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Social Services Legislation Amendment (Payments for Carers) Bill 2018

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2016-2017-2018

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(PAYMENTS FOR CARERS) BILL 2018

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  (Circulated by the authority of the

Minister for Social Services, the Hon Dan Tehan MP)



 

Contents

 

OUTLINE .. 3

FINANCIAL IMPACT STATEMENT . 4

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS .. 4

NOTES ON CLAUSES .. 5

Schedule 1 - Carer allowance . 6

Schedule 2 - Health Care Card . 8

 



SOCIAL SERVICES LEGISLATION AMENDMENT

(PAYMENTS FOR CARERS) BILL 2018

 

 

OUTLINE

The Social Services Legislation Amendment (Payments for Carers) Bill 2018 (the Bill) will, if passed, amend the Social Security Act 1991 (Social Security Act) to introduce an income test for Carer Allowance and the Carer Allowance (child) Health Care Card only.

Carer Allowance is a fortnightly income supplement of $127.10 that is paid to carers who qualify.  To date, an income test has not been applied to Carer Allowance.  Unlike most other social security payments, Carer Allowance is not targeted at those most in need of support, with eligibility extending to high income earners who are not in real need of financial support.

To better target those most in need, and to improve the long term sustainability of the welfare system, a family income test of $250,000 per annum would be applied to Carer Allowance and the Carer Allowance (child) Health Care Card only.  Carers with an annual income of less than $250,000 would continue to be eligible.

Introducing an income test will contribute to delivering a targeted welfare system, whereby those in real need of financial assistance receive it. 

The savings projected to be delivered as a result of the income test will be directed to funding major reforms in the carer service system.  A new Integrated Carer Support Service (ICSS) will be implemented to provide a clear pathway for carers to access supports and more services to more carers, with a focus on providing early intervention and cost-effective services that are proven to reduce the strain on carers.

Increased funding will provide carers with access to new and improved services, helping carers to live more full lives by increasing their skills and reducing the burden of providing care.  From October 2018, carers will be able to access new digital early intervention services such as counselling, coaching, peer support and education resources, as well as the provision of information and advice on carer support services.  From September 2018, carers will be able to access new and improved, tailored and targeted services at the regional and local levels through a network of Regional Delivery Partners to be established across Australia.   

Schedule 1 - Carer Allowance

Schedule 1 amends the Social Security Act to introduce a fixed and non-indexed family income test of $250,000 per annum for Carer Allowance, to apply to singles and couples.

Schedule 2 - Health Care Card

Schedule 2 amends the Social Security Act to require Carer Allowance (child) Health Care Card only claimants to satisfy the Carer Allowance income test.

FINANCIAL IMPACT STATEMENT

 

MEASURE

FINANCIAL IMPACT OVER THE FORWARD ESTIMATES

Introduction of a family income test for Carer Allowance

$85.6 million saving

 

The Introduction of a non-indexed family income test for Carer Allowance is a 2017 MYEFO measure with the total save invested in a support package for carers. The income test, with a threshold of $250,000, will provide $85.6 million over the forward estimates. The package of supports commensurate with the savings includes the introduction of the Integrated Carer Support Service progressively from October 2018.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

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



 

SOCIAL SERVICES LEGISLATION AMENDMENT

(PAYMENTS FOR CARERS) BILL 2018

 

 

NOTES ON CLAUSES

Abbreviations and Acronyms used in this explanatory memorandum

  • ATI means Adjusted Taxable Income;
  • Family Assistance Act means the A New Tax System (Family Assistance) Act 1999 ;
  • Family Assistance Administration Act means the A New Tax System (Family Assistance)(Administration) Act 1999 ;
  • FTB means Family Tax Benefit;
  • Health Care Card means the Carer Allowance (child) Health Care Card only issued under subsection 1061ZK(3) of the Social Security Act 1991 ;
  • ITA Act means the Income Tax Assessment Act 1997 ;
  • Social Security Act means the Social Security Act 1991 ;
  • Social Security Administration Act means the Social Security (Administration) Act 1999 ;

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services Legislation Amendment (Payments for Carers) Act 2018.

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

Clause 2 provides that each provision of the Bill specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table.  Any other statement in column 2 has effect according to its terms.

In practice, the commencement table provides that the Bill would commence on 20 September 2018, if passed by the Parliament and the Royal Assent is received prior to that date.  Alternatively, if the Bill is not passed by the Parliament or the Royal Assent is not received by that date, the Bill would commence as law on the first 1 January, 1 April, 1 July or 1 October to occur on after the day the Royal Assent is received.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule, and any other item in a Schedule to the Bill has effect according to its terms.



