension age. Again, those pensions are almost universally paid based on the same approach.
Senator MOORE: This is just an interest question. What constitutes living here? So if you are coming backwards and forwards regularly—it is an issue for lots of people with family. We have also had issues raised about caring responsibilities for people who have to go in and out. What constitutes residence in that sense?
Mr Hutchinson : A person normally has to be an Australian citizen or a permanent visa holder. Then the arguably discretionary piece of the puzzle is to be considered residing in Australia—
Senator MOORE: Maintaining a residence?
Mr Hutchinson : From memory, there are seven criteria specified in the legislation. I will probably get it wrong.
Senator MOORE: Do not worry.
Mr Hutchinson : Accommodation, frequency of absences, economic and financial ties—
Senator MOORE: Even between the 25 years that we now have and the 35 proposed in this legislation—
Mr Hutchinson : There is no change to that.
Senator MOORE: Could be acquiring residency even if they are mobile?
Mr Hutchinson : That is correct.
Senator MOORE: Subject to the limitations in the legislation?
Mr Hutchinson : Yes.
CHAIR: We have here the officers responsible for schedules 4, 8 and 11, which were the items that Ms Root was talking about.
Senator SIEWERT: Have we done 11 yet?
CHAIR: No. We are waiting for you.
Senator SIEWERT: I beg your pardon. Could we go to 11? I think you were in the room when I was asking the question about whether any legislative changes would be required to achieve the outcomes in terms of the longevity products and making sure that those people that may be affected by this amendment would have other products to go to?
Mr Cavalli : I think that starts to get into some other issues around superannuation. I would start by saying that this measure is about the treatment of people's income streams by the social security system and all that this measure is doing is attempting to treat people with the same levels of assets in the same manner. I think your first question was whether the FPA was concerned that this would stop people taking out account-based income streams, we do not believe that will be the case. The main driver for people taking out account-based income streams is that they get that stream of income, but the main concession that they get is that it is tax free over the age of 60 when you are drawing down—and not only the money that you draw down but also the investments, the earnings, in the account are also tax free. So you do not pay any tax either on the draw down or on whatever income is made.
So we do not see that there will be any disincentives for people to take up these particular products. They are very flexible products and they have that very significant tax advantage. In terms of longevity, you are starting to get into some other issues about the sorts of forms of products that industry may or may not want to produce. Our objective, and what deeming does, is to treat all investment products the same way. So there is neutrality of treatment. In that regard, we would see that that is the main criteria.
Mr Joyce : I think, as Mr Cavalli said, the key thing is that we do not think this change will discourage the take-up of this product, so it sort of makes the rest of your question—
Senator SIEWERT: So, you think that the comments that the Financial Planning Association are making are—and I am not putting words into your mouth—are inaccurate, and that it will not actually put people off?
Senator MOORE: The department does not agree with the statements.
Mr Joyce : We have not actually seen the submission, but that is right, we think they will continue to be a popular product. As Mr Cavalli says, they are flexible and all these rules are doing is actually making a reasonable assessment of the income those products are generating.
CHAIR: Would it be reasonable to ask the department to have a quick look at it, Senator Siewert?
Senator SIEWERT: That is what I was wondering.
CHAIR: There has been a submission received from the Financial Planning Association and it is online, but they chose not to come along as witnesses. Before lunchtime tomorrow if you are able to have a quick look and provide any extra comments you think you might need to make, having read their submission, that would be helpful, Mr Cavalli.
Mr Cavalli : Yes.
Senator MOORE: Mr Joyce, what is your relationship in your area with the FIS officers that are out in the network of Human Services, providing information to people who are claiming payments? Do you have a linkage?
Mr Joyce : Obviously, the FIS officers are part of the DHS network, as you know, so when we are putting any sorts of new measures in, we will provide information to them.
Senator MOORE: Training packages and things like that?
Mr Joyce : And Q&A documents and the like, that they can then draw on to provide information.
Senator MOORE: But you provide the policy advice to them?
Mr Joyce : Yes, that is right.
Senator MOORE: It seems to me that these kinds of questions that are being raised by the FPA are the kinds of things that FIS officers are dealing with all the time, with people coming to see them saying, 'How do I handle this and what should I do?' I know they cannot give personal investment advice and all that stuff, but they can give people information about the impacts of decisions they would make. This would be the kind of stuff that the FPA are raising with which you would be familiar. It would be not that difficult, I would imagine, to respond. There are quite specific concerns. They are talking about access to products and disincentive for people to take up choices by this change. That is a fair enough summation, is it not? If we get that to you, would you mind just having a look at it and seeing whether that seems reasonable to you?
Mr Cavalli : Yes.
Senator SIEWERT: I think it is probably better if you look at the submission and give us any feedback on the it.
CHAIR: I am just wanting to confirm from the revised explanatory memorandum that schedule 4 is anticipated to save $50.8 million over four years. Is that still the case, Mr Hutchinson?
Mr Hutchinson : That is what I understand, yes.
CHAIR: Schedule 8, $80.5 million over three years, Mrs Robertson?
Ms Robertson : Yes.
CHAIR: And the deeming rules, $161.7 million over four years. That is our current view of what we will save by doing that.
Mr Cavalli : That is correct.
CHAIR: Thank you very much.
Senator SIEWERT: I realise that you have just said that you would take this on notice and reply but one of the points that is made twice is that it affects those on modest incomes more than others. At one point it says it will target those with the smallest superannuation balance. I presume that you disagree with that statement? If so, why?
Mr Cavalli : As I said before, what this measure actually does is provide equity with people who hold assets in the superannuation environment with people that hold assets in the non-superannuation environment. Do they give anything about what small superannuation—
CHAIR: They talk about people with superannuation, yes.
Mr Cavalli : What levels?
Senator SIEWERT: They give an example of someone with an account who invests in an account based pension and give a difference between $200,000 and $500,000.
Senator MOORE: Mr Cavalli, we know we have got a hard copy here somewhere and I think if you could see it you might have a better chance than us reading it out to you.
Mr Cavalli : Someone might be holding $200,000 in an account based income stream. Superannuation is just a vehicle; the assets that you hold in your superannuation account can be the same assets that someone, who has saved all their life, has decided to purchase directly. They might have decided to purchase shares and put some money into a managed investment—they are the same sorts of things you have in a superannuation account and an account based income stream. So you can have two people with $200,000, one who has saved in super and one who has saved outside of super. That person, because of the way the concessional rules work at the moment for people with account based income streams, would get a full age pension. A single person who has saved $200,000 and is receiving the age pension would receive $75.78 less age pension a fortnight than the other person. Their circumstances are exactly the same except one person has saved in superannuation, has gotten tax benefits, is receiving tax benefits—because it is tax free—but is getting a maximum rate age pension. That is the objective of this measure. The FPA is suggesting we are hitting people with moderate amounts of superannuation, but at the moment we are actually treating them a lot more concessionally than people who hold potentially the same assets outside of superannuation.
Mr Joyce : The people who hold the same assets directly might be a small businessman who sold their business and purchased shares for their retirement.
Senator SIEWERT: So the point you are making is that, while it may be hitting that person with a modest super, it actually puts them equal with a person—
Mr Cavalli : I guess they are doing a comparison to people who have got significant super, who have been assessed, I am assuming, under the assets test. But that is what the current assets test is designed to do. As Ms Root said, it is about providing assistance based on peoples' needs. So if you have got $500,000, obviously you will have less need than someone with $200,000. But if people have got $200,000, they should be assessed the same way.
Mr Joyce : So it is a designed feature of the operation of the income and assets test that is creating the result that the FPA is demonstrating here because the assets test is the test coming into effect at much higher asset holdings. The key thing again, as Mr Cavalli was saying, is that when the FPA use the words 'we are hitting them', we are just assessing a reasonable level of income for what that product would be generating. We do not think the current test is effectively doing that—$200,000 is still a reasonable level of income; we might not be counting any income at all under the current test.
