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Social Services Legislation Amendment (Housing Affordability) Bill 2018

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2016-2017-2018

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

SENATE

 

 

 

 

 

 

 

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(HOUSING AFFORDABILITY) BILL 2017

 

 

 

 

REVISED EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 (Circulated by the authority of the

Minister for Families and Social Services, the Hon Paul Fletcher MP)



 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(HOUSING AFFORDABILITY) BILL 2017

 

Contents

OUTLINE .. 3

FINANCIAL IMPACT STATEMENT . 3

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS . 4

NOTES ON CLAUSES . 4

Schedule 1 - Social Security Amendments . 5

Schedule 2 - Family Assistance Amendments . 14

Schedule 3 - National Rental Affordability Scheme Amendments . 20

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS . 30

 

 



 

SOCIAL SERVICES LEGISLATION AMENDMENT

(HOUSING AFFORDABILITY) BILL 2017

 

OUTLINE

 

The Bill introduces the following measures:

 

·          Automatic Rent Deduction Scheme

·          National Rental Affordability Scheme Amendments

Schedules 1 and 2 - Social security amendments and Family assistance amendments

 

The social security law and the family assistance law are amended to incorporate a scheme for the automatic deduction of rent and other household payments.  The amendments provide that lessors of social (public and community) housing may request the Secretary to deduct payments of rent and household utilities relating to the occupancy of the premises, from the social security or family tax benefit payments of tenants and other adult household members who have entered into an agreement that contemplates deductions being made under this scheme.

 

 

Schedule 3 - National Rental Affordability Scheme Amendments

 

This Schedule clarifies and corrects certain ambiguous provisions in the National Rental Affordability Scheme Act 2008 (NRAS Act), and provides further flexibility in the future administration of the National Rental Affordability Scheme so as to further the objects of the NRAS Act.

 

The Bill clarifies that the object of the NRAS Act is to be achieved in ways that include protecting tenants in NRAS, protecting investors, providing rights to investors and recognising that State and Territories contributions are complementary to NRAS.

 

The Bill expressly identifies the Constitutional powers being relied upon and giving the NRAS Act operation within the scope of those Constitutional powers.

 

The Bill also clarifies other regulation making powers including to support the making of new regulations to replace the National Rental Affordability Scheme Regulations 2008 (NRAS Regulations), which are due to sunset on 1 April 2019. No new allocations will be made under NRAS and so the amendments to the Bill will ensure that the regulations do not need to provide for the approval of new participants under NRAS.

 

FINANCIAL IMPACT STATEMENT

 

MEASURE

FINANCIAL IMPACT OVER THE FORWARD ESTIMATES

Automatic Rent Deduction Scheme - Schedule 1 - Social Security Amendments and Schedule 1 - Family Assistance Amendments

Not for publication

Schedule 3 - National Rental Affordability Scheme Amendments

Nil

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

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

 

 

SOCIAL SERVICES LEGISLATION AMENDMENT

(HOUSING AFFORDABILITY) BILL 2017

 

 

NOTES ON CLAUSES

 

Abbreviations used in this explanatory memorandum

 

  • Social Security Act means the Social Security Act 1991 .

 

  • Social Security Administration Act means the Social Security (Administration) Act 1999 .

 

  • Family Assistance Administration Act means the A New Tax System (Family Assistance) (Administration) Act 1999.

 

  • National Rental Affordability Scheme Act means the National Rental Affordability Scheme Act 2008 .

 

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services Legislation Amendment (Housing Affordability) Act 2017

 

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

 

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



Schedule 1 - Social Security Amendments

 

 

Summary

 

The social security law is amended to incorporate a scheme for the automatic deduction of rent and other household payments (the Automatic Rent Deduction Scheme).  The amendments provide that lessors of social (public and community) housing may request the Secretary to deduct payments of rent and household utilities from the social security payments of tenants and other adult members of their households who have entered into an agreement with the lessor (however described) that authorises deductions being made.

 

Background

 

The Automatic Rent Deduction Scheme enables a social housing lessor to request the Secretary make a deduction from a person’s social security payments (subject to some exceptions), to pay for rent and utilities arising as a result of the occupancy of the premises.  In order to request a deduction, a lessor must be a social housing lessor (as defined) and the person in receipt of various social security payments must be a social housing tenant (as defined).

The Automatic Rent Deduction Scheme also provides for the recovery of overpayments made to social housing lessors, and enables the Secretary to charge a social housing lessor fees for various services associated with the Automatic Rent Deduction Scheme. Associated amendments are also made to Division 2 (Internal review) of Part 4 and Division 1 (Information gathering) of Part 5 of the Social Security Administration Act.

The amendments made by this Schedule commence on the later of the day after Royal Assent and 1 January 2019.

Explanation of the changes

 

Part 1 - Main amendments

 

Social Security (Administration) Act 1999

 

Inalienability

 

Social security payments are absolutely inalienable under section 60 of the Social Security Administration Act.  Item 1 amends paragraph 60(2)(aa) to provide that the inalienability of social security payments is subject to the new Part 3E of the Social Security Administration Act inserted by item 8 .