Schedule 1 - Carer allowance

 

 

Summary

 

Schedule 1 of the Bill will, if passed, amend the Social Security Act 1991 (Social Security Act) to introduce an income test for Carer Allowance.

The income test is set at a fixed limit non-indexed amount of $250,000 (for single and partnered households).  Therefore, people with an annual income of less than $250,000 will continue to be eligible for Carer Allowance and carers whose income exceeds this amount would no longer be eligible.

Introducing this income test will assist to support the refinement of a targeted payments system, whereby those who need financial assistance receive it.  Savings will be directed to increasing carer support funding and the introduction of new early intervention and life changing services to help carers improve their health and well being, and manage the strain of caring.

Background

The intention of the amendments proposed in this Schedule is to better target Carer Allowance to those in real need of financial assistance, rather than to those who earn high incomes.  This is in accordance with the purpose of Carer Allowance which is a supplementary payment, rather than a payment or benefit in its own right, that is designed to assist with the costs of caring.  It would also bring Carer Allowance into line with other social security payments which are income tested.

The income test is based on Adjusted Taxable Income (ATI) which would include taxable income (disregarding any assessable First Home Super Saver Scheme released amount), employer-provided fringe benefits, foreign income, net investment loss, reportable superannuation income and tax-free pension or benefit, Paid Parental Leave income and would exclude deductible child maintenance expenditure. Income from long-term financial assets will also be included in the income test for people who receive tax-free income streams.

If the Bill is passed, current Carer Allowance recipients and new claimants will be required to satisfy the income test.  It is estimated that the income test will impact around one per cent of current Carer Allowance recipients.

Explanation of the changes

Item 1 repeals the current heading at section 10A of the Social Security Act and substitutes a new heading ‘10A Definitions for carer allowance and seniors health card provisions’.

Item 2 amends subsection 10A(2) to omit ‘Part 3.9 and Part 3.12A’ and substitute ‘Parts 2.19, 3.9 and 3.12A’.

Items 3 to 6 adds new subsections at the end of subsections 953(1), 953(2)(f), 954(1)(f) and 954(1)(e) to require that a person must also satisfy the carer allowance income test under section 957A to be eligible.

Item 7 adds a new section 957A at the end of Subdivision A of Division 2 of Part 2.19, to provide for the carer allowance income test.

New subsection 957A(1) sets out a method statement to be used to work out whether a person satisfies the carer allowance income tests on a day.  The method statement sets out steps applying to a carer allowance income test day:

1.     Determine a person’s adjusted taxable income (ATI) for the reference tax year A person’s ATI would be provided for in new subsection 957B.  The ‘reference tax year’ would be defined in subsections 957(2) and (3) as being the immediately preceding tax year to the test day, if a notice of assessment of taxable income has been received or if not, the tax year immediately preceding the tax year that would apply if a notice of assessment had been received.  Alternately, the person can notify the Secretary that they wish to have their qualification for Carer Allowance determined by reference to their ATI for the current tax year.

2.     If the person is a member of a couple, determine the person’s partner’s ATI.

3.     If the person is not a member of a couple, but they have reached the minimum age mentioned in section 301-10 of the Income Tax Assessment Act 1997 (ITA Act) and they have at least one long-term financial asset, then work out the person’s deemed income.  Deemed income would be provided for in new subsection 957D(1).  Subsection 957(4) sets out the meaning of a long-term financial asset.

4.     If the person is a member of a couple, and both the person and their partner have reached the minimum age mentioned in section 301-10 of the ITA Act, and the partner has at least one long-term financial asset, then work out the partner’s deemed income under new subsection 957D(2).

5.     Add the amounts determined at steps 1, 2, 3 and 4.

6.     The person will satisfy the carer allowance income test if the amount calculated at step 5 is less than $250,000.

For the purposes of the method statement, new subsection 957C provides for accepted estimates.

Item 8 repeals the heading at Part 3.12A and substitutes a new heading ‘Part 3.12A - Provisions for carer allowance and seniors health card income test’.

Item 9 amends subsection 1157A(1) to insert the words ‘carer allowance income test and the’ after the words ‘purposes of the’.

Item 10 is an application provision, which provides that the amendments contained in Schedule 1 would apply in relation to working out a person’s qualification for carer allowance for a day on or after commencement.