Senator SIEWERT: Thank you. If you could have a look at it and provide any other feedback, that would be appreciated.
Mr Cavalli : Yes.
Senator MOORE: The information you have just given us is more detailed than in any of the data we have had up until now. So to explain the impact, if we could get in writing the kind of information you have just given us verbally that would meet our needs.
Mr Cavalli : Yes.
CHAIR: I welcome further officers from the Department of Social Services and from the Department of the Treasury. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I remind you the Senate has resolved that an officer of the department of the Commonwealth or a state shall not be asked to give opinions on matters of policy and should be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only question is asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. I now invite you to make a short opening statement and then members of that committee will be asking questions. We have here all the people related to the charities section, schedule 1A—am I correct in that? All right. Senator Siewert.
Senator SIEWERT: What is the rationale for delaying the implementation of the Charities Act?
Ms Woolley : The intention is to allow for further consultation on the legislation in the broader context of the government's other commitments around civil society.
Senator SIEWERT: I understand that there has been extensive consultation around it, in fact. I used to work for a not for profit and I remember being consulted—though that was a long time ago. What was the form of that consultation and why is more consultation needed?
Ms Woolley : To enable to government to have conversations with stakeholders in respect of the Charities Act, its intentions around the ACNC and the implementation of its commitments around civil society to see how all of these things intersect in the context of feedback from stakeholders. With the legislation due to commence in January, this enables a further period of time to talk about the mix of these issues with stakeholders.
Senator SIEWERT: What sorts of changes do you envisage would be needed to the Charities Act in order to deal with ACNC and civil society?
Ms Woolley : I guess, for an opportunity to see how, based on feedback from some stakeholders, the Charities Act may not be the most appropriate vehicle to be in place in the context of the construction of the ACNC and in the context of the government's agenda—thinking about all these issues together in the context of the government's agenda.
CHAIR: The minister has announced publicly that the ACNC will be disbanded and replaced by a centre of excellence, hasn't he?
Ms Woolley : That is correct.
Senator SIEWERT: Why would the Charities Act need to be amended? I can only think that it is about amending the Charities Act. At the moment the government says that it is delaying the implementation but, if you are doing more consultation around it, it seems to me to be fairly obvious that you are thinking of amending it. What would need to be amended in view of the ACNC going?
Ms Woolley : It would really be an opportunity to hear what stakeholders thought about it before it commences.
Senator SIEWERT: Surely an act does not need to be delayed in order for it to be amended down the track?
Ms Woolley : Though, if you wanted to look at those issues in context, the sequence of those things, you might—
Senator SIEWERT: What does the implementation of the Charities Act have to do with getting rid of ACNC?
Ms Woolley : I am not sure I can add anything further to the comments that I have made other than that these things are interrelated in terms of issues.
Senator SIEWERT: How? How is the definition of 'charity' and what it does interrelate with getting rid of ACNC?
Ms Woolley : I think there are intersections for people, for stakeholders, in the sector about how they see these issues connected in terms of the construct of that piece of legislation—how it operates, how it might be implemented by the ACNC, what role they might play in that, whether that construct continues into the future. In our conversations with stakeholders, they do see these things to be connected.
CHAIR: When is the new definition of 'charity' due to come into force if this legislation is not passed, Ms Woolley?
Ms Woolley : 1 January 2014.
CHAIR: So, any other changes around the ACNC and other aspects of the sector would be based on a definition that was put in place in contemplation of a system that the minister has now announced to be disbanded. Is that one way of understanding it?
Senator SIEWERT: Tell me examples of that.
Ms Woolley : I think that the connections are related to the way in which the sector, or this issue, is regulated, the views of different stakeholders—
Senator SIEWERT: Which stakeholders have called for the delay of the implementation of the Charities Act?
Ms Woolley : I do not have that.
Senator SIEWERT: I know a number that have called for getting rid of ACNC. I do not agree with them, but I have heard of them. I have not had anyone lobby me about delaying the implementation of the Charities Act.
CHAIR: Ms Berkeley, did you have something you want to add on that?
Ms Berkeley : I was just going to make the comment about interactions between the Charities Act and the ACNC. It is the ACNC that will administer the Charities Act and make decisions as to which entities are or are not charities.
Senator SIEWERT: That is what it is about. It is about not enabling the ACNC to do some work, in terms of starting to implement. Is that correct?
CHAIR: You would not let an organisation you are about to disband start work. Is that what you are saying the problem is?
Senator SIEWERT: No, it is not about the organisation. This is about the definition of 'charities' and is about charities. The government is prepared to delay the implementation of the Charities Act so that it can do away with ACNC. It does not want to enable ACNC to do any work, so they can prove it does not do anything.
Ms Piper : They just wanted to take more opportunity to do further consultation. I suppose that is consultation in the context of the announcement that the ACNC was going to be removed. Charities have not had formal consultation, I suppose, on the existence of the Charities Act, or the environment in which they are operating since the government announced that intention, and perhaps that is the opportunity they are looking for, to discuss further the Charities Act, and they have announced this to delay that.
Senator SIEWERT: How is it going to be implemented?
Ms Piper : It is just an opportunity for further consultation.
Senator SIEWERT: In the process the ACNC can surely start the implementation of the Charities Act. Do you intend changing anything in the Charities Act?
Ms Woolley : These are all matters for consultation.
Senator SIEWERT: What areas in the Charities Act do you think have been flagged for change?
Ms Piper : It is impossible to know at this stage and I think that is why the government has asked for more consultations, to see if there are any areas and possibly to flush out areas that they are interested in.
Senator SIEWERT: So why can you not implement it and then do the consultation?
Ms Piper : It is a decision of government to make the delay.
Senator SIEWERT: Was it made on advice that you gave, or did the government decide they were going to delay the implementation?
Ms Piper : I do not have information on that.
Senator SIEWERT: Can anyone answer that? I am not asking what advice you gave, I am asking did you give advice to government?
Ms Woolley : In the course of briefing a new government on a range of issues, including their commitments, advice is given in that context.
Senator CAROL BROWN: I was not here for a lot of the evidence that you have probably given but there was a lot of consultation undertaken in the formulation of the legislation that currently stands. I fail to see how further consultation is going to reach those people, the stakeholders, that are involved in this. I think we know what their views are. Do you have a consultation plan?
Ms Woolley : There is no detail at this stage available about the consultation but there will be detail made available as that comes to hand.
Mr Brown : Do you have a timeline?
Ms Woolley : In the new year would be the time for consultation.
CHAIR: One presumes that given the definition will be delayed until 1 September, it is before then.
Senator SIEWERT: That is a wild assumption pre-empting what the Senate is going to do!
Senator CAROL BROWN: The new year, to me, is the first three months, maybe. What does 'the new year', mean to you? Obviously not before February.
Ms Woolley : That is right, given that many community organisations over December and January are not available for consultation. The intention would be that soon after that there would be a process of consultation.
Senator CAROL BROWN: Who do you propose to consult with? The same group of stakeholders that have been consulted for years over this piece of legislation?
Ms Woolley : The detail of the consultation is not settled at this time.
CHAIR: The point has been made, Senator Brown, that they would be consulting on this and the development of a centre for excellence, not this and a commission.
Senator SIEWERT: What role does a centre of excellence have in regulating charities?
Ms Woolley : These are matters that are the subject of the consultation, in terms of working out the role of the centre of excellence in the context of these considerations.
Senator CAROL BROWN: So these consultations are around the role of a centre of excellence?
Ms Woolley : That is right. They are around the range of commitments that they are aligned to in the beginning around the civil society agenda, yes.
CHAIR: As I understood it, part of this was to consider whether states and territories should continue to be the bodies that would register charities. Is that your understanding, Ms Woolley?
Ms Woolley : I do not think decisions have been made about the exact scope.
