Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015

Bill home page  


Download WordDownload Word


Download PDFDownload PDF

2013-2014-2015

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

SENATE

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(FAMILY PAYMENTS STRUCTURAL REFORM AND

PARTICIPATION MEASURES) BILL 2015

 

 

 

 

REVISED EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Social Services, the Hon Christian Porter MP)

 

THIS EXPLANATORY MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED



 



SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL 2015

 

OUTLINE

 

This Bill will introduce one of a package of reforms to family tax benefit Part B.  The remaining reforms in the package have been removed from this Bill and will be reintroduced with certain modifications in a separate Bill.

Under this Bill, family tax benefit Part B will be removed from 1 July 2016 for couple families (other than grandparents and great-grandparents) with a youngest child aged 13 or over.  Single parents, grandparents and great-grandparents caring for a youngest child aged 13 to 18 will continue to have access to family tax benefit Part B (subject to satisfying other relevant requirements). 

 

Financial impact statement

The revised financial impact of the reforms to family tax benefit Part B in this Bill is a saving of $525.5 million over the forward estimates (indicative, fiscal balance, whole of Government).

 

 

STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS

The statement of compatibility with human rights appears at the end of this explanatory memorandum.

 



SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL 2015

 

 

NOTES ON CLAUSES

Abbreviation used in this explanatory memorandum

ยท          Family Assistance Act means the A New Tax System (Family Assistance) Act 1999

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Act 2015.

Clause 2 provides a table setting out the commencement dates of the provisions in the new Act.

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

 



Schedule 2 - Family tax benefit Part B rate

 

Summary

Under this Schedule, family tax benefit Part B will be removed from 1 July 2016 for couple families (other than grandparents and great-grandparents) with a youngest child aged 13 or over.  Single parents, grandparents and great-grandparents caring for a youngest child aged 13 to 18 will continue to have access to family tax benefit Part B (subject to satisfying other relevant requirements).

 

Background

Under the current rules, an individual’s standard rate of family tax benefit Part B is worked out using the table in clause 30 of Schedule 1 to the Family Assistance Act.  There are two different rates, depending on whether the individual’s youngest child is under five years of age or five years and over.  An FTB child who has turned 16 is disregarded for the purposes of family tax benefit Part B unless they are a senior secondary school child (as defined in section 22B of the Family Assistance Act) and the calendar year in which the child turned 18 has not ended. 

 

The current rules also prescribe circumstances in which an individual’s Part B rate is nil.  An example is where the individual’s adjusted taxable income is more than $100,000. 

 

From 1 July 2016, amendments made by this Schedule ensure that an individual who is a member of a couple, with a youngest child who has turned 13 years of age, will not be able to access family tax benefit Part B (their Part B rate will be nil).  This rule will not, however, apply where the individual is a grandparent or great-grandparent of that youngest FTB child.

 

Explanation of the changes

Amendments to the Family Assistance Act

 

Item 4 inserts a new clause 28D into Schedule 1 to the Family Assistance Act. 

 

Subclause 28D(1) sets out the general rule that an individual’s Part B rate is nil if the individual is a member of a couple and their youngest FTB child has turned 13.  However, this rule does not apply where the individual is a grandparent or great-grandparent of that FTB child (subclause 28D(2) refers).

 

Subclauses 28D(3) and (4) then provide a definition of grandparent or great-grandparent , which takes account of biological, adoptive, step and relationship child-parent relationships and is consistent with the definition that applies for the purposes of determining eligibility for the special grandparent rate where an individual is eligible for child care benefit by fee reduction. 

 

Item 10 is an application provision.  It provides that the amendments made by this Schedule apply in working out the rate of family tax benefit for days on or after commencement (that is, 1 July 2016). 



STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL 2015

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Schedule

This Bill makes amendments to the A New Tax System (Family Assistance) Act 1999

From 1 July 2016, family tax benefit Part B will be removed for couple families (other than grandparents and great-grandparents) with a youngest child aged 13 or over.  Single parents, grandparents and great-grandparents caring for a youngest child aged 13 to 18 will continue to have access to family tax benefit Part B (subject to satisfying other relevant requirements). 

This reform will improve the sustainability of the family payments system over the long term, while continuing to provide assistance to families in need with more limited capacity to engage in the workforce or increase workforce participation.

Human rights implications

These amendments engage the following human rights:

Right to social security

Article 9 of the International Covenant on Economic, Social and Cultural Rights recognises the right of everyone to social security, while article 11 recognises the right to an adequate standard of living for an individual and their family, including adequate food, clothing and housing, and the continuous improvement of living conditions.

Rights of the child

Article 26 of the Convention on the Rights of the Child requires countries to recognise the right of the child to benefit from social security.  Benefits should take into account the resources and the circumstances of the child and persons having responsibility for the maintenance of the child.

 



The objective of the family payment reform is to ensure that the family payments system remains sustainable in the long term.  The United Nations Committee on Economic, Cultural and Social Rights recognises that a social security scheme should be sustainable, and that the conditions for benefits must be reasonable and proportionate.

To the extent that introducing a new rate structure for family tax benefit Part B limits the right to social security, this is reasonable and proportionate.

As a share of Gross Domestic Product (GDP), government spending on family assistance in Australia has tripled from 0.9 per cent in in 1980 to 2.7 per cent in 2012, the most recent year for which comparable data is available.  Government spending on family assistance in Australia has consistently been above the OECD average as a share of GDP.  This is despite Australia being widely regarded as having one of the most targeted social welfare systems in the OECD and having an overall smaller total spend on welfare benefits compared to the OECD average (taken as a proportion of GDP).

While the number of families who receive family tax benefit has declined over time, down from 1.72 million in 2010-11 to 1.62 million in 2012-13, expenditure continues to rise, increasing by almost one billion dollars over the last three financial years for which data is available, up from $18.9 billion in 2010-11 to $19.8 billion in 2012-13.

With pressure on government spending expected to be further increased as a result of the aging population and the costs of health care, age related pensions, and aged care, it is imperative that support focuses on those most in need and helps promote greater workforce participation.

The Government supports families with the direct costs of raising dependent children through family tax benefit Part A or youth income support payments, with a family’s rate of assistance determined by family income.  These payments have the primary objective of ensuring that all children have access to a basic acceptable standard of living. 

Family assistance provides additional support to families with one main income through family tax benefit Part B to recognise and support the role of parents and other carers as carers and members of the workforce.  The design of family tax benefit Part B has a workforce participation focus, and is not based on a family income test, but a primary earner and a secondary earner income test.

The level of financial support provided by family tax benefit Part B is higher for families with a youngest child aged four and under in recognition of the higher need for parental provision of direct care of children, and reduced when a youngest child turns five (moving into compulsory education) and primary carers have a greater capacity to move into the workforce or increase their workforce participation.

Where a youngest child has reached the age of 13, the Government considers it appropriate to expect primary carers to engage in the workforce, or increase their workforce participation.  While this measure will reduce a family’s rate of family assistance once their youngest child turns 13, this measure does not limit an individual’s right to social security and they will retain access to income support or social security payments for themselves, and assistance for dependent children through family tax benefit Part A or youth income support payments.

Conclusion

These amendments are compatible with human rights because they advance the protection of human rights and, to the extent that these changes limit access to family payments, these limitations are reasonable and proportionate and families are otherwise provided for.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Circulated by the authority of the Minister for Social Services, the Hon Christian Porter MP]