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Social Services Legislation Amendment (Simplifying Student Payments) Bill 2017

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2016 - 2017

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(SIMPLIFYING STUDENT PAYMENTS) BILL 2016

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

 

 

Amendments to be Moved on Behalf of the Government

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the

Minister for Social Services, the Hon Christian Porter MP)



SOCIAL SERVICES LEGISLATION AMENDMENT

(SIMPLIFYING STUDENT PAYMENTS) BILL 2016

 

 

OUTLINE

 

These amendments reduce the period, from 18 months to 14 months, in which students from areas classified as remote or regional may earn at the rate required in order to be assessed as independent under the workforce participation provisions for youth allowance and relocation scholarship purposes.

 

Financial impact statement

 

The financial impact of these amendments is:

 

MEASURE

FINANCIAL IMPACT OVER THE FORWARD ESTIMATES

Independent test for youth allowance and scholarship payments for students

$81.1 million cost over the forward estimates

 

STATEMENT[S] OF COMPATIBILITY WITH HUMAN RIGHTS

 

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

 

 



 

SOCIAL SERVICES LEGISLATION AMENDMENT

(SIMPLIFYING STUDENT PAYMENTS) BILL 2016

 

Government Amendments

 

These amendments were included as part of the 2016-2017 MYEFO and give effect to a Government election commitment to support regional students’ access to education.  They amend the Social Services Legislation Amendment (Simplifying Student Payments) Bill 2016 (the Bill) , which will in turn amend the Social Security Act 1991 (the Act) .

 

These amendments add a new Schedule 4 to the Bill.  The new Schedule amends the rules governing when a person will be regarded as independent for the purpose of youth allowance and relocation scholarship payments for students. 

 

A person’s rate of youth allowance may be affected by whether or not they are ‘independent’, with a dependent recipient’s rate affected by parental income.  There are a variety of bases upon which a person may be independent (under section 1067A of the Act), for example where both of the young person’s parents are dead, or it is unreasonable for the young person to live at home. A young person will also be regarded as independent where they have supported themselves through paid work for a period or periods of employment over an 18 month period since leaving secondary school, earning at least the equivalent of 75% of the maximum rate of pay applicable to them ($24,042 for the 2016-17 financial year).  To access this criterion, the young person must also be from a regional or remote area of Australia; their parental income must be below $150,000; they must be undertaking full-time study; and required to live away from home to study.    

 

The amendments will result in a young person being regarded as independent if they have supported themselves for a reduced period of 14 months. Students who qualify under this provision will be eligible for youth allowance as independent after 14 months, rather than the current 18 month period, provided they have earned at least the equivalent of 75% of the maximum rate of pay under Wage Level A of the transitional Australian Pay and Classification Scale or modern award generally applicable to trainees or any rate substituted by the Fair Work Commission over that period.

 

This reduced timeframe will potentially allow young people to take a gap year at the end of secondary school and receive youth allowance the following year (subject to satisfying the other qualification requirements for youth allowance), rather than having to wait for a longer period and delay commencing their tertiary studies. For example, students who finished secondary school in November 2016, take a gap year in 2017 and commence tertiary studies in February 2018, could qualify for youth allowance as independents if they have earned at least $24,042 during the 14 months from November 2016 to February 2018

 

These amendments will also apply to Part 2.11B, including the definition of independence for relocation scholarship qualification purposes.

 

NOTES ON AMENDMENTS

 

Amendment 1 adds a new clause at the end of the table in clause 2, page 2.   These provisions are intended to come into effect on 1 January 2018.  However, if the Act receives the Royal Assent on or after that date, these provisions come into effect on the first 1 January or 1 July after the Act receives Royal assent.  

 

Amendment 2 adds a new Schedule 4 to the Bill.    