Senator SIEWERT: Geez, that is cutting red tape—not!
Senator CAROL BROWN: When can we expect some sort of terms of reference around this consultation? Probably around February will we expect some understanding of the breadth of the issues that will come out of consultation?
Ms Woolley : Yes.
Senator CAROL BROWN: Do you have any further information that you can share with us around that? Any sort of timeline you are looking to complete those consultations?
Ms Woolley : No, not at this time. No.
CHAIR: Can I just hop in here with a couple of questions? They are not related to what you have been talking about. The membership of the ACNC board, Ms Woolley, are you able to tell me who they are?
Ms Woolley : I would have to take that on notice; I do not have that information.
CHAIR: One thing I was just trying to confirm is whether Mr David Crosby is on the board. If you could let us know as soon as you can, that would be fine. Ms Berkeley, it has been put to me by some people that the definitions that would come into force if this legislation were not passed on 1 January are very broad, and could lead to a lot of organisations that would not currently be considered to undertake charitable work achieving tax-deductible status. Are you able to comment on those views?
Ms Berkeley : The explanatory memorandum to the Charities Bill when it was debated in the parliament last year set out what the differences are between the common-law definition of charities that currently applies, and the statutory definition of charity that is contemplated by the Charities Act. That explanatory memorandum makes it clear that the definitions are in fact very close and there are only a few areas in which they do digress, so I do not know that I would agree with the comment that there is a wide difference between the two definitions. Certainly the stated intention of that explanatory memorandum was that the statutory definition would essentially reflect the existing common-law position.
CHAIR: The revised explanatory memorandum for this bill says that the financial implications of the charities amendment are unquantifiable in 2013-14 and 2014-15. Am I to take it from what you have just said that the 'unquantifiable' is more at the 'not very much' end rather than 'huge'?
Ms Berkeley : I think it expressly says unquantifiable but small, and that reflects a reversal given that this current bill contemplates a delay—
CHAIR: It does not actually say 'or small' in the revised EM, but I am happy to add that in.
Ms Berkeley : Certainly there is no anticipation that it was going to be anything other than small.
Senator CAROL BROWN: If this has already been answered just let me know: has there been any consultation with the states and territories over the proposals in this bill to do with the ACNC? Have you talked to the states and territories about the direction that the government wants to take?
CHAIR: But this bill is not about the ACNC, is it?
Senator SIEWERT: It has just been directly linked to the ACNC.
Senator CAROL BROWN: Yes, it is about postponing the enactment—so has there been any discussion with the states and territories?
Ms Woolley : In relation to the delay of this? Not that I am aware of. I am happy to take that on notice.
Ms Berkeley : Not that we are aware of.
Senator CAROL BROWN: Also can you take on notice whether the states and territories have themselves indicated any interest in this bill? Were there any concerns or any issues?
Ms Woolley : Sure. I am anticipating that the consultation process would enable them to have an opportunity to comment on this.
Senator CAROL BROWN: So no-one has been consulted and the states and territories have not been consulted. I just do not understand why we would defer something when there has been no consultation.
CHAIR: Perhaps because there has not been consultation yet.
Senator CAROL BROWN: Well, there has been plenty of consultation on the legislation. At least from 2001 that we know we started to talk about it.
Senator SIEWERT: But the definition of 'charity' has been under discussion for years. That is what witnesses told us yesterday.
Senator CAROL BROWN: There has been no consultation on going down this path.
Ms Woolley : This represents the opportunity, I guess, for consultation. The rationale for the delay is to enable that discussion to occur in the context of the other commitments around the ACNC and the Centre for Excellence, so that is the logic of the delay.
Senator MOORE: Ms Woolley, you just said that you believe the rationale for this particular delay is to have consultation around the other changes that have been proposed. Nowhere in the information, which we have to this date around the bill, has that been spelt out.
Ms Woolley : There have been a number of media comments and commitments by the minister to that effect, talking about the mix of these issues and enabling conversation or consultation.
Senator MOORE: Do we have a copy of that media release? It certainly did not come to me.
CHAIR: The 'ACNC replacement unveiled' was today's media release. It is not very good quality.
Senator MOORE: Is that where it spells it out?
CHAIR: Well, sorry, this is in today's Pro Bono news, but I think it was done by the minister—you might be able to tell me—a little earlier.
Ms Woolley : I have had a look at the document you are talking about, and I think there may be direct comments from the minister.
Senator MOORE: Well can we find out, because you are from the department. I know that you are not automatically involved in the ministerial press releases, but if we could find out what media releases have been put out by the minister, and the dates, and then we can get copies of them.
Ms Woolley : The other thing I would draw your attention to is in the explanatory memorandum. There is a reference to the delay allowing for further consultation on the legislation in the broader context of the government's other commitments in relation to the civil sector.
Senator MOORE: That is a very general thing. Your comment was about the ACNC.
CHAIR: Going back to election commitments, the ACNC was to be disbanded, and there would be consultation around how the sector functions.
Senator MOORE: Yes, but for the purposes of this bill we are struggling with why the definitional aspect is now linked in with the ACNC. We are just trying to get that clear. I am sorry I came in late, I had to talk about asbestos. If we could get those media releases that would be very useful, because I have not seen them. Also, at this stage, do you have a schedule for consultation?
Ms Woolley : Not at this stage.
Senator MOORE: Between now and?
Ms Woolley : February.
CHAIR: They are anticipating that in February they will have the consultations' schedule and terms of reference. Is that right, Ms Woolley?
Ms Woolley : Yes.
CHAIR: Thank you very much for appearing. Those officers from the Treasury were specific to this particular charities area. As I understand it there are no further questions for Treasury, is that right? Treasury, go home, and thank you very much.
CHAIR: I welcome further officers from the Department of Social Services. You are comfortable that I assume that you have heard all the stuff about parliamentary privilege and the like?
Mr Palmer : Yes.
CHAIR: Do either of you have an opening statement?
Mr Palmer : No.
CHAIR: Senator Moore.
Senator MOORE: I am fascinated by these titles—National Gambling Unit, I like that. In terms of the process, my understanding of what we have before us is a reversal of the range of issues that were in place in the previous legislation—so everything that was in the previous gambling legislation is being recommended to be changed. Is that right?
Mr Palmer : Would it be easier for us to go through the measures, because not everything in the—
Senator MOORE: Okay. And if you have a table there, we would very much like to see it, Mr Palmer.
Mr Palmer : I have a table with my notes on it.
Senator MOORE: We would like a table a lot. That would be really useful.
Mr Palmer : We can provide that .
Senator MOORE: But if you could just go through them for the record, that would be great.
Ms Laffan : With respect to precommitment, there is a repeal but it is to be replaced with the government's commitment. The government has committed to working with a range of stakeholders to develop and implement a voluntary precommitment scheme in venues.
Senator MOORE: I will come back to that, but continue.
Ms Laffan : With regard to the gaming machine capability referred to in the current legislation as manufacture and importation requirements, again that is for repeal, but also to be replaced with the government's commitment to working with state and territory governments and the gaming industry to ensure machines are capable of supporting venue-based voluntary precommitment. With respect to dynamic warnings, the bill proposes the repeal of those. With the ATM measures, the bill proposes the repeal. The government considers state and territory governments are best placed to regulate ATMs in gaming venues. The regulator is proposed for repeal, as is the supervisory levy. With respect to the ACT trial, the trial had not yet commenced. Agreement was not reached. The trial did not require legislation to take place, but for clarity purposes references to the trial are proposed to be repealed from the act. Productivity Commission reviews are for repeal, as matters legislated to be referred to the Productivity Commission are no longer relevant or are inconsistent with the government's policy. With respect to the Australian Gambling Research Centre, there is no amendment, so the Australian Gambling Research Centre is to be retained.
