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Family and Community Services and Veterans' Affairs Legislation Amendment (2003 Budget and Other Measures) Bill 2003

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2002-2003

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

 

 

FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (2003 BUDGET AND OTHER MEASURES) BILL 2003

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Family

and Community Services,

Senator the Hon Amanda Vanstone)

 

FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (2003 BUDGET AND OTHER MEASURES) BILL 2003

 

 

OUTLINE AND FINANCIAL IMPACT STATEMENT

 

 

This Bill gives effect to most of the Family and Community Services and Veterans’ Affairs 2003 Budget measures that require legislation.  The Bill also gives effect to a 2001 Budget measure upon which the 2003 measure relating to recovery of overpayments arising from lump sum foreign pension payments depends.  Finally, the Bill makes a small number of non-Budget minor policy or technical changes.

 

 

Budget measures

 

Excluding payments for National Socialist persecution from income

 

Currently, payments made under the laws of Germany or Austria, by way of compensation to victims of National Socialist persecution, are excluded from income under the social security and veterans’ entitlements income tests.  More countries are now making such payments, eg, France, the Netherlands and Belgium.  This Bill will extend the current income exclusion to any such payment, regardless of the country making it, so that this beneficial treatment under the income test is available to all who receive the payment.

 

Commencement:     Royal Assent
 
Financial impact:     2003-04                     $0.2m

(social security)              2004-05                     $0.1m

                                    2005-06                     $0.1m

                                    2006-07                     $0.1m

 

Financial impact:     negligible

(veterans’ entitlements)

 

 

Access to information by Centrelink

 

The main cause of incorrect social security payments is failure to disclose income and assets, including in cases of serious fraud.  Most undisclosed earnings are detected by the comprehensive data matching arrangements that are currently in place.  Centrelink’s compliance activities are to be enhanced under this Bill to allow limited access to newly available data sources relating to taxation and financial transaction activities, but only for the purpose of the administration of the social security law.

 

Commencement:     Royal Assent
 
Financial impact:     2003-04                     -$26.5m

                                    2004-05                     -$55.7m

                                    2005-06                     -$57.2m

                                    2006-07                     -$58.4m

 

(Note:   Financial impact includes certain non-legislative elements announced in the 2003-04 Budget.  Total financial impact is for increasing the number of data matching reviews by 125,000 each year, and expanding the number of data sources used in data matching reviews.)

 

 

Assurances of support

 

Amendments are made to improve the operation of the Assurance of Support Scheme and simplify arrangements for people who provide an assurance of support.

 

Under the new arrangements, the Department of Immigration and Multicultural and Indigenous Affairs will continue to determine which new migrants are subject to an assurance of support.  However, once this determination is made, the assurance of support will be issued under the social security law and Centrelink will administer the Scheme, on behalf of the Department of Family and Community Services.  The new arrangement will enable Centrelink, as a single point of contact, to provide people giving assurances with more comprehensive information regarding the implications of their commitment to provide financial support to the new migrant.  Assurers will benefit from easy access to clear advice provided in their preferred language through the Centrelink network.

 

Improved administration of the Scheme will result in fewer migrants claiming income support during their assurance of support period and, if claims are made, in improved recovery of assurance of support debts from the assurers.

 

Commencement:     1 July 2004
 
Financial impact:     2003-04                     $2.1m

                                    2004-05                     -$3.9m

                                    2005-06                     -$4.5m

                                    2006-07                     -$4.9m

 

 



Stopping payment for people absent from Australia without notice and comparable foreign payment debt recovery
 

Amendments are made to strengthen the arrangements for ceasing payment to people travelling overseas who do not notify their departure.  Under the new rules, there would be capacity to suspend payment where a person leaves Australia without notifying the departure and the Secretary finds out about the departure before the end of the person’s portability period.  The person’s entitlement to payment would then be reviewed and, depending on the outcome of the review, payment would be either fully restored or cancelled.

 

This Bill also amends the social security debt recovery provisions to allow for the full recovery of overpayments that arise when a foreign pension payment is made as a lump sum in arrears.  Amendments are made to enable recovery from the person who receives the lump sum foreign pension payment and from the person’s partner (where relevant).

 

Commencement:     1 July 2004
 
Financial impact:     2003-04                     $2.7m

(2003 Budget                 2004-05                     -$0.2m

measures)                      2005-06                     -$2.0m

                                    2006-07                     -$3.5m

 

Financial impact:     2004-05                     -$2.1m

(2001 Budget                 2005-06                     -$4.6m

measure*)                      2006-07                     -$5.1m

                                   

 

(*The 2001 Budget measure refers to the standardisation of recovery of overpayments of Australian pensions where people receive their foreign pension in arrears.  This measure was a component of the ‘Further Simplification of International Payments’ package.  The figures are an estimate of administered savings for that component.)

 

 
Reducing portability period

 

This Bill reduces the allowable period of temporary overseas absence for portable social security payments from 26 weeks to 13 weeks.  The new portability period will also apply to disability support pension although there will be capacity to grant an unlimited portability period to a severely disabled disability support pensioner in defined circumstances.

 

A person’s rate of family tax benefit is subject to modification if the person or an FTB child of the person is absent from Australia for longer than 26 weeks.  Amendments are made to reduce this allowable period of absence to 13 weeks.

 

Commencement:     1 July 2004
 
Financial impact:     2003-04                     $3.1m

                                    2004-05                     $0.1m

                                    2005-06                     -$3.5m

                                    2006-07                     -$3.7m

 

 

Related or other non-Budget measures

 

Access to information by the Child Support Agency

 

This Bill restores access by the Child Support Agency (part of the Department of Family and Community Services) to financial transaction information held in the AUSTRAC database.  The Agency lost this access when it ceased to be part of the Australian Taxation Office following the 1998 changes in administrative arrangements.  The restored access is, as it was previously, only for the administration of the child support legislation, including in cases of substantial avoidance of child support liabilities.

 

Commencement:     Royal Assent
 
Financial impact:     2003-04                     negligible

 

(Note:   Financial impact includes negligible Departmental costs and negligible Administered savings in family tax benefit outlays.  Financial impact beyond 2003-04 will depend on the outcome of a current review into AUSTRAC charging arrangements for access by authorised agencies to financial transaction information.)

 

 

Technical corrections

 

This Bill also contains some minor technical amendments, commencing at various times as appropriate.  There is no financial impact from these.

 

 



FAMILY AND COMMUNITY SERVICES AND VETERANS’ AFFAIRS LEGISLATION AMENDMENT (2003 BUDGET AND OTHER MEASURES) BILL 2003

 

 

Clause 1 sets out how the Act is to be cited, that is, the Family and Community Services and Veterans’ Affairs Legislation Amendment (2003 Budget and Other Measures) Act 2003 .

 

Clause 2 provides a table that sets out the commencement dates of the various sections in, and Schedules to, the Act.

 

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

 

 

For ease of description, this Explanatory Memorandum uses the following abbreviations:

 

·          ‘Social Security Act’ means the Social Security Act 1991 ;

·          ‘Social Security Administration Act’ means the Social Security (Administration) Act 1999 ;

·          ‘Family Assistance Act’ means the A New Tax System (Family Assistance) Act 1999 ; and

·          ‘Family Assistance Administration Act’ means the A New Tax System (Family Assistance) (Administration) Act 1999 .

 



Schedule 1 - Excluding payments for National Socialist persecution from income

 

 

Summary

 

Currently, payments made under the laws of Germany or Austria, by way of compensation to victims of National Socialist persecution, are excluded from income under the social security and veterans’ entitlements income tests.  More countries are now making such payments, eg, France, the Netherlands and Belgium.  This Schedule will extend the current income exclusion to any such payment, regardless of the country making it, so that this beneficial treatment under the income test is available to all who receive the payment.

 

 

Background

 

This type of payment, made under the laws of Germany or Austria, is currently excluded from income by paragraphs 8(8)(n) and (p) of the Social Security Act, and by paragraphs 5H(8)(s) and (t) of the Veterans’ Entitlements Act 1986 .

 

These current paragraphs are repealed by items 1 and 3 respectively and substituted with a single paragraph for each Act.  The new paragraph excludes from income an amount paid, under a law of, or applying in, a country or a part of a country, by way of compensation for a victim of National Socialist persecution.  To ensure that the extended income exclusion applies consistently and securely in the future as well as for the current state of affairs, the new paragraph is broad enough to cover payments made in circumstances that are not necessarily envisaged at present.  The income exclusion will apply in relation to:

 

·          payments made by Germany or Austria, as currently provided;

·          payments made by the national government (or equivalent) of any country, or by the government (or equivalent) of any part of a country such as a state or a province;

·          payments made under a ‘law of’ a country or part of a country;

·          payments made under a ‘law applying in’ a country or part of a country (eg, made by a state of a country under a national (or equivalent) law applying in that state);

·          payments made by an entity other than a government, if made under a law of, or applying in, a country or part of a country;

·          payments made by Australia, or a State or Territory of Australia.

 

Items 2 and 4 respectively ensure that the amendments described above apply to payments made after the commencement of the Schedule.

 

This measure was announced by the Government on 13 May 2003 as part of the 2003 Budget.  People to whom relevant social security and veterans’ entitlement payments will be payable, or people to whom such payments will be payable at a higher rate, under these amendments have been paid on an ex-gratia basis since that date, pending Parliament’s consideration of the amendments.  The amendments themselves will commence on Royal Assent.

 

 

Explanation of changes

 

Item 1 repeals current paragraphs 8(8)(n) and (p) of the Social Security Act and substitutes a new paragraph 8(8)(n).  Item 2 provides for this amendment to apply to amounts paid after commencement of this Schedule.

 

Item 3 repeals current paragraphs 5H(8)(s) and (t) of the Veterans’ Entitlements Act 1986 and substitutes a new paragraph 5H(8)(s).  Item 4 provides for this amendment to apply to amounts paid after commencement of this Schedule.

 

 



Schedule 2 - Access to information

 

 

Summary

 

The main cause of incorrect social security payments is failure to disclose income and assets, including in cases of serious fraud.  Most undisclosed earnings are detected by the comprehensive data matching arrangements that are currently in place.  Centrelink’s compliance activities are to be enhanced under this Schedule to allow limited access to newly available data sources relating to taxation and financial transaction activities, but only for the purpose of the administration of the social security law.

 

This Schedule also restores access by the Child Support Agency (the CSA - part of the Department of Family and Community Services) to financial transaction information held in the AUSTRAC database.  The CSA lost this access when it ceased to be part of the Australian Taxation Office following the 1998 changes in administrative arrangements.  The restored access is, as it was previously, only for the administration of the child support legislation, including in cases of substantial avoidance of child support liabilities.

 

 

Background

 

Access to information by Centrelink

 

Australia’s social security system is targeted to those most in need.  The income and assets tests ensure that people able to support themselves do so.  Nevertheless, some people continue to ignore their reporting obligations or to defraud the system.  Centrelink’s compliance activities are in place to identify these people, recover debts and prosecute in more serious cases of fraud.

 

Experience has shown that a certain number of people seek to avoid detection through involvement in the cash economy and/or the use of assumed or stolen identities.  Cases already detected sometimes reveal large debts, often exceeding $50 000 in fraudulent payments.

 

The Australian Federal Police generally deals with only the more serious suspected cases of social security fraud.  The alternative way to pursue these cases is for Centrelink to investigate and refer suitable cases to the Director for Public Prosecutions.  However, there are currently protections against the disclosure, by other agencies to Centrelink, of information from certain newly available data sources that would enable Centrelink to conduct effective investigations into these cases.  These protections prevent Centrelink from acting fully to counter cash economy and identity fraud and, therefore, to protect more effectively Commonwealth social security outlays.