 

Item 1 of new Schedule 4 amends paragraph 1067A(10)(c), by inserting “for the purposes of Parts 3.4A, 3.4B and 3.7, except section 1070G.”  This amendment has the effect of limiting the application of current paragraph 1067A(10)(c), setting out the earnings over 18 months rule, so that it will only apply to:

  • the pension rate calculator “D”, which sets out the rate of disability support pension for people under the age of 21 who are not blind (Part 3.4A);
  • the pension rate calculator “E”, which sets out the rate of disability support pension for people under the age of 21 who are blind (Part 3.4B); and
  • rent assistance, with the exception of section 1070G, which sets out the specific requirements for youth allowance (Part 3.7). 

 

Item 2 adds a new paragraph (d) at the end of subsection 1067A(10).  Instead of having to have a period or periods of employment over an 18 month period since they left secondary school, a person who is eligible under this provision will be regarded as independent if they have a period or periods of employment over a 14 month period, provided they earn the rate of pay set out in subparagraphs 1067A(10)(d)(i) or (ii). 

 

Under subsection 1067A(10A) a person will be eligible under paragraph 1067A(10)(d) if, at the time of their application, they meet the criteria set out under subsection 1067A(10E):  

  • their family home is located in a regional or remote location; and
  • they are required to live away from home; and
  • they are undertaking full-time study; and
  • their combined parental income (as defined in point 1067G-F10 of the Youth Allowance Rate Calculator in section 1067G) for the appropriate tax year (Submodule 3 of Module F of that calculator) is less than $150,000.

 

In addition to applying to Part 2.11 (Youth Allowance), Part 3.5 (Youth Allowance Rate Calculator) and section 1070G (Specific Requirement (Youth Allowance)), paragraph 1067A(10)(d) also applies to scholarship payments for students, set out in Part 2.11B.

 

Extending the application of paragraph 1067A(10)(d) to Part 2.11B is intended to align the definition of independence for youth allowance purposes and the definition of independence for the purposes of qualifying for the relocation scholarship, as set out in section 592J of the Act.

 

As a result, if a person is regarded as independent for the purposes of qualification for youth allowance under the workforce independence criteria, they will also be regarded as independent for relocation scholarship purposes and thus not eligible for the relocation scholarship.

 

However, if someone is not eligible for youth allowance under paragraph 1067A(10)(d) and thus are considered dependent for youth allowance purposes, they may still meet the criteria for a relocation scholarship if they have to live away from home (see section 1067D). 

 

Item 3 applies to subsection 1067A(10A).  It omits paragraphs (10)(b) and (c) and substitutes paragraphs 10(b) and (d).  The result of this amendment is that a person will have to meet the criteria set out in subsection 1067A(10E), before they can be regarded as independent under paragraphs 1067A(10)(b) and (d) for youth allowance purposes.   

 

Item 4 applies to subsection 1067A(10A) and inserts “or 2.11B”.  This amendment has the effect of extending the application of paragraphs 1067A(10)(b) and (d) to scholarship payments for students under Part 2.11B, including relocation scholarships provided for by section 592J of the Act.  This corrects an unintended omission of these additional criteria when determining whether a person is independent for the purposes of relocation scholarship, and applies other criteria such as the remoteness criteria to this determination.

 

Item 5 applies to subsection 1067A(10A) and omits (10B) and (10C), as these provisions will be repealed as a result of these amendments. 

 

Item 6 repeals subsections 1067A(10B) to (10D).  These provisions are no longer required, as they were grandfathering provisions which ensured that people in specified situations retained access to the workforce independence criteria for youth allowance purposes. This included people who were receiving youth allowance before 1 July 2010 or who completed secondary school in 2008, took a gap year in 2009, commenced tertiary studies in 2010 and demonstrated their independence under these criteria before 1 January 2011.  Students who would have otherwise qualified for youth allowance under these provisions, will be able to qualify as independent due to their age. 

 

Item 7 applies the amendments made by this schedule to claims for youth allowance made on or after the commencement of this item.

 

The amendments made by this schedule in relation to working out if a person is qualified for a relocation scholarship payment will apply at a time on or after the commencement of this item. 