Senator MOORE: That is the full range? If we could get that in a table form, that would be very useful. I am interested in what we have in front of us: the only commitment is the one you read out first, which is about going into an effective consultation process. Can you get any indication from what is before you of what is the form of that consultation process, with whom is there going to be consultation, and is there any form of advisory group as there was previously—there was a National Gambling Advisory something that was actually looking over the whole process. Do you have any detail of that kind?
Mr Palmer : In terms of the specifics of how the consultations were run, that is still to be determined.
Senator MOORE: Is there a time frame on that?
Mr Palmer : My understanding is that in the new year we will start the process of consultations. In clause 20 of schedule 1 of the bill, it goes through that we would be looking at consulting with states and territories, the gaming industry, academics and community sectors—so a wide range of consultations.
Senator MOORE: Does the community sector include NGOs?
Mr Palmer : Yes, it would.
Senator MOORE: And does it include individual support groups as were on the previous advisory committee?
Mr Palmer : I do not know if it will include the specific same bodies that were in the previous arrangement, but the views of a wide range of people are important in the process.
Senator MOORE: In the bowels of the department is there a full list of the kinds of people and organisations that had previously been consulted?
Mr Palmer : I do not really wish to comment on the bowels of the department.
Senator MOORE: The bowels of the department, in the sense of somewhere deep within the department. It is a common phrase. Do you have a contact list?
Ms Laffan : We do have a contact list of stakeholders who have demonstrated an interest in the past and with whom we have had dealings with in the past.
Senator MOORE: So, all that knowledge is there and can just be reactivated?
Mr Palmer : Yes.
Senator MOORE: In terms of the process we would have hoped to have more information about that in the new year.
Mr Palmer : Yes.
Senator MOORE: This is similar to what we heard from the Treasury group about the charities, that it would be in the new year, but there is no particular date that you have yet?
Mr Palmer : No.
Senator MOORE: We talked about the consultation with the states and territories and the industry. That was in terms of the particular changes to the machinery to the industry. Is the list that was read out complete? Are there openings for further consultation with academics and people who also have knowledge in this area, such as the people who go to the conferences on gambling?
Ms Laffan : Are you asking about what the consultations would be focused on or who we would be consulting with?
Senator MOORE: Further down when we talked about something being appealed.
Ms Laffan : About the capability requirements?
Senator MOORE: Yes, that is right.
Ms Laffan : I would assume that the discussion on capability requirements would happen at the same time as those.
Senator MOORE: There are no separate areas of consultation. It would be concurrent.
Ms Laffan : Not for those two measures, no.
Mr Palmer : The two measures are very closely linked.
Senator MOORE: In relation to the process in terms of an end date, in section 20 it does not talk about an end date.
Mr Palmer : An end date has not been set.
Senator MOORE: The areas that have been wiped out previously had budget linked to it. With the elements that have been retained, such as the research council, is there a budget line still attached to that?
Ms Laffan : There is. The Australian Institute of Family Studies has separately appropriated funding for that purpose, and there has been no impact on that.
Senator MOORE: Okay. So the existing funding stream through the AIFS is being maintained at this stage.
Ms Laffan : That is correct.
Senator MOORE: Do you have a figure for the savings that has come out through the things that have been mentioned so far in gambling?
Mr Palmer : No, we do not at the moment.
Senator SIEWERT: I just have one issue, about the ATM. My understanding, from what you have just said, is that the Commonwealth believes that it is more appropriate for states to regulate the ATM. Have you done any work with the states about whether they are likely to take up that particular measure?
Mr Palmer : The states already regulate.
Senator SIEWERT: I am aware of Victoria.
Ms Laffan : All state and territory governments have implemented a ban on ATMs from gaming areas in hotels and clubs. All states and territories also prohibit gaming venue operators offering access to credit to a patron for gambling purposes in relation to land based gambling, that is, people are unable to use a credit card in a gaming venue. You mentioned Victoria. Tasmania has a ban on ATMs in all hotels and club gaming venues, and a $400 ATM withdrawal limit in casinos. In Western Australia's casinos, ATMs must be 40 metres from the entrance to any gaming area, unless the ATM has a $400 limit per customer per day. The ACT has a $250 per day ATM withdrawal limit commencing on 1 February next year. South Australia has a $200 dollar daily withdrawal limit on ATMs in gaming venues.
Senator MOORE: And the unmentioned states have no restrictions?
Ms Laffan : Other than the credit card that I mentioned before, and with regard to the placement of ATMs in gaming venues.
Senator MOORE: So they cannot be inside a gaming area or a gaming building.
Mr Palmer : They can be within the building.
Senator MOORE: Can we get that in table form as well?
Mr Palmer : Yes, we can provide that.
Senator MOORE: My understanding is that COAG worked together until very recently and there was a segment of COAG that looked at gambling. Is that right?
Ms Laffan : There was a ministerial council on gambling. I am sorry, I do not know the correct name. There was a select council as well.
CHAIR: And that was social services ministers?
Ms Laffan : There was a COAG Select Council on Gambling Reform, and the remit of that select council expired in December 2011.
Senator MOORE: And at this stage there is nothing in the current information that indicates the reactivation of such a body?
Ms Laffan : Not currently, although there are commitments about the consultation with state and territory governments.
Senator MOORE: Yes.
Ms Laffan : But, for that precise mechanism, no.
Senator MOORE: I know that had a general remit of gambling but, on the specific process in which ATM restrictions were agreed and discussed, was that through that or through another area?
Ms Laffan : Was that discussed in a—
Senator MOORE: Yes. There was discussion around ATMs, which was real. Was that through that process on gambling or was it through financial restrictions or some other grouping?
Ms Laffan : I am not sure I understand the question, but states and territories independently applied these restrictions on ATMs. Potentially there was some discussion too.
Senator MOORE: Yes. I am particularly interested to know whether the discussions around ATM access in venues were linked to the discussion on gambling which was then done through the COAG process. I am trying to find out whether the ATM restrictions that were already in place and have changed a bit over the years were a particular part of the discussion at that—
Ms Laffan : Whether they were as a result of those?
Senator MOORE: Yes.
Mr Palmer : We would have to find out. We do not have that knowledge here.
Senator MOORE: Can you check that. You do not have to get back to us by tomorrow; this is an ongoing area. But, as one of the particular areas in the previous legislation was around the limitation to ATMs at the level which was already in the ACT and South Australia, I think—South Australia was a $200—
Ms Laffan : South Australia's was $200. The ACT's was $250, but that commences on 1 February.
Senator MOORE: Yes, so they had already come to around the level that was in the federal area. The other states that you mentioned had higher levels.
Mr Palmer : That is correct.
Senator MOORE: And some states had no restriction at all.
Ms Laffan : Yes.
Mr Palmer : Can I just be clear: are you asking whether these ATM measures were discussed in that Commonwealth-state forum?
Senator MOORE: Yes—whether this particular discussion point was linked to the pre-existing COAG process that looked at gambling. This committee has done two or three inquiries into gambling, and at each of them this ATM measure came up in different ways, so I am trying to track back where it came from. Thank you.
CHAIR: I think you have both had and presumably continue to have discussions with state and territory counterparts around this area.
Mr Palmer : Yes.
CHAIR: There was a suggestion made here yesterday that the states might in fact be behaving in a less than honest fashion because of the revenues that they receive from gaming. Are either of you able to characterise your relationship with the states in view of that comment?
Mr Palmer : I do not think we can make any comment on those comments that were made yesterday.
CHAIR: Thank you, Mr Palmer. Thank you, witnesses. Senator Siewert, do you want witnesses on the increase from 25 to 35?
Senator SIEWERT: Do you mean schedule 3?
CHAIR: We have done schedules 4, 8 and 11, so we are up to the interest charge. Which schedule is that?
Senator SIEWERT: I only have a short question on that.
CHAIR: Schedule 3, family tax benefit and eligibility rules? Is that who is on their way?
Senator SIEWERT: This is the 17-year-olds.
CHAIR: There is one short question on 3.