Schedule 2 - Health Care Card

 

 

Summary

Schedule 2 of the Bill will amend the Social Security Act 1991 (Social Security Act) to insert a requirement that the carer satisfy the Carer Allowance income test in order to qualify for the Carer Allowance (child) Health Care Card only (health care card) under subsection 1061ZK(3).

Background

The health care card only is provided to disabled children in certain circumstances in accordance with subsection 1061ZK(3) of the Social Security Act. 

In circumstances where carers provide extra care to a child with medical conditions or a disability, but their care load is not sufficient to qualify for Carer Allowance, they will be eligible to receive a health care card in the name of the child. 

The health care card provides access to reduced cost Pharmaceutical Benefits Scheme items and a lower Medicare Safety Net Threshold in relation to costs incurred as a result of caring for the child.

Explanation of the changes

Item 1 adds a new paragraph (e) to subsection 1061ZK(3) to provide that eligibility for the disabled child health care card (card only) would require a carer to first satisfy the carer allowance income test under new section 957A.

Item 2 is an application provision that provides the amendments in Schedule 2 apply in relation to working out whether a person is qualified for a health care card on a day that is on or after the Bill commences as an Act.

 

 



STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Social Services Legislation Amendment (Payment for Carers) Bill 2018

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 Bill

Carer Allowance is an income supplement of $127.10 per fortnight paid to people who provide daily care and attention in a private home to a person with disability or severe medical condition.  Those caring for a child less than 16 years who do not qualify for Carer Allowance but still provide at least 14 hours of care per week are entitled to a Health Care Card.

The Bill introduces a $250,000 income threshold for Carer Allowance and Carer Allowance (child) Health Care Card only, from 20 September 2018. Eligibility for Carer Allowance will be restricted to claimants and current recipients, at implementation, where their adjusted taxable income, and that of their partner (where applicable), is below $250,000 per annum.  This will be a fixed income threshold with no indexation.

The generous threshold allows the Government to target financial assistance to those most in need while recognising the immense contribution carers make to our communities.  This also aligns Carer Allowance with other welfare payments and facilitates the sustainability of the welfare system.  The income test is expected to affect around one per cent (1%) of current Carer Allowance and/or Carer Allowance (child) Health Care Card only recipients.

The income test will provide $85.6 million of savings to be invested in a range of new early intervention and expanded services for carers, to ensure they get the support they need before they reach crisis point in their caring role.  Early intervention support services can lead to better long-term outcomes for carers.  They reduce emotional/physical strain, assist carers to stay in work or study, take breaks from caring responsibilities, and plan for the future.

Human rights implications

This Bill engages the following right:

·          The right to social security in Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR)

 

 

Scope of the right:

·          The right to social security requires that a country must ensure access to a social security scheme that provides a minimum essential level of benefits to all individuals and families that will enable them to achieve a basic standard of living.

·          Social security schemes should be sustainable to ensure that the right can be realised for present and future generations.

·          Any qualifying conditions for benefits must be reasonable, proportionate and transparent.

·          Any measures that have the effect of reducing existing levels of social security benefits, or of denying benefits to persons or groups who were previously entitled to them must have adequate justification.

The Bill introduces a permissible limitation as:  

a)      Legitimate objective : Income testing is the norm across a wide range of welfare payments in order to target assistance to those most in need. Introducing the income threshold for Carer Allowance will allow financial assistance to be directed to the most vulnerable and align Carer Allowance with other welfare payments.  Savings from the income test will also fund new early intervention services for carers that will assist them before they reach crisis point and yield benefits for carers now and into the future.

b)      Rational connection : Carer Allowance is currently not income tested. Implementing the income test will ensure that Carer Allowance is targeted and remain sustainable for taxpayers into the future.  The savings from the income test will directly fund new early intervention services for carers.  Evidence shows that early intervention, prevention and capacity building can lead to better long-term outcomes and improved wellbeing.

c)          Reasonable, necessary and proportionate : The generous income threshold is expected to impact around one per cent (1%) of current Carer Allowance recipients.  Around 99 per cent of recipients will have no change to their payment.  Carers who lose eligibility for Carer Allowance or the Health Care Card due to the income test can still access the Medicare Safety Net for assistance with medical costs.

Conclusion

The Bill is compatible with human rights because to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.

 

 

[Circulated by the authority of the Minister for Social Services, the Hon Dan Tehan MP]