 

This Schedule will allow Centrelink to take advantage of the additional available data sources for the purpose of identifying and investigating these potentially incorrect social security payments - that is, payments that have been paid that should not have been paid, and payments that have been paid at too high a rate.

 

Most of the newly available data sources arise under taxation legislation.  Information held in relation to Pay As You Go Payment Summaries, for example, and information potentially highlighting activities such as illegal tobacco and distillation industries, will help to identify fraudulent social security payments.  The Acts administered by the Australian Taxation Office that are to be amended to allow Centrelink access to information are:

 

·          the Excise Act 1901 (the Excise Act);

·          the Fringe Benefits Tax Assessment Act 1986 (the Fringe Benefits Act);

·          the Product Grants and Benefits Administration Act 2000 (the Product Grants Act); and

·          the Taxation Administration Act 1953 (the Taxation Administration Act).

 

The last data source is the AUSTRAC database, which contains information obtained under the Financial Transaction Reports Act 1988 (the FTR Act).  This ‘FTR information’ is expected to reveal cash economy activity as well as large transfers of funds out of Australia.

 

AUSTRAC annual reports since 1998-99 suggest that approximately 5% of the Suspect Transaction Reports generated each year under the FTR Act relate to suspected social security fraud.  This amounts to 400 cases, a relatively small number, but still a valuable target for Centrelink compliance activity.  Nevertheless, due to the low volume of cases expected, and the sensitivity of the information involved, access to the information within Centrelink will be restricted to specialist investigative officers.

 

When the amendments to the FTR Act provided by this Schedule commence, Centrelink will be able to access AUSTRAC information that indicates cases highly likely to involve fraud.

 

Access to information by the CSA

 

The CSA will resume access to FTR information only for the purpose of better fulfilling its responsibilities under the child support legislation.  That is, in an individual parent’s child support case, the resumed access will contribute to ensuring that the level of financial support to be provided by the parent for their children is determined according to their capacity to provide that support, and that the child support related debt is paid in accordance with the parent’s capacity to pay.

 

Information available from the AUSTRAC database is usually information that the CSA is entitled to obtain from clients or third parties under its own legislation.  However, the limited access proposed through AUSTRAC can identify additional lines of enquiry in a relatively small number of complex cases.  Many of these involve substantial child support related debts, particularly those owed by people who travel frequently and/or operate businesses outside Australia, people who deposit sums of money from overseas into accounts at casinos within Australia, or people who are involved in the cash economy.

 

There are two strong public policy reasons for allowing for the disclosure of information that will contribute to people fulfilling their child support obligations.  The disclosure will protect Australian Government outlays for family tax benefit, which must increase if child support debts are not paid.  Perhaps more importantly, the disclosure will contribute to the important policy objective that parents fulfill their financial responsibility to their children.

 

The CSA’s past experience in using FTR information has shown how valuable it is in locating debtors, and/or identifying potential sources of income or assets belonging to payers, some with very large debts.

 

It is proposed that, as in the past, the CSA’s internal controls will allow access to FTR information only to officers who can demonstrate to their managers a legitimate need to access it.

 

General

 

The amendments made by this Schedule to the FTR Act in particular mark a departure from the current access arrangements set up under that Act.  Historically, FTR information has been accessible only for law enforcement, revenue and national security purposes.  The Senate Standing Committee on Legal and Constitutional Affairs, in its 1993 report, ‘Checking the Cash’, considered the possibility of the then Department of Social Security being given access to FTR information.  The report stressed that ‘AUSTRAC was established to respond to major crime, not lesser breaches of the law such as minor breaches of the Social Security Act’ and that it should continue to have that focus.

 

The reasons for Centrelink and the CSA having access to FTR information are set out above.  For Centrelink in particular, the information is in fact necessary to detect and prevent cases of serious social security fraud.  However, to allay any concerns that the access may cause, consultations with key stakeholders have taken place.

 

Both for the FTR Act amendments and the taxation law amendments, the limited uses and disclosures provided for by this Schedule will be further controlled by:

 

·          Memoranda of Understanding between agencies;

·          the existing internal structures of all agencies that protect client privacy, such as the secrecy provisions of the social security, child support and taxation law and the FTR Act;

·          the Privacy Act 1988 ; and

·          the Public Service Code of Conduct.

 

Lastly, the new arrangements will be subject to occasional privacy audits conducted by AUSTRAC, the Privacy Commissioner and the Australian National Audit Office.

 

Technical amendments

 

This Schedule also contains some minor technical amendments loosely associated with the main amendments.  These amend the social security law definition of ‘officer’ and subsection 16(4) of the Income Tax Assessment Act 1936 (Income Tax Assessment Act) to update current references to social security legislation and programs to reflect the current concept of the ‘social security law’ introduced by the Social Security Administration Act.  There is no policy change from these purely modernising amendments.

 

All amendments made by this Schedule commence on Royal Assent.

 

 

Explanation of changes

 

Excise Act

 

Items 1 and 2 amend section 159 of the Excise Act, which protects information obtained by a person in the course of official employment under that Act, to add new subparagraphs to each of existing paragraphs 159(3)(c) and (d).  These new subparagraphs prevent an offence arising against the main secrecy rule in the section if the Commissioner of Taxation, a Deputy Commissioner or a person authorised by one of those office holders discloses information to the Chief Executive Officer (CEO) of Centrelink, or the Secretary of the Department of Family and Community Services (FaCS), as long as the information is to be used for the purposes of the administration of the social security law.  Those purposes are described above under Background.

 

Item 3 sets down how these amendments are to apply.  They apply to information obtained by the ATO before, on or after commencement.  In other words, when the amendments commence (on Royal Assent), Centrelink will be able to access any protected information held at that point in the ATO’s records in relation to the Excise Act, even if it was obtained before commencement.

 

This application rule is common to all of the amendments made by this Schedule, apart from the technical social security law amendments.  The main reason for applying the amendments to information obtained before commencement is a purely practical one.  This is that the ATO (or AUSTRAC in relation to the FTR Act amendments) computer systems will not be able readily to separate information held in its records that is obtained before commencement from that obtained after.  Those computer systems were not designed with a view to later amendments to the access arrangements and the cost of modifying the systems would be prohibitive.

 

FTR Act

 

Items 4 to 12 amend the FTR Act, to give Centrelink and the CSA limited access to FTR information.

 

Items 4, 5 and 6 will set up in subsection 3(1) of the FTR Act three new definitions that will be needed in the following amendments.  The newly defined terms are ‘Centrelink officer’, ‘Child Support Agency’ and ‘CSA officer’.  Each of these takes its meaning from or in relation to the relevant legislation.

 

Items 7 to 12 amend section 27 of the FTR Act.  The basic secrecy rule in the FTR Act is section 25.  However, section 27 overrides section 25 to allow specified agencies, and officers of those agencies, to have access to defined FTR information.  In all cases other than for taxation officers and the Commissioner, this access is available only if the AUSTRAC Director gives a written authorisation for the relevant agency.  This authorisation must state the FTR information, or class of FTR information, to which the agency is to have access.  If such an authorisation is given, then specified officers of the agency are entitled to access that class of information.  Centrelink and the CSA, and their officers, are to join the agencies and officers currently covered by this structure to allow access on the basis of an authorisation in relation to a limited class of information.  This requirement, together with the Memoranda of Understanding that will be part of the arrangement, will give appropriate control over access.  Items 7 to 11 will make the amendments necessary to add Centrelink and the CSA to the agencies and officers currently covered by this structure.

 

Item 12 amends the provisions in section 27 that control how a specified officer of a specified agency may use and/or disclose FTR information once it has been disclosed to him or her, so that the controls are the same as for the officers currently covered by those provisions (ie, all cases other than taxation officers).  Basically, a Centrelink officer or CSA officer must not, while remaining such an officer, disclose the FTR information except as provided by subsection 27(6).  When the person is no longer such an officer, he or she must not disclose the FTR information in any circumstances.

 

However, that basic provision is subject to subsections 27(7) to (11) and (12), allowing limited disclosure in certain cases to do with legal, or court, proceedings or to the person or company who is the subject or source of the information.  These exceptions will also apply to Centrelink and CSA officers handling FTR information.  Any breach of the section 27 rules is an offence under subsection 27(13).

 

Item 13 provides the common application clause, as described above.  That is, the amendments to the FTR Act will apply to information obtained by AUSTRAC before, on or after commencement.

 

Fringe Benefits Act

 

Item 14 amends section 5 of the Fringe Benefits Act, which protects information obtained by a person in the course of official employment under that Act, to add new paragraphs to existing subsection 5(5).  These new paragraphs prevent an offence arising against the main secrecy rule in the section if the Commissioner of Taxation, a Deputy Commissioner or a person authorised by one of those office holders discloses information to the CEO of Centrelink, or the Secretary of FaCS, as long as the information is to be used for the purposes of the administration of the social security law.  Those purposes are described above under Background.

 

Item 15 provides the common application clause, as described above.  That is, the amendments to the Fringe Benefits Act will apply to information obtained by the ATO before, on or after commencement.

 

Income Tax Assessment Act

 

Items 16 and 17 make some minor technical amendments, loosely associated with the main amendments, to the secrecy provision of the Income Tax Assessment Act.  These repeal and substitute paragraphs 16(4)(e) and (eb) of that Act to replace the current references to any law of the Commonwealth ‘relating to pensions, allowances or benefits’ with the current concept of the ‘social security law’ introduced by the Social Security Administration Act.  The now outdated name of the Department of Social Security is also amended in line with the other amendments in this Schedule.  There is no policy change from these purely modernising amendments.

 

Item 18 provides the common application clause, as described above.  That is, the amendments to the Income Tax Assessment Act will apply to information obtained by the ATO before, on or after commencement.

 

Product Grants Act

 

Items 19 and 20 amend section 47 of the Product Grants Act, which protects information obtained by a person in the course of official employment under that Act, to add new subparagraphs to existing paragraphs 47(3)(c) and (d).  These new subparagraphs prevent an offence arising against the main secrecy rule in the section if the Commissioner of Taxation, a Deputy Commissioner or a person authorised by one of those office holders discloses the agreed classes of information to the CEO of Centrelink, or the Secretary of FaCS, as long as the information is to be used for the purposes of the administration of the social security law.  Those purposes are described above under Background.

 

Item 21 provides the common application clause, as described above.  That is, the amendments to the Product Grants Act will apply to information obtained by the ATO before, on or after commencement.

 

Social Security Act and Social Security Administration Act

 

Items 22 and 23 make minor technical amendments loosely associated with the main amendments.  These amend the social security law definition of ‘officer’ to reflect the current concept of the ‘social security law’ introduced by the Social Security Administration Act.  The modification of the definition for the purposes of the confidentiality provisions in the social security law is also moved from the interpretation area of the Social Security Act to a more relevant and accessible position, directly adjacent to the confidentiality provisions in the Social Security Administration Act.  There is no policy change from these purely modernising amendments.

 

There is no need for an application clause for these amendments.

 

Taxation Administration Act

 

Items 24 and 25 amend section 68 of the Taxation Administration Act, which protects information obtained by a person in the course of official employment under an ‘indirect tax law’, to add new subparagraphs to existing paragraphs 68(3)(c) and (d).  These new subparagraphs prevent an offence arising against the main secrecy rule in the section if the Commissioner of Taxation, a Deputy Commissioner or a person authorised by one of those office holders discloses the agreed classes of information to the CEO of Centrelink, or the Secretary of FaCS, as long as the information is to be used for the purposes of the administration of the social security law.  Those purposes are described above under Background.