Senator MOORE: Is it one of your questions, Chair?
CHAIR: No, it is one of Senator Siewert's questions. Hers are as short as mine sometimes.
Senator SIEWERT: We are now discussing, I think under schedule 3, the measure that cuts off payments at the end of the school year. Once they finish school at the end of year 12, this cuts it off?
Ms Lindenmayer : This measure supports families with children up until the end of the calendar year that they finish year 12.
Senator SIEWERT: Effectively regardless of age?
Ms Lindenmayer : Regardless of age.
Senator SIEWERT: If they are older than the normal age for finishing year 12, they will still be carried through to when they finish year 12?
Ms Lindenmayer : They will be carried through till the end of the calendar year they turn 19.
Senator SIEWERT: If they are doing year 12?
Ms Lindenmayer : Yes.
Senator MOORE: You say they are eligible til the end of the calendar year, which will be 31 December. When is the last payment in the cycle?
Ms Lindenmayer : I think payment cycles vary but they would be paid up until that date—31 December.
Senator MOORE: Is it prepaid or postpaid?
Ms Lindenmayer : It is paid in arrears.
Senator MOORE: So with 31 December you would be likely to get a payment sometime in January, and that would be the last one. Is that how in arrears works?
Ms Lindenmayer : Yes, that is my understanding.
Senator MOORE: So the last payment would be some time after Christmas?
Ms Lindenmayer : Yes.
Senator SIEWERT: My understanding is that the amount of money saved is $76 million over four years, is that correct?
Ms Lindenmayer : That is correct.
Senator SIEWERT: Is that on that particular measure or is that overall to the budget?
Ms Lindenmayer : It is for this particular measure. As an example, you might have a 17-year-old who is finishing school at the moment, so in December this year, but they do not turn 18 until March. Their payment would cease at the end of December this year, which is in line with when they finish school. So they are finished year 12 rather than continuing the payment until their 18th birthday.
Senator SIEWERT: Then they have to go through the whole process of approved study—
Ms Lindenmayer : They protest their eligibility for youth allowance.
Senator SIEWERT: So how long a period is there where families are not getting support in one way or another?
Ms Lindenmayer : My understanding is they could claim youth allowance from I January. They could lodge their intent to claim youth allowance and if they meet the eligibility criteria for youth allowance they will be eligible for youth allowance from January.
CHAIR: Has there been the potential for people to double up?
Ms Lindenmayer : No, you cannot receive both payments.
Senator SIEWERT: So they finish in the calendar year ending 31 December, and you are saying they could be prepared enough to then claim youth allowance from 1 January?
Ms Lindenmayer : They could lodge their intent to claim with Centrelink, yes.
Senator MOORE: Can you remind us of the eligibility for youth allowance—age, income and all that. What do we have to do to get youth allowance?
Ms Lindenmayer : I am not the expert on the youth allowance, but my understanding with youth allowance is that they need to be full-time students or apprentices aged between 16 and 24, they could be job seekers aged under 22 looking for work, and there is a parental income test and a personal income test.
Senator MOORE: So you could easily be a job seeker. You could end up at the end of December and put your claim into Centrelink and start being a job seeker. That would be a relatively straight forward claim. But if you were looking at taking up study, your eligibility would only be once the course begins—is that right?
Ms Lindenmayer : I cannot answer that question.
Senator MOORE: Can anyone answer that question? We are trying to identify the—
Ms Lindenmayer : I am not a youth.
Senator MOORE: I know, but we are trying to identify the gaps. You said that you could actually lodge your intent to claim. So at the end of the calendar year, 31 December, you finish school, and if you intend to go into a study situation in the next year, you may get your results and your HECS offer in late December—I am looking at the first possible way. You may get that, but your eligibility to get the payment would only be from when you start the course—is that right?
Mr Caddick : Oliver Caddick, Director of the Student Payment Program Performance Team in Department of Social Services.
Senator MOORE: This is your area, Mr Caddick?
Mr Caddick : This is, yes.
Senator MOORE: When are you eligible?
Mr Caddick : We pay on intent in youth allowance.
Senator MOORE: So you do not have to have actually started the course?
Mr Caddick : That is correct. So there can be a seamless transition between family tax benefit and youth allowance as a student.
Senator MOORE: If you have your offer and are going to study—
Mr Caddick : The offer is not really relevant. We pay on intent to study—
Senator MOORE: I did not know that.
Mr Caddick : at that point for people transitioning between school and—
Senator MOORE: Higher education of any kind.
Mr Caddick : and tertiary education.
Senator SIEWERT: You do not have to have been accepted into a course?
Mr Caddick : That is correct, not at that point.
CHAIR: In most cases, would transition officers or other school staff tell students about youth allowance when they tell them all the other things that happen in the big bad world?
Mr Caddick : Now we are moving away from my area of expertise, but I think that would depend on the school or the institution. I am sure that happens in some cases in some schools.
CHAIR: Thank you.
Member of the committee interjecting—
CHAIR: I was just asking if eligibility for youth allowance would be something that students would be told about, the things you can get when you leave school.
Senator SIEWERT: Certain schools, perhaps; I do not think all schools.
Senator MOORE: Basically, it would be knowing your entitlements and knowing your options. I know DSS does not do that, but Centrelink does.
Mr Caddick : Centrelink would do that as well. I am sure that Centrelink does inform—and this is where you guys might be able to help me—families that there will be an information campaign around the measure. Centrelink will certainly be informing families about eligibility for youth allowance.
Ms Lindenmayer : There is information on the DHS website—
Senator SIEWERT: Yes, there is. I have seen that.
Ms Lindenmayer : For students, families by cohort. So there is information available.
Senator MOORE: If you pay on intent and the intent is not fulfilled, is an overpayment created?
Mr Caddick : No.
Senator SIEWERT: Do they get charged the interest?
Mr Caddick : No, that is not right.
CHAIR: No, we just chop their heads off straightaway.
Senator MOORE: What does happen, Mr Caddick, in that case? If you pay on intent, and someone with good intent puts their claim in, knowing the system, and then for whatever purpose does not then go into a study circumstance, what happens?
Mr Caddick : Whether they have a place is uncertain and they tell Centrelink about their intent, they will pay on intent, provided they inform Centrelink of their circumstances, they will not acquire a debt.
Senator MOORE: But they could be receiving money for two or three months by the time they have actually—
Senator MOORE: If they come to see the department in January—
Mr Caddick : We do not pay on completely vague intents, but we do pay on an intent to study or an intent to enrol in university.
Senator SIEWERT: Can we double-check what intent does mean? I am sure it has not changed that much since we were there. For example, when my son was applying for university, he did not get an offer until after the new year. You get your results after Christmas and you do not get an offer until after new year.
Mr Caddick : We do currently pay for that period on intent.
Senator SIEWERT: So if you have actually lodged an application for various institutions, that counts as intent?
Mr Caddick : It certainly does, yes.
Senator SIEWERT: Okay. What happens for those who end up not getting an offer? Bearing in mind that there are two or three rounds and sometimes you do not get an offer until early February, I think it is still the same, and you miss out?
Mr Caddick : We still pay you then on intent. At some point, if it becomes impossible for the person to study, they would be expected to notify of their change in circumstances. At that point, it is possible that they could become a job seeker. But, provided they are pursuing the pathway to study, we will pay on intent while they are awaiting offers.
Senator SIEWERT: It is not their fault if they miss out. They then need to notify that have missed out. What happens if they take up the job seeker path?
Mr Caddick : If there were no educational options open to them in tertiary education, yes.
Senator SIEWERT: If they decided to apply for TAFE within that period, would that be covered?
Mr Caddick : I believe it would. Yes, it would cover their intent, but bearing in mind their intent must be for full-time study.
Senator MOORE: Do you happen to have the figures for the current youth allowance versus job seeker allowances?