 

Income management regime

 

Under Part 3B (income management regime), a person who is subject to income management will have part of their payments deducted in order to pay for the priority needs of that person, their partner, their children, and any other dependants. A deduction made under the Automatic Rent Deduction Scheme will be made from the ‘deductible portion’ of a person’s instalment or payment prior to the balance of the deductible portion being credited to the Income Management Record and the person’s income management account.

 

‘Household utilities’ is currently defined in paragraph 123TH(1)(h) of the Social Security Administration Act.  Item 4 amends this definition to remove references to specific household utilities, as this definition is moved to Schedule 1 under item 15 .

 

Items 4A to 4W will amend provisions in Division 5 of Part 3B of the Social Security Administration Act which provide for a deduction to be made from a welfare payment, or instalment of a welfare payment, subject to the income management regime. This deduction is referred to in the Social Security Administration Act as the ‘deductible portion’.

 

Item 4A of the Bill will repeal paragraphs 123XI(2)(b) and (c) of the Social Security Administration Act and substitute new paragraphs 123XI(2)(b) and (c). Paragraph 123XI(2)(b) applies if Part 3E of the Social Security Administration Act or Part 3A of the Family Assistance Administration Act (both dealing with automatic deductions of rent or other household payments) applies in relation to the person and the instalment of category I welfare payment.

 

If so, an amount equal to so much of the deductible portion of the instalment as remains after a deduction is made from that portion of the instalment under section 124QG of the Social Security Administration Act or section 67E of the Family Assistance Administration Act is credited to the Income Management Record and the person’s income management account.

 

Paragraph 123XI(2)(c) states that, if paragraph (b) does not apply, an amount equal to the deductible portion of the instalment is credited to the Income Management Record and the person’s income management account.

 

This effect is replicated in items 4B to 4W amending equivalent sections 123XJ, 123XJA, 123XJB, 123XJC, 123XJD, 123XK, 123XL, 123XM, 123XN, 123XO, 123XP, 123XPAA, 123XPAB, 123XPA, 123XPB, 123XPC, 123XPD, 123XPG, 123XPJ, and 123XPK of the Social Security Administration Act.

 

Trial of cashless welfare arrangements

 

Under Part 3D (Trial of cashless welfare arrangements), section 124PL provides for the manner of payment of a restrictable payment, where that payment is payable to a trial participant or voluntary participant.  When a deduction is made from, or an amount is set off against the restrictable payment (for instance, under various provisions of the social security law or the Family Assistance Administration Act), the balance of the restricted portion that is to be paid to a restricted bank account is reduced by the amount deducted.  Items 5 and 6 insert references to include deductions under new section 124QG, and new section 67E of the Family Assistance Administration Act.

 

A social housing tenant who is a trial participant or voluntary participant within the meaning of Part 3D of the Social Security Administration Act will only have a deduction made from the restricted portion of their payments (see item 8 of Schedule 1, proposed sections 124QG and 124QH, and item 5 of Schedule 2, proposed sections 67E and 67F).

 

Item 7 repeals and substitutes a new section 124PM to make clear that use of the unrestricted portion of the payment is not governed by Part 3E.

 

Automatic deductions of rent or other household payments

 

Item 8 inserts new Part 3E - automatic deductions of rent or other household payments, after existing Part 3D. 

 

Division 1 - Introduction  

 

Sections 124Q and 124QA set out the simplified outline and the objects of this Part. 

 

Section 124QB defines a divertible welfare payment for the purposes of this Part as a social security payment or a payment under the ABSTUDY scheme that is payable (except as an advance), that is not an Australian Victim of Terrorism Overseas Payment, a Disaster Recovery Allowance, a student start-up loan, or an ABSTUDY student start up loan under the Student Assistance Act 1973 .  The Minister may also determine, by legislative instrument, that one or more kinds of social security payments are not divertible welfare payments. 

 

Section 124QC defines a social housing lessor for the purposes of this Part.

 

Subsection 124QC(1) provides that an authority of a State or Territory is a social housing lessor where all preconditions are met. The authority must provide social housing in the State or Territory, and have a written agreement with the Human Services Department relating to the authority’s ability to request deductions under Part 3E. A Minister of the authority’s State or Territory must have also provided a letter or document to the Commonwealth Minister setting out the social housing policies of the State or Territory. This is subject to subsection 124QC(2).

 

Subsection 124QC(1A) provides that a body is a social housing lessor where all preconditions are met. The body must provide social housing in a State or Territory and is either approved to provide social housing by the State or Territory, or is registered as a community housing provider under a law of a State or Territory, and this approval or registration has been notified in writing to the Secretary. The body must have a written agreement with the Human Services Department relating to the body’s ability to request deductions under Part 3E. A Minister of the body’s State or Territory must have also provided a letter or document to the Commonwealth Minister setting out the social housing policies of the State or Territory. This is subject to subsection 124QC(2).

 

New subsection 124QC(1A) will enable a provider registered under the National Regulatory System for Community Housing to be considered a social housing lessor under Part 3E, subject to meeting the other preconditions in the subsection.