 

Item 26 provides the common application clause, as described above.  That is, the amendments to the Taxation Administration Act will apply to information obtained by the ATO before, on or after commencement.

 



Schedule 3 - Assurances of support

 

 

Summary

 

This Schedule makes amendments to the Social Security Act, the Social Security (Administration) Act and the Migration Act 1958 to provide for the transfer of the Assurance of Support Scheme from the migration legislation to the social security legislation.

 

These amendments are made to improve the operation of the Assurance of Support Scheme and simplify arrangements for people who provide an assurance of support.

 

Under the new arrangements commencing on 1 July 2004, the Department of Immigration and Multicultural and Indigenous Affairs will continue to determine which new migrants are subject to an assurance of support.  However, once this determination is made, the assurance of support will be given and accepted under the new provisions of the social security law relating to assurances and Centrelink will administer the Scheme, on behalf of the Department of Family and Community Services.  The new arrangement will enable Centrelink, as a single point of contact, to provide people giving assurances with comprehensive information regarding the implications of their commitment to provide financial support to the new migrant.  Both assurers and new migrants will benefit from easy access to clear advice provided in their preferred language through the Centrelink network.  Centrelink will continue to be responsible for recovery of assurance of support debts.

 

Improved administration of the Scheme will result in fewer migrants claiming income support during their assurance of support period and, if it occurs, in improved recovery of assurance of support debts from the assurers.

 

 

Background

 

An assurance of support is a form of legal undertaking given by the assurer to repay to the Commonwealth income support payments made to the migrant in respect of whom the assurance was given during the specified period of the assurance (2 or 10 years depending on the migrant’s visa).  The Assurance of Support Scheme allows migrants who are at a higher risk of needing to claim social security payments to come to Australia, while protecting the Commonwealth from financial risk.

 

The current responsibility for, and administration of, the Scheme is split between the Department of Immigration, Multicultural and Indigenous Affairs (DIMIA) and the Department of Family and Community Services (FaCS).  DIMIA decides who must obtain an assurance (by determining which visa needs an assurance as a condition of its grant), makes a decision to accept or reject an assurance and, if the assurance is accepted, transfers data about the assurer and any person covered by the assurance to Centrelink.  Centrelink is responsible (on behalf of FaCS) for ensuring that any recoverable payment made to the migrant during the period of the assurance is recovered from the assurer.

 

The fragmentation of responsibilities has resulted in complex administrative processes that provided opportunity for assurers to claim that they did not fully understand their financial obligations resulting from assurances.

 

To improve administration of the Scheme, the Government has decided to transfer the administration of the Scheme from DIMIA to FaCS.  The transfer, facilitated by the new legislative framework provided by the amendments in this Schedule and a suite of disallowable instruments, will be assisted by the development of an improved customer service system.

 

 

Explanation of changes

 

This Schedule contains three Parts:  Part 1 - Main amendment, Part 2 - Consequential amendments, and Part 3 -Application, transitional and saving provisions.

 

Part 1 - Main amendment

 

Item 1 inserts new Chapter 2C containing new assurance of support provisions into the Social Security Act.

 

New Chapter 2C - Assurances of support

 

New Chapter 2C contains five parts dealing with the following matters: giving of assurances, acceptance of assurances, effect of accepted assurances, ministerial determinations relating to assurances and assurances given by unincorporated associations.

 

New Part 2C.1 - Giving assurances

 

New section 1061ZZGA    What is an assurance of support?

 

An assurance of support is given in connection with a visa applied for and the visa applicants.  In relation to certain visa subclasses, Migration Regulations 1994 require assurances of support to be given as a condition of grant of those visas (mandatory assurances). Migration Regulations 1994 also include the power for the Minister to request that an assurance of support be given as a condition of grant of some other visa subclasses (discretionary assurances).  The visa applied for cannot be granted if an assurance of support has been requested in connection with the visa is not provided and found to be acceptable.  If the assurance is given and accepted, and the visa is granted, the assurance is in effect for a specified period (currently, two or 10 years depending on the visa subclass).  As a result, if specified income support payments are paid to the persons identified in the assurance in respect of the period during which the assurance is in effect, the paid amounts become a debt due to the Commonwealth by the assurer.

 

New section 1061ZZGA defines the term ‘assurance of support’ for the purposes of the new Chapter.

 

It states that ‘assurance of support’ means an undertaking made by a person under the new Chapter 2C that the person will pay the Commonwealth an amount equal to the amount of a social security payment received in respect of a period by a person identified in the undertaking who becomes the holder of a visa granted in connection with the undertaking.  Subparagraph (a)(ii) of the definition makes it clear that the undertaking to pay the amount in respect of a period extends throughout the period irrespective of whether the person who was granted a visa in connection with the undertaking continues to hold that visa throughout the period or not.  Therefore, the undertaking will cover the whole relevant period even if the person is subsequently granted another visa during that period, or becomes a citizen and does not hold any visa for the remainder of that period.

 

The period to which the undertaking applies, that is, the period in respect of which liability to pay the social security amounts arises, is the period referred to in the context of new section 1061ZZGF (dealing with the period for which an assurance is in force).

 

Paragraph (b) of the definition specifies that the undertaking to repay social security amounts relates to those social security payments that, when the payments are received, are specified in a determination made by the Minister for that purpose under new subsection 1061ZZGH(1), table item 1.  The social security payments that give rise to an assurer’s liability, that are specified in the ministerial determination in force at the time of payment, may be different to those specified at the time of the undertaking.

 

New subsection 1061ZZGH(1) makes it mandatory for the Minister to specify the social security payments, the amounts of which assurers will have to repay.  The determination under new subsection 1061ZZGH(1) is a disallowable instrument (new subsection 1061ZZGH(4) refers).  Currently, the social security payments relevant to an assurer’s liability are specified in the Migration Regulations 1994, regulation 2.38.

 

As a result of the statutory interpretation rule in paragraph 23(b) of the Acts Interpretation Act 1901 (a word in the singular number include the plural), one assurance may relate to 2 or more persons.  Therefore, a Note to the definition clarifies that an assurance may relate to social security payments received by 2 or more persons.

 

New section 1061ZZGB    Who may give an assurance of support?

 

New section 1061ZZGB provides that a ‘person’ may give an assurance of support.  ‘Person’ is defined in section 22 of the Acts Interpretation Act 1901 as including a body politic or corporate, as well as an individual.  As a result of the operation of new section 1061ZZGI, the social security law that relates to new Chapter 2C applies to an unincorporated body or association as if it were a person.  Therefore, an unincorporated body may also give an assurance (new subsection 1061ZZGI provides that it may be done by the action of a partner if the body is a partnership, or, in any other case, by the action of a member of the committee of management of the body).

 

Only a person who meets the requirements for giving assurances specified in relation to a person in a determination made by the Minister under new subsection 1061ZZGH(1), table item 2, may give an assurance.  New subsection 1061ZZGH(1) makes it mandatory for the Minister to specify requirements to be met in relation to persons for them to be permitted by new section 1061ZZGB to give assurances of support.  One example of such a requirement is the current policy requirement for giving assurances that an individual has to be an Australian resident and at least 18 years old.  Another current requirement is that the capacity to give assurances is limited to the giving of assurances in respect of maximum two adults (persons over 18 years of age).

 

The ministerial determination under new subsection 1061ZZGH(1), table item 2, is a disallowable instrument (new subsection 1061ZZGH(4) refers).

 

This section is intended to operate to the effect that if there are no requirements specified in relation to a particular class of persons, a person within that class would not be permitted to give an assurance.  For example, if the determination under new subsection 1061ZZGH(1) does not specify any requirements in relation to unincorporated bodies, new section 1061ZZGB will prevent the body to give an assurance.

 

For a person, or a body, to be able to give an assurance under this section, the requirements for that kind of a person, or body, to be permitted to give an assurance must be specified by the Minister and the requirements must then be met by such a person, or body.

 

Note 1 clarifies that an undertaking given by a person who does not meet the requirements for giving an assurance is not an assurance of support because it is not given under this Chapter.  The Secretary is therefore not required to accept or reject the purported assurance.

 

Note 2 refers to the statutory interpretation rule in paragraph 23(b) of the Acts Interpretation Act 1901 (a word in the singular number include the plural) in support of the explanation that, under new section 1061ZZGB, 2 or more persons may give one assurance of support only if all those persons meet the requirements for giving assurances specified by the Minister in a determination under new subsection 1061ZZGH(1).  It is intended, for example, that the determination will specify requirements for giving one assurance by multiple assurers (eg jointly by 2 individuals).

 

New section 1061ZZGC    How to give an assurance of support

 

New section 1061ZZGC specifies how an assurance of support is given.

 

An assurance is given if it is delivered in writing in accordance with a form approved by the Secretary (new paragraph 1061ZZGC(1)(a) refers).  New subsection 1061ZZGC(2) provides that an assurance of support form may include other undertakings in addition to the assurance.  If other undertakings are included in the assurance of support form, new subsection 1061ZZGC(2) ensures that the inclusion in the form of the other undertakings does not affect the assurance of support.  In other words, an assurance given in accordance with the approved form is an assurance of support even though there may be other undertakings included in the assurance of support form.

 

New paragraph 1061ZZGC(1)(a) provides that an assurance may be delivered either:

 

·          to a person apparently performing duties at a place approved for this purpose by the Secretary; or

·          to a person approved for this purpose by the Secretary; or

·          in a manner, and to a place, approved for this purpose by the Secretary.

 

The Secretary may approve a place or a person in Australia or out of Australia (new subsection 1061ZZGC(3) refers).

 

New paragraph 1061ZZGC(1)(b) provides that an assurance may also be given in a different manner than that specified under new paragraph 1061ZZGC(1)(a) if the Secretary approves such a manner.  In approving such manner, the Secretary is not limited by any other provision of this new section (new subsection 1061ZZGC(4) refers).

 

New subsection 1061ZZGC(1) together with new section 1061ZZGA operate to the effect that if a person ‘gives’ an assurance in a way different to that approved by the Secretary, the person has not given an assurance (because it is not given unless it is given in the approved way; and, if not given as required by the provisions of new Chapter 2C, it does not fall into the definition of ‘assurance of support’ in new section 1061ZZGA, so it is not an assurance).  A note at the end of new subsection 1061ZZGC(1) clarifies that, in such a situation, the Secretary is not required to accept or reject the purported assurance.

 

New subsections 1061ZZGC(1) to (4) provide the Secretary with a high degree of flexibility in determining how assurances are to be given, enabling the Secretary to take into account the circumstances of various customer groups and to respond (if required) to a changing technological environment.  The Secretary’s powers relating to determining how assurances are to be given are aligned with the powers currently provided by the social security law in relation to determining how social security claims are to be given.

 

Material to accompany assurance of support

 

New subsection 1061ZZGC(5) requires the person who gives an assurance to provide any information specified in an assurance of support form and any document specified by the Secretary.  Under new subsection 1061ZZHC(6), if the person does not provide the required information or document, the assurance is taken not to have been given.  (Consequently, the Secretary is not required to make a decision to accept or reject an ‘assurance’.)

 

New Part 2C.2 - Acceptance of assurances

 

New section 1061ZZGD    Accepting or rejecting an assurance of support

 

New subsection 1061ZZGD(1) requires the Secretary to accept or reject an assurance that has been given as provided for by new Chapter 2C.