 

 

Schedule 4 - Independent test for youth allowance and scholarship payments for students

 

This Schedule 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 Schedule will support regional and remote students’ access to tertiary education by reducing, from 18 months to 14 months, the period young people from regional and remote areas of Australia have to earn the amount required to satisfy the workforce independence provisions for youth allowance, from 1 January 2018.

 

Currently, students whose family home is in a regional or remote location can access youth allowance on the basis of being independent under concessional workforce participation arrangements. One way in which students can demonstrate they have supported themselves is through a period or periods of employment over 18 months since leaving secondary school, with earnings totalling at least 75 per cent of Wage Level A of the National Training Wage schedule in a modern award. This is $24,042 for 2016-17.

 

In addition, to access these arrangements students’ parental income must be below $150,000, they must be undertaking full-time study and they must be required to live away from home to study.

 

Human rights implications

The Schedule engages the following human rights:

 

Right to social security

 

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right of everyone to social security.

 

The right to social security requires that a system be established under domestic law, and that public authorities must take responsibility for the effective administration of the system.  The social security system must provide a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs.

 

The United Nations Committee on Economic, Cultural and Social Rights (the Committee) has stated that a social security scheme should be sustainable and that the conditions for benefits must be reasonable, proportionate and transparent (see General Comment No.19).

 

Article 4 of ICESCR provides that countries may limit the rights such as to social security in a way determined by law only in so far as this may be compatible with the nature of the rights contained within the ICESCR and solely for the purpose of promoting the general welfare in a democratic society.  Such a limitation must be proportionate to the objective to be achieved.

 

To the extent that there is an impact on a person’s right to social security by virtue of Schedule 4, the impact is limited.

 

The reduced period of 18 months to 14 months will allow students to qualify for youth allowance four months sooner than under current arrangements. Students will be able to take a gap year at the end of secondary school, and subject to them satisfying the other qualification requirements for youth allowance, receive payment as independents the following year.

 

This Schedule also recognises that young people who have been genuinely self-supporting through paid employment should be considered financially independent of their parents. Students who are considered independent for youth allowance purposes, do not have their rate of payment affected by parental income, as is the case for dependent recipients.

 

It is estimated that approximately 3,700 regional and remote students will qualify for youth allowance as independent under this measure - approximately 2,500 would become eligible for payment as independent four months earlier than under current provisions and approximately 1,200 would become eligible for payment as independent who otherwise would not have met the independence criteria.

 

There is a risk that this Schedule could disadvantage students who have difficulty gaining sufficient employment and earning the minimum amount in the reduced period of 14 months. These students may not qualify for youth allowance under the new arrangements. However, anecdotal evidence indicates that many young people meet the required earnings in a period of much less than 18 months - usually within a year - but must wait 18 months before they can qualify for youth allowance (student).   

 

Right to education

 

Article 13 of the ICESCR recognises the right of everyone to education.

 

This Schedule may have a limited impact on a person’s right to education where a person has difficulty gaining sufficient employment and earning the minimum amount in the reduced period of 14 months. As this may result in students not qualifying for youth allowance under the new arrangements, it may impact their ability to commence or continue tertiary study for financial reasons.

 

However, this impact is expected to be limited as students who may no longer qualify for youth allowance under these arrangements, will still be able to apply for youth allowance as either a dependent or under one of the other independence criteria.

 

As stated above, many young people meet the required earnings within a year - however they must wait 18 months before they can qualify for youth allowance. This has resulted in students having to commence study prior to qualifying for student payments or take two gap years before commencing study and qualifying for payment. The longer students are disengaged from study after completing secondary school, such as for more than a year, the less likely they will be to commence or complete tertiary study. This Schedule supports students to commence study within a suitable period of time after completing secondary school.

 

In addition to student payments, the Australian Government provides other programs to assist tertiary students with the cost of education, including through the Higher Education Loan Program and VET Student Loans which assist students pay part or all of their tuition fees.

 

Conclusion

 

The Schedule is compatible with human rights. To the extent that it may have a limited adverse impact on a person’s access to social security or education, the limitation is reasonable and proportionate to supporting access to education for regional and remote students.

 

 

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