Mr Caddick : In terms of the rate of payment—
Mr Kimber : In terms of students and youth allowance, there is a range of rates, depending on individual circumstances. Under 18 at home, it is $223 per fortnight and over 18-plus at home, is $268.20 a fortnight.
Senator MOORE: Is that the full payment—that they have met all the criteria that Ms Lindenmayer talked about?
Mr Kimber: Yes, that is right.
Senator MOORE: What about job seekers?
Mr Kimber : Youth allowance other for job seekers, under 18 at home is $223 and 18 to 21 at home is $268.
Senator MOORE: It is very similar.
Ms Lindenmayer : To clarify, I only mentioned two of the eligibility criteria. There were probably others.
Senator MOORE: Parental income test, self-income test and you have proven what you are going to do—study or seeking work.
Ms Lindenmayer : That is my understanding.
Senator SIEWERT: I want to go back to notification. You are saying it is available through school, but surely the parent will be notified that their family tax benefit is going to cease at the end of the calendar year in which their child finishes year12.
Ms Lindenmayer : They will get notification from DHS, yes.
Senator SIEWERT: Will that automatically include the issues we have just dealt with?
Ms Lindenmayer : It is my understanding, but I would like to clarify that.
Senator SIEWERT: If you could, it would be appreciated. Are the eligibility criteria around parental eligibility different to those for the family tax benefit?
Ms Lindenmayer : Yes.
Senator SIEWERT: So there is no guarantee that a person intending to study will receive youth allowance even though their parents are receiving the family tax benefit.
Ms Lindenmayer : That is correct.
Senator SIEWERT: There is a gap. Some of the savings will be picked up paying the person youth allowance, so it is a case of moving payments around. Is there potential saving where the person is not eligible for youth allowance but their parent would have been getting family tax benefit for them?
Ms Lindenmayer : Yes, that is correct.
Senator SIEWERT: Do we know how much that is?
CHAIR: That would be that amount.
Senator SIEWERT: No. That is just the amount that is saved through this measure. That is what I understood from the answer that you gave me previously.
CHAIR: Are you asking whether there will be a cost to the youth allowance from this measure?
Senator SIEWERT: I am asking what the net saving is.
CHAIR: Do you understand that, Ms Lindenmayer? The question is whether there is a gross or a net saving?
Ms Lindenmayer : It is a net saving. This is a saving.
Senator SIEWERT: The $76.6 million—
Ms Lindenmayer : Over four years is a saving.
Senator SIEWERT: For family tax benefit?
Ms Lindenmayer : For family tax benefit, but it includes taking into account that some students will move to youth allowance.
Senator SIEWERT: Okay. From the answer I had previously, I understood it was just about family tax benefit and did not take into account youth allowance.
Ms Lindenmayer : No, it does.
Senator SIEWERT: Thank you.
CHAIR: We have completed schedule 3. Thank you very much, officers. We now move to schedule 5, interest charges, primarily for student debts. Do either of you have an opening statement.
Mr Kimber : No.
CHAIR: Okay. We will go to questions.
Senator SIEWERT: What are the circumstances in which this provision would be invoked? What are the criteria and assessment processes for this to be invoked? I understand it would be invoked, that they will be charged, where students refuse to pay but are not unable to pay.
Mr Caddick : Firstly, the measure primarily and in its entirety on implementation focuses on ex-recipients, so it is not really students we are talking about in the measure. It is former students who are no longer on income support, so these are former students who are employed.
Senator SIEWERT: When does the interest start accumulating?
Mr Caddick : Where a debt is raised, the person will receive a notice that they have 28 days to enter into an agreement to repay the debt. If they either fail to respond to that notice or fail to negotiate an agreement then interest will start from the 29th day.
Senator SIEWERT: That is if they do not respond or stop paying?
Mr Caddick : Yes.
Senator MOORE: How do they appeal?
Mr Caddick : All of the provisions in the bill would be subject to full merits review, including through the SSAT, the AAT—
Senator MOORE: So if they were going through an appeal process, whichever stream of appeal process, they would not incur the interest rate, that would be frozen pending the appeal?
Mr Caddick : That is correct.
Mr Kimber : Usually there is an internal DHS review, social security tribunal, administrative appeals—yes.
Senator SIEWERT: Some of the issues raised earlier in evidence—I do not know if you heard this—were around people moving after they finished studying and being hard to track down, and there was a range of other issues raised. How is that take into account?
Mr Caddick : First off, I would say that people are under a notification obligation to inform DHS of a change of circumstances. If they have a debt that they have been notified of and they owe DHS, or owe the government and the community the money then they are under a notification obligation to notify of any change in address. Having said that, if a significant period of time has elapsed I do understand there is case law and provisions within the legislation around notification. Again, they would also be subject to appeal as well.
Senator SIEWERT: So if the notification somehow got lost, they could use that as a basis for an appeal?
CHAIR: If they went overseas for five years, for example.
Mr Caddick : I would not want to give any sort of cut and dried answer there, simply because it would depend on the circumstances. The interest charge itself is an ordinary social security debt under the social security legislation, so it is subject to special circumstances waiver provisions. So if there was a genuinely special reason why the person had not notified or it had got lost, as you say, then that could be taken into account under the legislation.
CHAIR: And if you were not working or did not have an income?
Mr Caddick : I imagine if you did not have an income you would probably be on income support, in which case you would be subject to the withholdings regime and the interest issue does not arise because it does not apply to people who are subject to withholdings from income support or family payment.
Senator SIEWERT: The debt would be subject to withholding, you mean?
Mr Caddick : Indeed, as it is at the moment. And that is not something we are touching here.
CHAIR: Are you able to give us a sense of the quantum of loans that are involved and what the interest owing and whatever is—\?
Mr Kimber : In terms of ex-recipients, there are something in the order of 33,000 debts held by around about 22,000 debtors—so there are some debtors who have more than one debt—and there is around $72 million owed to the Commonwealth.
CHAIR: Wow. And that is 33,000 debts out of millions—
Mr Kimber : There are about 96,000 student debts held by about 65,000 debtors.
CHAIR: So you are telling me that a third of the money from students is outstanding—have I misunderstood that?
Mr Caddick : There is about $205 million outstanding in the debt base for students. About $114 million of that is held by ex-recipients, and about $72 million of that is not under recovery.
Senator MOORE: What does that mean?
Mr Caddick : It means there is no recovering it.
Senator MOORE: It has just been waived, or—
Mr Caddick : No, it has not been waived, it is just not being recovered.
CHAIR: Because you cannot find the person to recover it, or—
Mr Caddick : Or because they just do not want to.
CHAIR: They do not want to get involved in paying it back, is that what you are saying?
Mr Caddick : Yes. There are mechanisms, as some of you would be aware, to recover the debt through garnisheeing from wages, tax returns, et cetera, but those options are not always available in all circumstances. Recovery through the courts is an available option to DHS as well, but that is incredibly expensive.
CHAIR: How many people are there right now that you would choose to charge interest on, and how much do they owe that this legislation would cover?
Mr Kimber : It will target those that are not in any sort of recovery arrangement. There is $72 million outstanding that is not subject to any recovery arrangements.
CHAIR: And you do not know how many people it is?
Mr Kimber : It is 22,000, and there are about 33,000 debts.
Senator SIEWERT: I understand that there are existing provisions to charge interest.
Mr Caddick : Yes; they are not used at the moment.
Senator SIEWERT: Why not?
Mr Caddick : They were suspended, as I understand, in about 2005.
Senator SIEWERT: Why was that?
Mr Caddick : That would have been a decision of government. I am not aware of the particular details.
Senator SIEWERT: So 2005—that was the previousprevious mob! I do not know the detail of those provisions or why they were suspended, so are these the same as those provisions?