 

Under new subsection 1061ZZGD(2), the Secretary is permitted to accept an assurance if the following conditions are met.

 

Requirements for acceptance relating to a person giving the assurance

 

The Secretary has to be satisfied that the person who gave the assurance meets the requirements for acceptance relating to the person specified in a determination made for this purpose by the Minister under new subsection 1061ZZGH, table item 3 (new paragraph 1061ZZGD(2)(a) refers).

 

Note 1 at the end of new subsection 1061ZZGD(2) clarifies that one assurance given by 2 or more persons (that is, by multiple assurers) may be accepted only if the Secretary is satisfied that the requirements that relate to all of them, as specified in the ministerial determination, are met.

 

Primarily, it is intended that the relevant requirements will relate to the financial capacity of a person, or persons, giving an assurance to support a person, or persons, identified in the assurance.  The financial test applies to a person who gives an assurance under the current Assurance of Support Scheme.

 

Special requirements may apply to a member of a couple who wants to give an assurance in respect of a person while the partner gave or is giving assurance in respect of another person (new subsection 1061ZZGH(2) authorises the Minister to specify requirements to be met by assurers who are members of a couple).

 

The determination under new subsection 1061ZZGH(1), table item 3, is a disallowable instrument (new subsection 1061ZZGH(4) refers).

 

Provision of a security

 

In relation to certain visa subclasses, the Migration Regulations 1994 require that an assurance of support is given and accepted as a condition of grant of the visa (mandatory assurances).  Regulation 2.39 requires that if an assurance is given in respect of a visa applicant who has turned 18, the person giving the assurance must lodge a bond.  The bond must be in the form approved by the Minister that secures the payment to the Commonwealth, on demand, of any amount (up to the bond amount), due to the Commonwealth as the result of the liability arising in respect of social security payments paid to the visa applicant and his or her dependants.  Subregulation 2.39(4) specifies the applicable bond amounts.

 

New paragraph 1061ZZGD(2)(b) specifies the lodgement of a security as a condition of acceptance of a mandatory assurance.

 

Note 2 at the end of new subsection 1061ZZGD(2) clarifies that the requirement to give a security does not apply to a kind of visa in relation to which there is a discretion to request an assurance (discretionary assurance).

 

If an assurance is a mandatory assurance and the assurance relates to a visa applicant who was at least 18 at the time of the application for the visa (an adult), the Secretary may only accept the assurance if the requirements specified in new subsection 1061ZZGD(3) that relate to the lodgement of a security are met.

 

As clarified by subparagraph 1061ZZGD(2)(b)(ii), the requirement to lodge a security in respect of an assurance that relates to an adult applies regardless of whether the assurance relates also to a person who was under 18 at the time of the application for the visa.

 

Under new subsection 1061ZZGD(3), a person who gave an assurance, or at least one of the multiple assurers (if an assurance is given by multiple assurers), has to give a single security for the liability that may be incurred in connection with the assurance.  This provision reflects the requirement that a single security is to be given in respect of the assurance, irrespective of how many persons are identified in the assurance.

 

New subsection 1061ZZGD(3) specifies further that the single security is intended for the liability that the person who gave the assurance (or everyone who gave the assurance, if the assurance is given by multiple assurers) may incur in connection with the social security payment received by any person (whether an adult or not) identified in the assurance.  This indicates that the security may be used to discharge the liability of an assurer (or assurers, if multiple assurers are involved) arising out of social security payments of any of the persons identified in the assurance.

 

The extent of the assurer’s liability connected with an assurance is described in new section 1061ZZGG.

 

New subsection 1061ZZGD(3) also requires that the security be given in a form approved by the Secretary and be of a value specified by the Minister in a determination under new subsection 1061ZZGH(1), table item 4.  Before making the determination, the Minister must ask the Minister for Immigration, Multicultural and Indigenous Affairs for comments and must consider the comments received (new subsection 1061ZZGH(3) refers).  The determination is a disallowable instrument (new subsection 1061ZZGH(4) refers).

 

Rejecting the assurance

 

New subsection 1061ZZGD(4) provides that the Secretary may reject an assurance.  If the conditions of acceptance of an assurance specified in new subsection 1061ZZGD(2) are not met, the Secretary cannot accept the assurance and will reject it.

 

One way of ensuring that the person giving the assurance understands the consequences of the person’s commitment and the extent of the possible financial obligations is by the provision to the person of comprehensive information, in a way that is easy for the person to understand.  To achieve this, it is intended that the assurance of support process will involve an obligatory interview, which the person giving an assurance will be required to attend.  New subsection 1061ZZGD(5) makes it clear that an assurance may also be rejected under subsection 1061ZZGD(4) if the person giving the assurance and requested by the Secretary to attend an interview relating to the assurance fails to do so.

 

New section 1061ZZGE    Notices relating to assurance of support

 

New subsection 1061ZZGE (1) provides for a notice of acceptance or rejection of an assurance to be given to the person who gave the assurance and the Minister for Immigration, Multicultural and Indigenous Affairs.

 

The notice is to name the person, or persons, in respect of whom the assurance was given.

 

New subsection 1061ZZGE(2) provides for a notice to be given to the person who gave the assurance specifying the period for which the assurance is in force in respect of the person for whom the assurance was given.

 

A Note at the end of new subsection 1061ZZGE(2) directs the reader to new section 1061ZZGF for an explanation when an assurance of support is in force.

 

An assurance of support cannot come into force unless the visa, in connection with which the assurance was given, is granted and the person in respect of whom the assurance was given is in Australia.

 

New subsection 1061ZZGE(2) requires the Secretary to give a notice of the assurance of support period if the Secretary becomes informed that the person in respect of whom the assurance was given was granted the visa and entered the ‘migration zone’ (that term, which, generally, denotes Australia, is defined in section 5 of the Migration Act 1958 ).

 

Given that an assurance may be given in respect of more than one person and the assurance of support in respect of some of those persons may come into force from a different date, the assurance may therefore remain in force for different periods, despite the fact that there is only one assurance of support.  This would occur when different members of migrating family covered by an assurance of support arrive in Australia at different times.

 

New subsection 1061ZZGE(3) requires the Secretary to notify the assurer whose assurance has ceased to be in force at the time specified in new subparagraph 1061ZZGF(1)(b)(ii) of the cessation.

 

A Note at the end of new subsection 1061ZZGE(3) informs the reader that new subparagraph 1061ZZGF(1)(b)(ii) is about cessation of an assurance of support if another assurance comes into force in respect of the person covered by both assurances.

 

New Part 2C.3         Effect of accepted assurances

 

New section 1061ZZGF    When an accepted assurance is in force

 

New subsection 1061ZZGF(1) specifies when an assurance of support comes into force and for how long it remains in force in respect of a person for whom the assurance was given.

 

An assurance of support cannot come into force unless the visa in connection with which the assurance was given is granted and a person in respect of whom the assurance was given is in Australia.

 

New paragraph 1061ZZGF(1)(a) operates to the effect that the assurance of support given in connection with a particular visa comes into force in relation to a person specified in the assurance:

 

·          at the time the visa was granted - if the person is in Australia at the time of the grant; or

·          at the time at which the person entered Australia - if the person was not in Australia at the time of the grant of the visa.

 

New subparagraph 1061ZZGF(1)(b)(i) provides that the assurance remains in force for the period specified by the Minister in a determination made under new section 1061ZZGH(1), table item 5, unless the Secretary determines an earlier cessation of the assurance under new subsection 1061ZZGF(2).

 

Currently, the period for which an assurance remains in force is specified in the Migration Regulations 1994, regulation 2.36 (10 years if the person is granted a Contributory Parent (Migrant) (Class CA) visa or Contributory Aged Parent (Residence) (Class DG) visa, and 2 years in the case of other kinds of visas).

 

It is intended that the determination made by the Minister under new section 1061ZZGH(1), table item 5, after the commencement of new section 1061ZZGH enabling the Minister to make such an determination, will specify the same assurance of support periods that apply currently.

 

New subsection 1061ZZGH(3) requires that, before making the determination under new section 1061ZZGH(1), table item 5, the Minister asks the Minister for Immigration, Multicultural and Indigenous Affairs for comments and must consider the comments received (new subsection 1061ZZGH(3) refers).

 

The determination is a disallowable instrument (new subsection 1061ZZGH(4) refers).

 

New subparagraph 1061ZZGF(1)(b)(ii) provides that if the Secretary determines under new subsection 1061ZZGF(2) the time at which the period of an assurance ceases, and that time is earlier than the end of the period specified for the assurance in a determination under new subsection 1061ZZGH(1), the assurance remains in force until that earlier time.

 

A Note at the end of new subsection 1061ZZGF(1) informs the reader that an assurance of support given in respect of 2 or more persons may be in force at different times in respect of each of those persons.  This may happen as a result of the cessation of the period, or because the period has started at a different time in respect to each of those persons.

 

New subsection 1061ZZGF(2) gives the Secretary a discretionary power to determine that the assurance of support ceases to be in force in respect of the person at the time when another assurance comes into force in respect of the person.  As a matter of policy, there is no intention of using this power for earlier cessation of a 10-year period.  It is intended that, in rare cases where a person in respect of whom an assurance of support is in force is granted a different visa for which another assurance is required, and the two assurances would be in force during the same time, the Secretary will be able to terminate the earlier 2-year assurance to avoid concurrent liability of two different assurers that may arise in respect of the same period.

 

New subsection 1061ZZGF(3) specifies that an assurance of support under this new Chapter is in force in respect of a person only in relation to the period that applies to the person under new subsection 1061ZZGF(1). This subsection clarifies the meaning of the references, in the provisions of the Social Security Act, other than new Chapter 2C (eg section 578B), to assurances of support being ‘in force’.

 

New subsection 1061ZZGF(4) provides that an assurance of support that came into force in respect of a person under new subsection 1061ZZGF(1) remains in force in respect of the person regardless of any change of circumstances that may occur.  As a result of the operation of this provision, the assurance cannot be withdrawn after the assurance came into effect.  This subsection replicates the current subsection 504(5) of the Migration Act 1958 that applies to the effect of assurances of support given under that Act.

 

New section 1061ZZGG    Liability to pay for social security payment

 

New subsection 1061ZZGG(1) specifies when the assurer’s liability arises.

 

The assurer’s liability arises when an assurance is accepted under new Chapter 2.C and a person in respect of whom the assurance was given receives a social security payment in respect of the period during which the assurance is in force and, at the time the payment is received, the payment is specified in a determination under new subsection 1061ZZGH(1), table item 1.

 

If these circumstances occur, the assurer is liable to pay the Commonwealth the amount of the social security payment (new subsection 1061ZZGG(2) refers).

 

In relation to the effect of the assurance given by more than 1 person, new subsection 1061ZZGG(3) provides that the liability all of those persons is both joint and several.

 

The determination specifying social security payments for the purposes of new section 1061ZZGG is a disallowable instrument (new subsection 1061ZZGH(4) refers).

 

New Part 2C.4 Determinations

 

New section 1061ZZGH    Determinations

 

New subsection 1061ZZGH(1) provides that the Minister must make determinations specified in the Table of the determinations included in the new section.

