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Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Bill 2003

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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 28 th  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.