Mr Kimber : No, they are different. They are designed differently. Those provisions go back, I think, to the late 1990s. Originally there was a penalty interest imposed of around about 20 per cent. That was in place from about 1999 to about 2002-03, I understand. Then that was reduced to three per cent from about 2003 through to 2005. The first one was obviously seen, in commentary that was around, as very punitive and close to credit card rates. The second one was obviously too low to have any sort of incentive effect in terms of encouraging people to enter into a repayment arrangement. As I understand, it was suspended from 2005 onwards. This is designed differently. This is a general interest charge that is fixed against the Treasury bill rate plus seven per cent. It uses the exact same formula as the ATO uses for a general interest charge for tax debts.
CHAIR: Tax debts?
Mr Kimber : That is actually in the legislation.
CHAIR: In fact we are treating these particular social welfare debts in the same way that we treat taxpayers who do not pay back money.
Mr Caddick : Not entirely. We are somewhat more generous in the sense that a debtor who has one of these social services debts will be able to escape the interest charge completely through entering into and honouring a repayment arrangement. While tax does have some capacity to remit, which is the term they use, the remission of their interest charge, generally speaking, if you are late paying your tax you are going to have to pay the interest. It operates similarly to credit card debt.
CHAIR: That is why there is a saving of $33.5 million over three years in the EM, yet you are saying there are $73 million worth of debts outstanding. If people, because of the threat, for want of a better word, of the interest charge, the incentive, of having to pay an interest charge enter into an agreement to pay you back, then they do not pay an interest charge.
Mr Kimber : That is correct.
Senator SIEWERT: In relation to the 24,000 that are not under any recovery arrangements, is there an assumption that once the interest is able to be charged they will suddenly start paying?
Mr Caddick : There is an assumption, I think, that a proportion of them will, about 50 per cent in the first year.
Senator SIEWERT: What is special about the student related provisions? Were those interest provisions only suspended for student related debt?
Mr Kimber : My understanding is they were suspended for all payments. For the student related debts, I think some of the thinking behind the particular measure was that students, after receiving income support whilst they are studying, then move into paid employment and are more able to settle their debts to the Commonwealth that they may have incurred while on student income support.
Senator SIEWERT: This is on top of paying HECS?
Mr Kimber : These are debts that are incurred that they were not entitled to in terms of the student income support payment.
Senator SIEWERT: Are you saying they are all related to people that were falsely claiming, or that made mistakes claiming?
Mr Kimber : There can be a range of reasons. One might be that they changed their study load and did not inform DHS and continued to receive higher levels of payment. They might have had employment and did not declare earnings, or just other changed circumstances that might have come into play, that is, they were partnered and then were single. It could be a range of circumstances.
Senator SIEWERT: These provisions of interest charges will be different for people that receive student assistance than other forms of income support?
Mr Kimber : That is right, Senator.
Senator BOYCE: We have had some comment from organisations saying that it is most likely that it would be students who had just entered the workforce who would bear the brunt of these interest charges. Could either of you comment on whether you think that is the case?
Mr Kimber : I think that it is important to remember that the interest charges only come into play when an ex-student does not enter into a repayment arrangement.
CHAIR: Refuses to pay back the debt when asked by DHS.
Mr Kimber : They would be contacted by DHS and get 28 days to consider whether to either pay back the debt in full or enter into a repayment arrangement. It is only after that that the general interest charge would actually be applied.
Senator SIEWERT: What period of time would that be?
Mr Kimber : 28 days.
Senator SIEWERT: 28 days after they have been contacted?
Mr Kimber : After the issuing of the advice, so on the 29th day interest would be applied.
Senator SIEWERT: This will apply into the future, but it is also about those situations where you have no recovery arrangements.
Mr Kimber : That is right.
Senator SIEWERT: How old are they?
Mr Kimber : There would be a range—some very short in duration and some could be also a number of years.
Senator SIEWERT: Sorry, I am not trying to be difficult, although I am sure I am managing to be. When you say 'a number of years', are you talking about since tracking back to 2005?
Mr Kimber : There would be some that are as old as five to six years.
Mr Caddick : It would be unlikely that there would be too many more than six years old.
Senator SIEWERT: Why is that?
Mr Caddick : Because of the statutory limitation. There has not been any recovery action on them.
Senator SIEWERT: So there is a statute of limitation—
Mr Caddick : Within the social security law, yes.
Senator SIEWERT: So that same rule is applying?
Mr Caddick : That rule applies to all social security debts.
CHAIR: Do current students receive an end-of-year reconciliation or anything like that of what they owe?
Mr Caddick : Not in a sort of family tax benefits sense because as an income support payment, it is based on your need at that time.
CHAIR: No, I am talking about these debts. In my last semester, would I be aware that I owed money to DHS?
Mr Caddick : Yes, you would have received notification of the debt from DHS.
CHAIR: So I do not have the excuse that, 'Oh, I didn't know I owed you anything'?
Mr Caddick : Correct.
Mr Kimber : Yes, you would receive advice.
Senator SIEWERT: Surely that would be in your last year though, because if you owed a debt and you were still on some sort of payment, you would already be recovering that from that payment, would you not?
Mr Kimber : That is right. There would be a withholdings arrangement in place.
Senator SIEWERT: So this is at the end of your study?
Mr Caddick : My understanding is that all debts are notified.
Senator SIEWERT: Yes, but how soon after you finish studying are you notified?
Mr Caddick : I think you are notified more or less as soon as the debt is raised.
Mr Kimber : That could be answered by DHS, but I would envisage a process whereby, if you were a student on a student payment and subject to withholdings because you were still on Austudy or Youth Allowance, once you finish studying, you would be provided advice as to if you did not continue to make some type of repayment through some type of agreement with DHS, that a general interest charge will apply. There would be that notification process as you transition from being a student into the work force.
CHAIR: I call the remaining two officers to the table. Welcome. As you have no opening statement, we will go straight to questions. Senator Moore.
Senator MOORE: I know that you know what these questions are because you may have heard them in previous evidence we have had, which is not new evidence. First, is there a current departmental review of the paid parental scheme going on?
Mr Brown : Yes.
Senator MOORE: What is the timing of that review?
Mr Brown : The timing of the legislative review is that it had to commence at the beginning of this year, which it did. Within the legislation there is not a technical end date but we are currently working on a report and we would expect to finalise that probably in the very early part of next year. Once it is provided to the minister, there is a requirement that it is tabled in parliament within 15 sitting days.
Senator MOORE: I remember when we put that in the legislation. You are hoping to finish that early in the new year. That is covering the whole implementation process, how it worked?
Mr Brown : On our internet site there are terms of reference for the PPL scheme review. It sets out the issues but we are not restricted to those issues. It also will draw from the separate evaluation process which is also underway. Some of the earlier evaluation reports are now publicly available and they are being finalised over the coming months.
Senator MOORE: Is the review internal or consultants?
Mr Brown : It is being done by the department but it involved public submissions, a range of meetings with stakeholder groups, analysis of administrative data, those kinds of things.
Senator MOORE: We heard evidence this evening from a couple of industry groups and their comments were not new, being consistent. One of the specific issues raised was the complexity of the form and the complexity of the claiming process. They made a statement which is on the record now that it is a 75-page form that people have to fill in. Why?
Mr Brown : Clearly there is a range of different information that is required by Centrelink in order to make assessments. This is one that DHS is probably best able to respond to, but they have sought to combine claim processes as well. They have gone an online arrangement as well, so if you claim online you do not necessarily have to go through all the questions, you can be streamed through depending on which ones there are. Generally speaking, they do not collect information that is not required for the payment processing.
Senator MOORE: The statement was 75 pages but when I asked them is not 75 pages of actual claim form, it is information combined with claiming—
CHAIR: It is 47 pages of claim form.
Senator MOORE: That was my next comment. In terms of process I am interested because it just seems to be a lot of claim form. Comparison was made with New Zealand, where apparently you can claim with six pages. Has the complexity of the claim form been looked at in the review? I know it is not one of the terms of reference that it seems to me to be appropriate.