 

In the determinations, the Minister must specify the following things:

 

·          social security payments - for the purposes of new section 1061ZZGA (definition of ‘assurance of support’) and new section 1061ZZGG (liability);

·          requirements to be met for a person to be permitted by new section 1061ZZGB to give an assurance of support;

·          requirements to be met in relation to a person giving an assurance for the Secretary to be permitted by new subsection 1061ZZGD(2) to accept the assurance;

·          values of securities to be given for the Secretary to be permitted by new paragraph 1061ZZGD(3)(b) to accept mandatory assurances of support; and

·          periods for which assurances of support that were accepted under new Chapter 2C remain in force under new paragraph 1061ZZGF(1)(b)(i) in respect of persons for whom the assurances were given.

 

The relevance of the determinations to the provisions for which they are needed was commented on in the context of those provisions.

 

New subsection 1061ZZGH(2) clarifies that a determination for the purposes of new subsection 1061ZZGD(2) (requirements for acceptance of assurances) may specify particular requirements relating to members of couples.

 

Note 1 at the end of new subsection 1061ZZGH(1) clarifies that a determination may specify matters and things by reference to classes and may make different provision with respect to different matters or classes of matters.

 

Note 2 clarifies further, in reliance on the Acts Interpretation Act 1901 , that the Minister may amend a determination by another written determination.

 

The Minister must consult with the Minister for Immigration, Multicultural and Indigenous Affairs before determining values of securities or periods for which assurances are in force (new subsection 1061ZZGH(3) refers).

 

The determinations are disallowable instruments for the purposes of section 46A of the Acts Interpretation Act 1901 (new subsection 1061ZZGH(4) refers).

 

Part 2C.5       Assurances by unincorporated bodies

 

New section 1061ZZGI      Application of social security law to unincorporated bodies

 

A ‘person’ as defined in the Acts Interpretation Act 1901 does not include an unincorporated body.

 

A number of new provisions relating to assurances of support are expressed to apply in relation to a person.  For example, a ‘person’ may give an assurance of support.  It is intended that these and other provisions should have the potential to apply to unincorporated bodies as well as other persons.

 

Therefore, new subsection 1061ZZGI(1) provides that a ‘person’, for the purposes of new Chapter 2C (dealing with assurances of support) and the social security law as far as it relates to this Chapter, includes an unincorporated body.

 

The provision also identifies individuals within the unincorporated body who can act on behalf of the body (new subsection 1061ZZGI(2)), on whom obligations can be imposed and who can discharge those obligations (new subsection 1061ZZGI(3)).

 

In relation to offences committed by the body, new subsection 1061ZZGI(4) provides that if the body would commit an offence (eg section 217 of the Social Security Act relating to making a false or misleading statements applies to the body as if it were a person), the body does not commit the offence (as a result of this amendment, section 217, and other relevant sections relating to offences, will not apply to the body).  However, if an individual who represents a body makes false or misleading statement, he or she may be responsible for an offence committed under section 217, in his or her own right (not as a representative of the body).

 

New subsection 1061ZZGI(5) limits the scope of what can be done by an individual (eg a partner or a member of the body’s management committee) on behalf of the body.  It ensures that when there are requirements relating to a body for giving assurances (requirements under new section 1061ZZGB) or for accepting assurances (requirements under new paragraph 1061ZZGD(2)(a)), the giving of an assurance or acceptance of the assurance depends on the body meeting the requirements.  The requirements relating to the body cannot be met by the representatives of the body meeting the requirements relating to them as individuals.

 

New subsection 1061ZZGI(6) provides that the determination made by the Minister under new section 1061ZZGH, specifying requirements for a person who is an unincorporated body to be permitted to give an assurance or to have the assurance accepted may specify requirements relating to not only the body as such but also to the individuals through which the body acts; that is, partners or members of the body or of its committee of management.

 

Part 2             Consequential amendments

 

Amendments to the Migration Act 1958

 

Item 2 amends section 504 of the Migration Act 1958 (the Migration Act).  It inserts new subsection 504(5A) that affects the operation of paragraph 504(1)(g) and subsection 504(5).

 

Section 504 of the Migration Act relates to making of regulations under that Act.  Paragraph 504(1)(g) contains the enabling provision for making regulations in relation to assurances of support. Specifically, the power provides for making regulations:

 

(a)           ‘requiring assurances of support to be given, in such circumstances as are prescribed or as the Minister thinks fit, in relation to persons seeking to enter, or remain in, Australia’;

(b)           ‘providing for the enforcement of assurances of support’; and

(c)           ‘the imposition on persons who give assurances of liabilities in respect of maintenance of, and other expenditure in connection with, the persons in respect of whom the assurances of support are given’.

 

New subsection 504(5A) states that regulations providing for the enforcement of assurances or imposition of liabilities, made under paragraph 504(1)(g) of the Migration Act before, on or after 1 July 2004, have effect only in relation to assurances that were ‘given before 1 July 2004 and are not assurances of support in relation to which Chapter 2C of the Social Security Act applies or applied’.  This means that the regulations will continue to apply to assurances that were given and accepted before 1 July 2004 but do not apply to assurances in respect of which the Minister for Immigration had not decided before that day whether to accept them or not (the latter assurances are the assurances to which Chapter 2C applies as a result of the transitional arrangements provided for in an amendment made by item 18, paragraph (1)(c)).

 

The amendment also has the following effect.

 

New subsection 504(5A) does not affect the regulation-making power under the Migration Act to require assurances of support to be given (the power specified in paragraph (a) above).  After 1 July 2004, the existing Migration Regulations that specify those visa subclasses for which an assurance of support is required or may be requested will continue in force, and new regulations may be made for that purpose under paragraph 504(1)(g) of the Migration Act.

 

New subsection 504(5A) limits the regulation-making power under the Migration Act to provide for the enforcement of assurances and for the imposition of liabilities in connection with assurances (the powers specified in paragraphs (b) and (c) above).

 

The existing Migration Regulations specify the extent of the liability of a person who gives an assurance of support (regulation 2.38 of the Migration Regulation 1994, in connection with regulation 2.39).

 

Currently, the enforcement of assurances occurs under the Social Security Act and is administered by Centrelink (on behalf of the Department of Family and Community Services).  As a result of new subsection 504(5A), these regulations will continue in force, after 1 July 2004, but only in relation to assurances given before 1 July 2004.  Under the Social Security Act, the liability as defined in the Migration Regulations constitute a debt recoverable under the Social Security Act (section 1227 of the Social Security Act refers).  As the regulations relating to liability will remain in effect for the purposes of the assurances given before 1 July 2004, the liability relating to those assurances will continue to be recoverable under the Social Security Act (Centrelink will recover debts arising in relation to those assurances).

 

The enforcement of assurances given after 1 July 2004 and accepted under the Social Security Act will also occur under that Act (amendments made by items 4 to 14 refer).

 

As the result of the amendment, after 1 July 2004, the regulation-making powers relating to the enforcement of assurances and imposition of liability may be exercised effectively only in relation to assurances of support that were given before 1 July 2004 under the current Migration Regulations.

 

Subsection 504(5) of the Migration Act provides that any assurance of support given in accordance with the regulations under paragraph 504(1)(g) continues to have effect in spite of any change in circumstances.  New subsection 504(5A) limits the operation of subsection 504(5) so that it applies only to assurances given before 1 July 2004 under the Migration Regulations.

 

Amendments to the Social Security Act 1991

 

Definition of ‘assurance of support’ in subsection 23(1)

 

Item 3 amends the definition of ‘assurance of support’ in subsection 23(1).

 

This definition is relevant to a number of provisions in the Social Security Act dealing with qualification or payability of certain social security payments (widow allowance, parenting payment (partnered), youth allowance, austudy payment, newstart allowance, mature age allowance, mature age partner allowance and crisis payment).  These provisions operate to the effect that if an assurance of support is in force in respect of the social security claimant, and the assurer is willing and able to provide an adequate level of support to the claimant, and it was reasonable for the claimant to accept that support, the claimant is not qualified for the payment or the payment is not payable to the claimant.

 

Currently, assurance of support is defined by reference to the Migration Regulations 1989 and the Migration Regulations 1993.

 

Item 3 omits the current definition and substitutes a new definition that includes a reference to new Chapter 2C of the Social Security Act under which assurances of support will be given after 1 July 2004.

 

The new definition also includes a reference to Migration Regulations 1994 under which assurances are given currently, inadvertently omitted from this definition.

 

Definition of ‘assurance of support debt’ -subsection 23(1) and section 1227

 

Item 4 amends the definition of ‘assurance of support debt’ in subsection 23(1).  This definition is relevant to Chapter 5 of the Social Security Act relating to overpayments and debt recovery.  Item 4 repeals the current full definition of the ‘assurance of support debt’ and substitutes a new definition that cross-refers to the meaning given by subsection 1227(2).

 

Item 7 inserts new subsection (2) into section 1227 (assurance of support debt).  This new subsection reproduces the definition of ‘assurance of support debt’ repealed by item 4 and makes an amendment consequential on the introduction (by item 1) of new assurance of support provisions in new Chapter 2C.

 

Generally, new subsection 1227(2) provides that assurance of support debt means:

 

·          a debt due and payable by a person to the Commonwealth, or liability of a person to the Commonwealth, because of the operation of the specified regulations of the Migration Regulations 1989, 1993 and 1994 in respect of the payment to another person of a social security payment specified in those regulations; or

·          a liability of a person to the Commonwealth because of the operation of new section 1061ZZGG in new Chapter 2C inserted by item 1 .

 

Item 6 repeals the note at the end of section 1227, which refers the reader to subsection 23(1) for the definition of ‘assurance of support debt’.  As item 7 imports the definition of ‘assurance of support debt’ into section 1227, the note is no longer needed.

 

Methods of recovery of a debt - section 1230C

 

Item 8 inserts new subsection (5) into section 1230C.

 

New section 1061ZZGD(3), inserted by item 1 , requires as a condition of acceptance of certain assurances (mandatory assurances) that a security be given for the liability that the assurer may incur in connection with the assurance.  Section 1240C specifies methods of recovery of debts.  New subsection 1230C(5) clarifies that this section does not prevent recovery of an assurance of support debt by the enforcement of a security given in connection with the relevant assurance of support.  The security may be enforced at any time.  New subsection 1230C(5) clarifies that the enforcement of a security may occur before or after seeking to recover the debt by another method specified in this section, and regardless of whether or not the enforcement involves legal proceedings (the enforcement of a security may occur regardless of how it is carried out).

 

As a consequence of the amendment made by item 8, item 5 amends table item 14 in subsection 1222(2). This table item specifies methods of recovery of assurance of support debts.  Item 5 substitutes a new table item that includes a reference to the enforcement of security as a method of recovery of assurance of support debts.

 

Non-recovery of debts

 

Item 14 inserts new section 1237AAE that imposes extra rules relating to waiver of assurance of support debts.

 

New subsection 1237AAE(1) specifies that the new section affects some waiver provisions in connection with an assurance of support debt by setting out extra rules limiting the circumstances in which waiver may occur and the extent of waiver.

 

New subsection 1237AAE(2) affects waiver under section 1237AAD (waiver in special circumstances).  It prevents the waiver under section 1237AAD if the only reason for waiver of an assurance of support debt under this section is that the assurer (or assurers) were unaware of the effect of new section 1061ZZGG or of the regulations made under Migration Act 1958 in connection with the assurance.  New section 1061ZZGG inserted by item 1 provides that an assurer is liable to pay the Commonwealth the amount of the social security payments specified in a determination made for that purpose by the Minister under new section 1061ZZGH.  The relevant regulations (eg regulation 2.38 of the Migration Regulations 1994) specify that an assurer is liable, subject to that regulation, to pay the Commonwealth an amount of support paid to another person in connection with the assurance by way of specified social security payments.

 

New subsection 1237AAE(3) affects waiver under sections 1237AAA(waiver of small debts), 1237AAB (waiver in relations to settlements) and 1237AAD (waiver in special circumstances) if a security was given in connection with the assurance of support under new section 1061ZZGD(3).  The only purpose for requiring a security in connection with the assurance is to ensure the repayment of the liability that potentially may arise.  It is therefore contrary to the very concept of security that the assurance of support debt be waived, on any ground, if there is an enforceable security available.  This new subsection prevents waiver of the amount of the assurance of support debt that is equal to the amount of the security that can be obtained by enforcing the security and applied to reduce the debt.

 

A note to this subsection clarifies that an amount that can be obtained by enforcing the security cannot be applied to reduce the debt if it is applied to reduce another assurance of support debt connected with the same assurance.  The note contemplates that there may be a number of debts relating to the same assurance (eg 3 debts relating to 3 different periods) and that that only a portion of the security may be obtained to reduce the first debt. That portion (an amount) cannot be applied again to reduce the other debts.

 

New subsection 1237AAE(4) affects waiver under section 1237AAD (waiver in special circumstances) if there are multiple assurers.  Multiple assurers are jointly and severally liable for the same debt (new subsection 1061ZZGG(3) refers).  In that situation, new subsection 1237AAE(4) prevents the waiver of an amount of the debt unless the Secretary is satisfied that the amount cannot be recovered from any of the assurers.

 

New subsection 1237AAE(5) affects waiver under section 1237AAD (waiver in special circumstances) if there are multiple assurers and the security is still available in relation to the assurance.  This new subsection provides that in that situation, the amount of the assurance of support debt that may be waived is the amount that is no greater than the amount (if any) that may be waived taking into account both new subsections 1237AAE(3) and (4).

 

Items 9, 10, 11, 12 and 13 make amendments that are consequential on the amendment made by item 14 .

 

Subsection 1236A(1) provides that the existing waiver provisions apply to debts arising after 1 January 1996 and the debts arising earlier and outstanding on that day.  Item 9 amends this subsection to include a reference to new section1237AAE.

 

Subsection 1237(1) provides that the Secretary may waive the right to recover a debt, or part of it, only in circumstances described in sections 1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD.  Item 10 amends this subsection to clarify that, in relation to assurance of support debts, the right to waive is subject to new section 1237AAE.

 

Sections 1237AAA (waiver of small debts) and 1237AAB (waiver in relation to settlements) are affected by the limitations on waiver under those sections imposed by new section 1237AAE in relation to assurance of support debts.  Item 11 inserts a Note at the end of the affected sections to inform the reader that the waiver under these sections is so affected.

 

Item 13 inserts a new Note (Note 2) at the end of section 1237AAD (waiver in special circumstances) to inform the reader that the waiver under this section is subject to the limitations imposed by new section 1237AAE in relation to assurance of support debts.  Item 12 renumbers the existing Note as Note 1.

 

Amendments of the Social Security (Administration) Act 1999

 

Section 144 of the Social Security Administration Act specifies decisions under the social security law that are not reviewable by the Social Security Appeals Tribunal.  For example, subsection 144(f) makes non-reviewable the decisions under section 16 of the Social Security Administration Act relating to the form, place, person and method of making claims for social security payments.  As a matter of consistency, item 15 inserts new paragraph (da) into section 144 to make non-reviewable similar decisions made under new section 1061ZZGC relating to form, person, place, and method of giving an assurance of support.

 

Section 151 provides that the Social Security Appeals Tribunal cannot exercise certain powers or discretions conferred by the social security law, eg powers to approve the form and place of lodgement of a claim.  For consistency, item 16 inserts new paragraph (ba) in subsection 151(2) to ensure that the Tribunal does not exercise powers conferred by new section 1061ZZGC dealing with the form, place, manner etc of giving an assurance of support.

 

Section 192 provides the Secretary with the power to require any person to provide information, or a document, that the person possesses if the Secretary considers it may be relevant to the consideration of matters under the social security law specified in this section.  Item 17 makes amendment to section 192 to ensure that the Secretary may use the information-gathering power in this section to obtain information or a document relevant to the question whether an assurance of support given under new Chapter 2C should be accepted or rejected.

 

Part 3             Application and transitional provisions

 

The amendments made by item 18 include application and transitional provisions relevant to the introduction, from 1 July 2004, of the new Assurance of Support Scheme under the social security law.

 

These provisions have the following effect.

 

Transitional provisions

 

All assurances of support given to the Department of Immigration, Multicultural and Indigenous Affairs (DIMIA) under the current Assurance of Support Scheme and not finalised by 1 July 2004 (the Minister for Immigration had neither accepted nor decided not to accept) will be transferred to Centrelink (acting on behalf of the Department of Family and Community Services) for further processing under the new provisions of the social security law relating to assurances of support ( subitem 18(3) refers).

 

The transfer of assurances will also involve transfer of personal information collected by DIMIA in order to decide whether the assurance is acceptable. This information is also relevant to a decision under the Social Security Act whether to accept the transferred assurances.  Subitem 18(3) requires the disclosure of the information: therefore, the disclosure is not prevented by the Privacy Act 1988 (a note at the end of this subitem makes that clear).

 

Once these assurances are transferred for processing under the social security law, the requirements of new Chapter 2C (Assurances of support) will become relevant to decide whether the assurance may be accepted.  New subsection 1061ZZGD(3) requires, as a condition of acceptance of certain assurances (mandatory assurances), that a single security be given in relation to the assurance in a form approved by the Secretary.  To facilitate the decision-making process in relation to the transferred mandatory assurances, subitem 18(4) provides that the requirements relating to the lodgement of a security are taken to be met if, before 1 July 2004, the assurer lodged a bond, or bonds, in relation to the assurance in compliance with regulation 2.39 of the Migration Regulations 1994.

 

A note at the end of subitem 184) clarifies that this will allow the Secretary to accept the assurance even though a security has not been given as required under new Chapter 2C of the Social Security Act but was given as required by regulation 2.39.

 

Application provisions for Chapter 2C of the Social Security Act

 

Subitem 18(1) specifies the matters to which the provisions of new Chapter 2C apply.

 

Chapter 2C applies to the giving of assurances given under this Chapter after 1 July 2004, their acceptance and their effect ( subparagraphs 18(1)(a), (b) and (d) refer).

 

Chapter 2C also applies to the acceptance, after 1 July 2004, of the assurances given before that date under the Migration Regulations 1994 and transferred for processing under the Social Security Act in accordance with the transitional arrangements referred to in subitem 18(3) ( paragraph 18(1)(c) refers).

 

To enable the application of Chapter 2C to assurances that were not given under that Chapter, subitem 18(2) deems the transferred assurance to have been given under that Chapter.

 

Application of amendments in Part 2 of this Schedule

 

Part 2 makes amendments ( items 4 to 14 ) relevant to recovery of assurance of support debts.  Subitem 18(5) provides that these amendments apply in relation to debts arising before, on or after the commencement of this Schedule (1 July 2004).

 

Subitem 18(5) also clarifies that the application of the amendment to the definition of ‘assurance of support’ made by item 3 is not limited to the area of debts (this definition applies to qualification/ payability provisions of various income support payments).

 



Schedule 4 - Stopping payment for people absent from Australia without notice

 

 

Summary

 

Schedule 4 amends the Family Assistance Administration Act and the Social Security Administration Act to strengthen notification arrangements for people travelling overseas who do not notify their departure.  Amendments are made to enable the Secretary to suspend payment pending review of entitlement where a person leaves Australia without notifying and the Secretary finds out about the departure before the end of the person’s portability period.  Payment would then be fully restored or cancelled depending on the outcome of the review.

 

 

Background

 

Social security customers who leave Australia are required to notify Centrelink of their departure. This requirement arises under sections 67 and 68 of the Social Security Administration Act.  Under these provisions, the Secretary may require a claimant or recipient to inform the Department (which can include Centrelink) if a specified event of change in circumstances occurs or is likely to occur.

 

Similarly, people who are receiving family tax benefit (FTB) by instalment are required under section 25 of the Family Assistance Administration Act, to notify of a departure from Australia.

 

While there is capacity in both the social security and family assistance laws to end, or adjust the rate of, payment to customers who have been overseas for longer than the relevant portability period, there is currently no mechanism that would enable payment to be suspended where a person fails to notify of a departure, the person leaves Australia and the Secretary finds out about the departure before the end of the person’s portability period.

 

The amendments made by Schedule 4 provide such a mechanism to suspend payments in defined circumstances.

 

 

Explanation of the changes

 

Amendments to the A New Tax System (Family Assistance) Act 1999

 

Item 3 inserts two new variation provisions into the Family Assistance Administration Act.

 

New section 30A applies where:

 

·          a determination is in force under which a claimant is entitled to be paid FTB by instalment;

·          the claimant leaves Australia without notifying the Secretary about the departure; and

·          the Secretary finds out that the claimant has left Australia less than 3 years after the departure.

 

Where these conditions are met, the Secretary would have the discretion to vary the claimant’s entitlement determination so that it has the effect that the claimant is not entitled to be paid FTB for any day after the end of the claimant’s last instalment period.

 

However, this variation would be undone when the Secretary obtains the information required to determine whether the claimant was entitled to FTB while overseas.

 

This new variation provision would operate as an incentive for customers to notify when they go overseas and would facilitate a review process to ensure that a customer remains entitled to payment of FTB while overseas.

 

If, as a result of the review process, the claimant remains entitled to FTB while overseas, then no further action would be taken.  If, however, the customer ceased to be entitled to FTB while overseas (eg, the customer has left Australia permanently), then section 31 of the Family Assistance Administration Act would be used to vary entitlement to be paid FTB by instalment to take account of the relevant event.  A debt would be raised as appropriate.

 

New section 30B is a similar rule that deals with the situation where an FTB child leaves Australia and the claimant (person who is entitled to be paid FTB by instalment in respect of that child) does not notify the child’s departure from Australia and less than 3 years have passed after the FTB child left Australia.  In this situation, the Secretary may vary the claimant’s entitlement determination so that it has the effect that the claimant is not entitled to be paid FTB in respect of the child who is overseas.  As with new section 30A, the variation would take effect from the day after the end of the claimant’s last instalment period.

 

The Secretary would then be required to undo this variation when the Secretary obtains the information required to determine whether the claimant was eligible for FTB (where the FTB child who is overseas is the claimant’s only FTB child), or the rate of FTB (where the claimant has more than one FTB child).

 

Again, it is section 31 of the Family Assistance Administration Act that would be used to make any relevant adjustment to payment where the child’s absence from Australia has an impact on the claimant’s eligibility for, or rate of, FTB.

 

Items 2 and 4 are consequential amendments.

 

The amendments made by item 2 ensure that a person cannot avoid the effect of a variation under new section 30A or 30B by reclaiming FTB.

 

The amendments made by item 4 ensure that the effect of a variation made under new section 30A or 30B cannot be negated by a variation made under other specified provisions.

 

Item 1 ensures that the amendments made to the Family Assistance Administration Act apply on or after commencement (1 July 2004) in relation to departures from Australia before, on or after that date.

 

Amendments to the Social Security (Administration) Act 1999

 

Section 81 of the Social Security Administration Act provides for cancellation or suspension of payment where a person refuses or fails to comply with certain notification obligations.

 

Item 6 amends section 81 by inserting a new subsection (3).  The new provision would enable the Secretary to cancel or suspend payment where the following conditions are met:

 

·          a person who is receiving a social security payment has been given a notice under section 67 or 68 that requires the person to notify of a departure; and

·          the person does not comply with this requirement; and

·          the person leaves Australia; and

·          the person’s portability period for their payment has not ended.