Mr Brown : I think the claim process more generally is being picked up within the review. There are certainly comments about the claim form and complexity. DHS are well aware of this and we would be seeking to work with them constantly to try and enhance and simplify those arrangements.
Senator MOORE: Another thing that was raised was the complexity of the employer's role as paymaster. When we had the review introducing paid parental leave we did it in the Employment and Education Committee, not in this committee, but there was a lot of outcry at that stage, at the beginning, about how hard it was going to be as a paymaster to balance the requirements of having someone on paid parental leave. At that time we were assured by the department that there would be ways of making this simpler and the department were aware of the issues about how you would have to as an employer maintain your pay system and be able to interact effectively without causing too much trouble. I tried to find it earlier but I know, because I was on the committee, that we were assured at that time that that would be able to be a more simple process as it got bedded down. The evidence that we had this afternoon from two employer organisations was that it is still—and one gentleman went has far to say, 'almost impossible'—to actually use your current payroll system and effectively have someone on paid parental leave work within the system without causing complexity. Is that the view of the department?
Mr Brown : What we are looking at is the feedback from the review and the evaluation process. The evaluation is four phase, and it is certainly focused on process issues in the first couple of phases, and it will continue over the next little while. In broad terms it certainly showed that, overall, while there were some concerns and misunderstandings between Centrelink and different employers, over time, as Centrelink mastered the business of working with employers, and employers, particularly when they had multiple claimants, were able to adapt as well. So, overall, it is not without concerns and issues raised by employers—small, medium, large—but I think the processes have been managed well and they are relatively smooth, notwithstanding the evidence provided here earlier in the day.
Senator MOORE: The specific claim made by an employer group was that it was impossible to actually maintain effectively, through your computer based pay system, an employee who was on paid parental leave. That because of complexities with tax and superannuation, BAS statements could not be completed easily and it would be too difficult. He went as far as to say, impossible, to make sure that it all added up effectively. It was going to create extraordinary amounts of work for small business in particular to use existing payroll systems to come up with an outcome that would be straightforward. That particular issue was raised before the scheme started and we had evidence from the department that they were aware of those issues and that that would not be the case.
Mr Brown : The Council of Small Business Australia have raised those concerns with us consistently, but other evidence and feedback, given either through the review or the evaluation, or through correspondence to the minister, is not a uniform view at all.
CHAIR: The early childhood people supported that view, did they not?
Senator MOORE: There has never been an argument that employers did not want to take on the job, and that is what we got. What we tried to establish at the legislation committee at the beginning of the process was taking on board concerns about this and what would be the expectation of putting it into place. The information that we had at that time, which I have received subsequently, is similar to yours, Mr Brown, that claims were made about how difficult it was but then, when you talked to other people, they said once you had your system in place it works smoothly. As someone who does not do payroll work anymore, and used to do it in the department, not in a small business, I have not been able to get a clear answer in this short time about what is the correct statement. Is there system availability? At the time of the introduction of the scheme we were talking about products such as MYOB, which was the most standard software around. There were statements made at that time that MYOB should be able to be adjusted so that, if you are paying a number of employees and they have different hours, and you then had an employee or more who were in the middle of paid parental leave, that employee's records should be able to be entered in as 'on paid parental scheme,' and your ability to do your BAS return, which is so important, and any interaction with tax, should be able to be adjusted.
The gentleman from the Small Business Association said that is not true and I am trying to find out from you, Mr Brown, with the work you have done with the evaluation and the review—whilst of course, there will always be complexities and some people will find transition more easily than others—is it possible under the range of software that people use for payroll to be able to do that without too much trouble?
Mr Brown : The advice that we have been given from a range of different stakeholders is to say that the answer is yes, but it varies across organisations. Going back to the phase 2 report of the evaluation, to assist this, on page 107 where it says, 'It was easy to get information about the PPL scheme,' 83 per cent strongly agreed or disagreed, only 13 per cent said less than that. 'Ease of registering for the PPL scheme', more than half said it was easier to register with the scheme, so it was a minority but a sizeable minority found it was difficult. Attitudes towards organising PPL statements, 'It was easy to organise payments for the PPL scheme', strongly agree or agree was 79 per cent.
Senator MOORE: 79 per cent of people—
Mr Brown : of people said they strongly agreed or agreed that it was easy to organise payments for the PPL scheme through Centrelink.
CHAIR: Who were the people?
Mr Brown : Sorry?
CHAIR: Who were the survey people?
Mr Brown : This was a stratified sample of employers who had been paying PPL.
CHAIR: Are you able to table that document?
Mr Brown : Yes. These are publicly available on the website, on the phase 2 evaluation report. So there is still a sizeable minority who have found difficulties, they have found costs, including one-off costs, but sometimes on-going costs, time, and they have been spread across small, medium, larger organisations as well. But it is not evident to us that the issues raised earlier today exist across all organisations.
Senator SIEWERT: It is fair to say that the representative from the Small Business Association did not particularly value the input from bureaucrats in Canberra and felt that there was not an understanding of the rigours of small business by people who do not work in that area and that is a common statement. That was a view—that he did not feel that people truly understood. Is that the kind of information you get back from employers—that they do not think that people who are involved in setting up these schemes truly understand the difficulties of small business or any business having to do this extra work?
Mr Brown : Certainly that is a view that I have heard expressed throughout the course of this year undertaking the review. On the other hand, the department has been at pains to consult with a wide range of groups, including employer groups, and has received submissions. I have met with a wide range of stakeholder groups as well, so we certainly attempted to understand the issues that have been presented.
CHAIR: What you are saying is that it is possible for a small business to go about its weekly, fortnightly, monthly, whatever, payroll without needing manual intervention to pay a person on paid parental leave on the pay cycle that everyone else is on, so to speak?
Mr Brown : It would take manual intervention to set up each claimant. We would need to check, I think, whether or not the answer is that they would need it for every fortnight or for every payment.
CHAIR: Whether you had to do it on every pay cycle, so to speak?
Mr Brown : No, my understanding is that once set up, it is reasonably good to go, although Centrelink also makes payments into the employer's account and then that would need some manual intervention to pass it on, I assume.
CHAIR: We are seeing a cost involved in this measure. What is that cost?
Mr Brown : That is not program outlays; that is basically Centrelink administration costs but really to change their IT systems and make some adjustments to claim forms and letters and things like that.
CHAIR: So you would expect the majority of that over five years would be in the first year?
Mr Brown : Yes.
Senator MOORE: We have an impossible time frame and I do not expect this information by tomorrow, but I am really interested in what feedback we have from IT companies. This was a particular issue that was raised at the beginning of this payment, about exactly these concerns about people who rely on things like MYOB. I am particularly interested to see what information, if any, the department has from talking to accountants and the people who do payroll. We asked a lot of questions about that at the start. What came out of those discussion? The information we had in evidence today was no different from what we had from employer groups before it came in. I want to see what the reality is, because I do not know and I honestly have not had to do it myself. I would like to know what information the department has.
This is an important point and I know it is going to be part of the evaluation, but any information the committee could have about these claims about the difficulty will be helpful. Even with the proposed change we have, it is an opt in, opt out thing—if employers want to retain it, they can. I am interested to know what that option would include. As I say, we do not need that by tomorrow. We would not ask you to do it all by then. I am trying to understand the expectations of the paymaster role, which we have heard so much about. There is such a gap between what we hear from some people and what I have read in that review about the feedback that we have.
CHAIR: Is this something we should be thinking about in terms of a briefing once the review is complete?
Senator MOORE: I would think so. I think it is a critical point. Until this inquiry we thought we had until the time of the review, but now this inquiry has a predate before the expectation of the review that is due in February next year.
CHAIR: That concludes the hearing of the committee into the Social Services and Other Legislation Amendment Bill 2013. We thank the witnesses and Hansard, Broadcasting and the secretariat for the work they have done.
Committee adjourned at 21:27