 

The concept of a person’s portability period for a payment is defined in section 1217 of the Social Security Act.

 

A note at the end of new subsection 81(3) informs the reader that the new provision can be used to suspend payment and then to cancel the same payment.  The relevant enabling provision is section 33 of the Acts Interpretation Act 1901 .

 

The decision to suspend payment under new subsection 81(3) would come into effect on the day on which the determination is made or a later day specified in the determination (in accordance with subsection 118(13) of the Social Security Administration Act).  The amendment made by item 7 ensures that a suspension decision under new subsection 81(3) cannot have retrospective effect.  It does this by precluding the operation of subsection 118(7) to this decision.

 

If a decision is made to suspend payment under new subsection 81(3), a review of entitlement would follow.

 

If the review shows that the person concerned continues to meet the relevant qualification and payability rules while overseas, then payments would be resumed under section 85 of the Social Security Administration Act.

 

If the review shows that the person is not qualified, or that an amount is not payable, then payment would be cancelled.  Cancellation would occur under either new subsection 81(3) or the general cancellation provision in section 80 of the Social Security Administration Act.  Under new subsection 118(11A) as inserted by item 8 , this cancellation decision would take effect on a day specified in the determination (which may be earlier that the day on which the determination is made).  This date of effect provision would enable payment to be cancelled prospectively or retrospectively, from the date of the relevant event or change in circumstances that lead to loss of qualification or payability.

 

Item 5 makes a consequential amendment to section 80 of the Social Security Administration Act by inserting a new subsection 80(3).  This new provision ensures that a cancellation decision can be made under section 80 after a suspension decision under new subsection 81(3) and can take effect at some time after the suspension decision.  By way of example, a suspension decision is made under new subsection 81(3) because a person leaves Australia without notifying the departure.  Centrelink reviews the person’s entitlement.  Before the review is completed, the person’s portability period ends.  This event closes the door on cancellation under new subsection 81(3).  The outcome of the review is that the person was entitled to their social security payment while overseas and until the end of the person’s portability period.  Section 80 enables payment to be cancelled with effect from the end of the person’s portability period.

 

Item 1 ensures that the amendments made to the Social Security Administration Act apply on or after commencement (1 July 2004) in relation to departures from Australia before, on or after that date.

 

 



Schedule 5 - Comparable foreign payment debt recovery

 

 

Summary

 

The amendments made by Schedule 5 allow for the full recovery of overpayments that arise when a foreign pension payment is made as a lump sum in arrears.  This measure will ensure that the full amount of a debt arising from that overpayment is recovered from the person who receives the lump sum foreign pension payment and from the person’s partner (where relevant).

 

 

Background

 

Where a person receives a foreign pension payment as a lump sum in arrears from a country with which Australia has a social security agreement, the overpayment of Australian pension for the period covered by the lump sum is recovered under the relevant agreement under so called embargo provisions.  In contrast, where the same type of payment is received from other countries, no debt is incurred under the existing debt recovery provisions in the social security law.

 

The amendments made by Schedule 5 standardise the recovery of debts that result from the overpayment of an Australian social security payment to a person who receives an arrears payment of foreign pension by treating this source of income consistently, irrespective of whether the payment is received from an agreement or non-agreement country.  Furthermore, the amendments ensure that the full amount of the debt resulting from the overpayment is recovered, whether the customer is single or partnered.

 

The amendments made by Schedule 5 give effect to the 2001-02 Budget measure to standardise the recovery of debts that result from the overpayment of Australian pension to a person who receives a lump sum arrears payment of foreign income.  The amendments also give effect to the 2003-04 Budget measure by providing for full recovery of the resulting overpayments.

 

 

Explanation of the changes

 

Amendments to the Social Security Act 1991

 

Item 3 inserts a new section 1228A into the Social Security Act.  This new provision enables a debt to arise if:

 

·          an amount was paid to a person by way of a social security payment in respect of particular period;

·          the person or the person’s partner receives a lump sum payment of arrears of a comparable foreign payment in respect of the same period; and

·          if that lump sum were paid as periodical payment, it would reduce the social security payments paid in respect of that period.

 

The amount by which the social security payment would have been reduced over the period represented by the lump sum arrears payment is a debt due to the Commonwealth by virtue of new subsection 1228A(2).

 

New subsection 1228A(3) clarifies that section 1073 of the Social Security Act (that allows certain income amount to be apportioned across 12 months) does not apply to the lump sum.

 

Item 5 repeals superfluous notes at the end of subsection 1221(1) of the Social Security Act.

 

Item 2 inserts a new item (15A) in the table in subsection 1222(2) of the Social Security Act to specify that a debt under new section 1228A is recoverable by deductions, legal proceedings, garnishee notice or repayment by instalments.

 

Item 1 repeals superfluous notes at the end of subsection 1221(1) of the Social Security Act.

 

Item 4 provides for the application of new section 1228A.  This new provision  applies to lump sums paid on or after commencement (1 July 2004), irrespective of whether the lump sum relates wholly or partially to a period occurring wholly or partly before commencement.

 

 



Schedule 6 - Reducing portability period

 

 

Summary

 

Schedule 6 amends the Social Security Act to reduce the allowable period of temporary overseas absence for portable social security payments from 26 weeks to 13 weeks.  The new portability period will apply to disability support pension (DSP) without distinction (under the current rules, severely disabled customers have unlimited portability for DSP) although there will be capacity to grant an unlimited portability period to a severely disabled disability support pensioner in defined circumstances.

 

The changes will not affect age pension and wife and widow B pension where the recipient is an ‘entitled person’  These payments will retain an unlimited maximum portability period.

 

A person’s rate of family tax benefit (FTB) is subject to modification (reduction) if the person or an FTB child of the person is absent from Australia for longer than 26 weeks.  Schedule 6 also amends the Family Assistance Act to reduce that period of allowable absence to 13 weeks.

 

The amendments made by Schedule 6 will commence on 1 July 2004 and apply in relation to absences from Australia that start on or after that date.

 

 

Background

 

The rules relating to overseas portability of social security payments are set out in Part 4.2 of the Social Security Act. Certain pensions have indefinite portability - age pension, DSP for a severely disabled person, bereavement allowance and wife and widow B pension for an ‘entitled person’ (defined in section 1212 of the Social Security Act).  All other portable social security payments have a maximum portability period of 26 weeks (some conditional upon meeting specified criteria).  The table at the end of section 1217 of the Social Security Act sets out the various portable social security payments and specifies the maximum portability period that attaches to each relevant payment type and any conditions that attach to the portability period.  There is capacity under section 1218C for a person’s portability period to be extended in prescribed circumstances.

 

These rules are amended to reduce to 13 weeks the maximum portability period for those social security payments that are currently portable for 26 weeks.  The exception is DSP for a severely disabled person which currently has unlimited portability.  Under the new rules, DSP will be portable for up to 13 weeks although there will be capacity to determine unlimited portability for severely disabled people with a terminal illness.

 

These amendments are intended to encourage people who are workforce age and on income support payments to remain in Australia and be available to contribute through employment or social participation.

 

For FTB, the general rule is that an individual who has been absent from Australia for more than 3 years cannot be eligible for FTB.  Similarly, a child who has been absent from Australia for more than 3 years cannot be an FTB child.  This 3 year maximum portability period will not change.

 

However, absence from Australia by an individual or FTB child can affect rate.  An individual who has been overseas for longer than 26 weeks is entitled only to the base rate of FTB Part A and is not entitled to rent assistance or FTB Part B.  An FTB child who has been overseas for more than 26 weeks can only attract the base FTB child rate for FTB Part A and is disregarded for FTB Part B.

 

Schedule 6 ensures that these rate modifications apply after an individual or FTB child has been absent from Australia for more than 13 weeks.

 

 

Explanation of the changes

 

Amendments to the A New Tax System (Family Assistance) Act 1999

 

There are residence requirements for both FTB and child care benefit (CCB).  A standard requirement across both payment types for an individual who is the holder of a specified visa is that the individual is either:

 

·          in Australia; or

·          temporarily absent from Australia for not more than 26 weeks and the absence is an ‘allowable absence’ for special benefit.

 

The relevant provisions are subsections 21(1A), 42(1A), 44(1A) and 45(1A) of the Family Assistance Act.

 

Items 1 and 3 replace existing references to ‘26 weeks’ in these provisions with references to ‘13 weeks’.  This is consistent with changes to the portability period for special benefit.

 

The general rule in section 24 of the Family Assistance Act is that FTB is portable for 3 years.  This means that an individual’s eligibility for FTB ceases after the individual has been absent from Australia for more than 3 years.  Similarly, a child who has been absent from Australia for more than 3 years cannot be an FTB child.  If an individual or FTB child has been absent from Australia for more than 26 weeks but less than 3 years, then the 3 year portability period continues to run despite short returns to Australia of less than 26 weeks.  The relevant rules are in subsections 24(2) and (5).

 

Also, if an individual ceases to be eligible for FTB because the individual has been overseas for longer than 3 years, returns to Australia and then leaves again within 26 weeks after returning, then the individual is not eligible for FTB during that subsequent absence.  An individual does not get a ‘new’ portability period in this situation.  The relevant provision is subsection 24(6).

 

A similar rule applies in relation to an FTB child (subsection 24(3) refers).

 

Item 2 changes all references to ‘26 weeks’ in section 24 of the Family Assistance Act to ‘13 weeks’.  The 3 year portability rule remains unchanged.

 

Absence from Australia can also affect an individual’s rate of FTB.

 

Section 62 of the Family Assistance Act modifies the way in which the rate of FTB is calculated for an ‘absent overseas recipient’.  The effect of the modification is that an absent overseas recipient is entitled to be paid the base rate of FTB Part A but is not entitled to rent assistance or FTB Part B.  An individual is an absent overseas recipient after having been absent from Australia for more than 26 weeks.  If the individual then returns to Australia and leaves again less than 26 weeks after returning, this status applies immediately for the latest absence.

 

Item 4 amends section 62 of the Family Assistance Act by omitting all references to ‘26 weeks’ and substituting references to ‘13 weeks’.

 

Section 63 of the Family Assistance Act modifies the way in which an individual’s rate of FTB is calculated where the individual is not an absent overseas recipient but an FTB child of the individual is an ‘absent overseas FTB child’.  The effect is that an absent overseas FTB child can only attract the base FTB child rate for FTB Part A and is disregarded for FTB Part B.  An FTB child is an absent overseas FTB child after having been absent from Australia for more than 26 weeks.  If the child then returns to Australia and leaves again less than 26 weeks after returning, this status applies immediately for the latest absence.

 

Item 4 also amends section 63 of the Family Assistance Act by omitting all references to ‘26 weeks’ and substituting references to ‘13 weeks’.

 

Item 5 makes a consequential amendment to subsection 63A(1) of the Family Assistance Act.  This provision currently refers to the ‘26’ week period referred to in subsections 62(2) and 63(2).  This reference is changed to the ‘13’ week period.

 

Item 6 sets out the application rules for the amendments made by Schedule 6 to the Family Assistance Act.

 

Subitem 6(1) provides that the amendments apply to absences from Australia that start on or after commencement (that is, 1 July 2004).

 

Subitem 6(2) clarifies that the amendments made to subsections 24(2), (3), (5) and (6) and subsections 62(3) and 63(3) of the Family Assistance Act also apply to children and individuals who come or return to Australia on or after 1 July 2004.

 

An example of how the application provisions would work is set out as follows.

 

An FTB child leaves Australia on 4 March 2004.  The child is overseas when the changes commence on 1 July 2004 (at this point the child has been overseas for more than 17 weeks) and is therefore not subject to the new rules.  On 2 September 2004 the child becomes an ‘absent overseas FTB child’ (having been overseas for more than 26 weeks).  Section 63 would then apply with the effect that the rate of FTB Part A for that child becomes the base FTB child rate and the child cannot attract FTB Part B.

 

The child returns to Australia 9 September 2004.  At this point, the new rules would potentially apply in relation to the child by virtue of subitem 6(2) .

 

The child leaves Australia again 18 weeks after returning. In this situation, neither subsection 24(2) nor subsection 63(3) would apply because the child has remained in Australia for longer than the threshold 13 weeks.  This means that the child would have a new portability period of 3 years in relation to the child’s status as an FTB child and a new portability period of 13 weeks before the rate of FTB for the child is affected under section 63.

 

However, if the child remains in Australia for 10 weeks and then leaves Australia, subsections 24(2) and 63(3) would apply with the effect that the child’s 3 year portability period would resume (on leaving Australia, the child would be taken to have been overseas for more than 37 weeks) and the new 13 week portability rule would ensure that the during the subsequent absence, the child would only attract the FTB base rate of FTB Part A and no FTB Part B.

 

The application provisions would apply in a similar manner to individuals receiving FTB.

 

Amendments to the Social Security Act 1991

 

The table at the end of section 1217 of the Social Security Act sets out the portability arrangements for portable social security payments.

 

Item 12 repeals existing items 2 and 3 of the table and replaces them with a single portability period of 13 weeks for DSP.

 

However, item 15 then inserts new section 1218AA that provides the Secretary with the discretion to determine an unlimited maximum portability period for DSP if certain conditions are met.

 

These conditions are set out in new subsection 1218AA(1) and are satisfied if a person:

 

·          is a severely disabled person; and

·          is receiving DSP; and

·          has a terminal illness; and

·          is leaving Australia permanently to be with or near a family member of the person or to return to the person’s country of origin.

 

If a person has been granted unlimited portability for DSP under this new rule but, during the period of absence, ceases to meet one or more of the conditions set out above, then the person would become subject to the standard 13 week maximum portability period.  The 13 week portability period would run from the day the person ceased to meet the relevant condition for unlimited portability. These revocation rules are in new subsections 1218AA(2) and (3).

 

Items 13 and 14 omit all other references to ‘26’ weeks in the table at the end of section 1217 and substitute references to ‘13’ weeks.  The effect is a new maximum portability period of 13 weeks for all other payment types that currently have a 26 week maximum portability period.

 

The remaining amendments to the Social Security Act are consequential upon, or consistent with, the new portability periods set out in the table at the end of section 1217.

 

Part 2.10 of the Social Security Act sets out the rules relating to qualification and payability of parenting payment (PP).  One of the qualification conditions for PP is that the person has a PP child.  Sections 500F to 500H operate to modify the definition of PP child in situations where a child is absent from Australia for more than 26 weeks and where a child is born outside Australia.  These provisions set up a portability period of 26 weeks for a PP child.

 

Item 7 replaces existing references to ‘26’ weeks in these provisions with references to ‘13’ weeks.  The note changes the heading to section 500F accordingly.

 

Part 2.24A of the Social Security Act provides the qualification and payability conditions for the pensioner education supplement (PES).  As part of these conditions, a person must be an Australian resident and, subject to section 1061PN, in Australia.

 

Section 1061PN ensures that a person who is undertaking qualifying study is taken to be in Australia if the absence is related to the study or, in any other situation, the absence is for not more than 26 weeks.  Item 8 repeals this reference to ‘26’ weeks and substitutes a reference to ‘13’ weeks.

 

This change to the portability rules for PES is consistent with the broader reduction in portability from 26 to 13 weeks.

 



Section 1061Q of the Social Security Act sets out the qualification rules for telephone allowance.  Under subsection 1061Q(4A), a person qualifies for telephone allowance if, among other things, the person is temporarily absent from Australia for a continuous period not exceeding 26 weeks and was the holder of a seniors health card immediately before leaving Australia.  Consistent with the new portability period of 26 weeks, the reference to ‘26’ weeks in this provision is amended by item 9 to read ‘13’ weeks.

 

Section 1061S of the Social Security Act sets out the rate calculation process for telephone allowance.  The table at the end of subsection 1061S(1) sets out the different rates of telephone allowance depending on the person’s situation.  Of relevance is whether the person’s partner is the holder of a seniors health card.

 

Under subsection 1061S(3A), a person’s partner is taken to be the holder of a seniors health card if the partner is temporarily absent from Australia for a continuous period not exceeding 26 weeks and was the holder of a seniors health card immediately before leaving Australia.  Consistent with the new portability period of 26 weeks, the reference to ‘26’ weeks in this provision is amended by item 10 to read ‘13’ weeks.

 

Section 1218B of the Social security Act ensures that a person’s parenting payment is not portable if, having previously had parenting payment cease because of overseas absence, the person returns to Australia for a continuous period of not less than 26 weeks.  Item 16 makes a consequential amendment to paragraph 1218B(b) to omit the existing reference to ‘26’ weeks and replace it with ‘13’ weeks.

 

Section 1220B of the Social Security Act provides for the rate of DSP for a severely disabled person to be calculated using the Pension Portability Rate Calculator after the person has been continually absent from Australia for more than 26 weeks.  This rule does not apply to a person who qualified for DSP because of becoming unable to work or permanently blind while an Australian resident.

 

The amendment made by item 17 modifies this rule so that it applies in relation to a severely disabled person who has been granted unlimited portability under new section 1218AA.

 

Item 18 amends clause 128 of Schedule 1A to the Social Security Act.  The effect is to modify the way in which the current savings provision in clause 128 operates.

 

Clause 128 provides that the amendments to sections 1213A, 1215, 1216, 1220A, 1220B and 1221 made by the Social Security and Veterans’ Entitlements Legislation Amendment (Miscellaneous Matters) Act 2000 (the amending Act) do not apply to specified persons who were overseas on 20 September 2000 (commencement of the amending Act) until they return to Australia for a continuous period of more than 26 weeks.

 

Existing clause 128 has the broad effect of preserving 12 month portability for certain social security pensions (the amending Act standardised the portability period for social security payments to 26 weeks) and ensuring that proportional portability applies in relation to certain pensions after 12 months (instead of the ‘new’ 26 weeks).

 

By virtue of existing clause 128, the current standard 26 week portability period does not apply to disability support, widow B and wife pensioners who were overseas on 20 September 2000 and who have not returned to Australia for a continuous period of longer than 26 weeks.  These pensioners continue to have either 12 month portability or, in the case of certain disability support pensioners, unlimited portability.

 

To achieve a consistent policy position, the new provisions in clause 128 ensure that the new 13 week portability rules will apply to all disability support, widow B and wife pensioners once they return to Australia on or after 1 July 2004.

 

However, the Secretary will also have a discretionary power under new clause 135 of Schedule 1A (as inserted by item 19 ) to allow DSP customers to continue to receive their payment overseas if they currently have an unlimited portability period, come back to Australia and do not become Australian residents again.

 

The effect of clause 128, as it relates to other payments with unlimited portability, that is, age pension, bereavement allowance, widow B pension (entitled person) and wife pension (entitled person), will not change.

 

Item 19 inserts a new clause 135 into Schedule 1A to the Social Security Act.  This new provision enables the Secretary to determine unlimited portability for DSP where a disability support pensioner with an unlimited portability period is absent from Australia on 1 July 2004, comes to Australia after that date and does not become an Australian resident again.

 

This provision would enable the Secretary to determine that unlimited portability continues for severely disabled DSP customers who would otherwise be subject to the new 13 week portability and for those DSP customers with unlimited portability previously saved under clause 128 of Schedule 1A to the Social Security Act.  These circumstances are referred to in the notes at the end of new clause 135.

 

Item 20 sets out the application rules for the amendments made by Schedule 6 to the Social Security Act.

 

Subitem 20(1) provides that the amendments apply to absences from Australia that start on or after commencement (that is, 1 July 2004).  The exception, set out in subitem 20(3) , is the amendments to Schedule 1A (savings provisions).

 

Subitem 20(2) clarifies that the amendment to section 500H applies to children who come to Australia on or after 1 July 2004.

 



Schedule 7 - Technical corrections

 

 

Summary

 

This Schedule makes some minor technical amendments, commencing at various times as appropriate.

 

 

Background

 

The technical amendments made by this Schedule are to correct misnumbering and otherwise misdescribed (ie, technically failed) amendments that resulted from the delayed passage of the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Act 2003 (the AWT Act).  In particular, the technical deficiencies resulted from the interaction of the AWT Act with other Family and Community Services legislation that was going through Parliament at the same time and amending some of the same provisions, such as the Family and Community Services Legislation Amendment (Special Benefit Activity Test) Act 2002 (the Special Benefit Act).  The aim of these technical amendments is to ensure that Parliament’s clear intention is given effect in relation to all of these similarly timed Acts, and given effect on the correct date.

 

 

Explanation of changes

 

Item 1 repeals subsection 63(5) of the Social Security Administration Act and substitutes new subsections (5) and (5A).  The AWT Act contained an amendment to subsection (5) but, due to a prior amendment to subsection (5) brought about by the earlier passage of the Special Benefit Act, the AWT Act amendment was misdescribed.  Accordingly, subsection 63(5) is repealed and the two new subsections substituted so that provision is made for the outcomes intended in both the Special Benefit Act as well as the AWT Act.

 

Item 2 provides for the repeal of Part 1 of Schedule 6 to the AWT Act.  Both Schedule 1A and Schedule 6 to the AWT Act contained an amendment to the term ‘receiving’.  The two schedules originally had different commencement dates and it was envisaged that the amendment in Schedule 1A would operate to repeal the amendment provided for in Schedule 6.  Due to the delay in the passage of the AWT Act, the commencement dates for various schedules were changed and Schedules 1A and 6 ended up with the same commencement date.  The effect of this was that the amendment in Schedule 1A was repealed by the later occurring Schedule 6.  The amendment made by this item corrects that unintended outcome.

 

Item 3 amends a reference to the AWT Act that is contained in the Special Benefit Act.  The commencement of Schedule 2 to the Special Benefit Act was contingent upon passage of the AWT Act.  As debate on both Bills was occurring in the course of 2002, the commencement table in the Special Benefit Act referred to the AWT Act ‘ 2002 ’.  As the AWT Act ended up being Act Number 35 of 2003, the reference in the Special Benefit Act is amended by this item.

 

Item 4 corrects a reference in Schedule 5 to the AWT Act.  The reference is to subparagraph ‘607(1)(iii)’ when it should have been to a reference to subparagraph ‘607(1)(b)(iii)’.

 

Items 5 to 7 as well as i tems 10 to 18 provide for some numbering corrections arising as a result of the interaction between the AWT Act, the Special Benefit Act and the Family and Community Services Legislation Amendment Act 2003 .

 

Item 8 amends subsections 660YAB(1) and (2) and 771(1) and (2) of the Social Security Act to confirm that the AWT Act measure closing access to mature age allowance and partner allowance is effective from 20 September 2003, as reflected in the commencement provision for the measure.

 

Item 9 corrects a punctuation error.

 

Item 19 renumbers subsection 1230C(3) of the Social Security Act as subsection (4).