 

The purpose of the precondition in paragraphs 124QC(1)(c) and 124QC(1A)(d) is to provide transparency that social housing lessors are regulated by States and Territories, and operate under State or Territory legislation and policy regimes. In practice, the letter or document from the relevant Minister of a State or Territory will include information on how their policies apply limits to the amount that tenants can be charged, and how tenants are protected from financial hardship. The letter will also confirm to the Commonwealth Minister that social housing lessors in the jurisdiction are responsible for informing tenants of their intention to request a deduction and the reasons for making that request under the Automatic Rent Deduction Scheme.

 

Subsection 124QC(2) enables the Minister, by written instrument, to determine that a specified authority or body may not be a social housing lessor for the purposes of this Part. 

 

            Example

A particular community housing provider in Queensland is a registered body under paragraph 124QC(1)(c). The Minister for housing in Queensland writes to the Minister for Families and Social Services requesting that this community housing provider not be a social housing lessor under Part 3E. After considering the correspondence from the Queensland Minister, the Minister for Families and Social Services may determine, by written instrument, that the community housing provider may not be a social housing lessor for the purposes of Part 3E.  

 

Subsection 124QC(3) provides that such a written instrument is not a legislative instrument. This provision is included to assist readers as the instrument is not a legislative instrument within the meaning of subsection 8(1) of the Legislation Act 2003

 

Subsection 124QC(4) states that the Commonwealth Minister may publish a letter or document provided by a Minister of a State or Territory setting out the social housing policies of the State or Territory, as referred to in paragraphs 124QC(1)(c) and 124QC(1A)(d), on the Department’s website to ensure transparency. The Department referred to in subsection 124QC(4) is the Department of Social Services.

 

Subsection 124QC(5) defines Commonwealth Minister for the purposes of section 124QC.

 

Section 124QD defines a social housing tenant as a person who is 18 or older, who pays, or is liable to pay rent in relation to premises let by a social housing lessor, whether or not the person is named in an agreement (however described) with the lessor for occupancy of the premises.  State and Territory social housing schemes provide for rent to be calculated based upon the income of all members of a tenant’s household, despite the fact not all members of the household may be party to the lease with the social housing lessor.  This definition will allow deductions to be sought from the welfare payment of any of the adult occupants of the house.

 

A note alerts the reader that ‘rent’ is defined in section 13 of the Social Security Act.  The definition is broad, and includes all amounts payable as a condition of occupancy of premises, which would generally include bond payments.

 

Section 124QE expressly provides that this Part binds the Crown in each of its capacities. 

 

Division 2 - Deductions from divertible welfare payments

 

Subsection 124QF(1) provides that a social housing lessor may request the Secretary to make a deduction from a divertible welfare payment payable to a social housing tenant if both of the following conditions apply. Firstly, the tenant has an ongoing or outstanding obligation to pay an amount for rent, household utilities or both, in relation to the tenant’s occupancy of premises let by the lessor. Secondly, the tenant’s agreement with the lessor for occupancy of the premises, or another agreement with the lessor, authorises the lessor to make requests under Part 3E for deductions from divertible welfare payments payable to the tenant.

 

A tenant’s other agreement with the lessor referred to in paragraph 124QF(1)(b), which is not a tenancy agreement but authorises the lessor to make requests for deductions, is not required to be in written form.   

 

Subsection 124QF(2) provides that a deduction may be requested whether the obligation arose before, on or after the commencement of this section.

 

Subsection 124QF(3) provides that the social housing lessor’s request must specify the amount to be deducted, which must not be more than that required to satisfy rent, household utilities or both payable by the tenant, and any outstanding payment of rent, household utilities or both payable by the tenant.  The lessor’s request must also specify the date from which deductions are to be made.

 

Subsection 124QF(4) provides that the social housing lessor may amend the request to specify a different amount to be deducted.  An amended request must satisfy the requirements of subsection (3).

 

Subsection 124QF(5) provides that the social housing lessor must give the request and any amendment of the request to the Secretary in a way approved by the Secretary, for the request or amendment to be effective.  The Secretary may approve a way of giving requests and a way of giving amendments.

 

Under section 124QG, the Secretary has discretion to deduct an amount from a social housing tenant’s divertible welfare payment if a request has been made by a social housing lessor under section 124QF. However, the Secretary must not make a deduction if any circumstances outlined in subsection 124QG(2) exist.

 

The Secretary must not make a deduction if the social housing lessor’s request is revoked, if the Secretary is notified under section 124QI that the social housing tenant ceases to be a social housing tenant in relation to the lessor, if the social housing lessor ceases to be a social housing lessor, or at any time the tenant is covered by a determination under subsection 124QG(3). 

 

The Secretary must also not make a deduction if a social housing tenant is subject to the income management regime within the meaning of Part 3B of the Social Security Administration Act and the following two criteria are met. Firstly, all or part of the tenant’s divertible welfare payment is a category E welfare payment, category H welfare payment, category I welfare payment, category P welfare payment, category Q welfare payment, category R welfare payment or category S welfare payment within the meaning of Part 3B of the Social Security Administration Act. Secondly, the deductible portion under Division 5 of Part 3B of the Social Security Administration Act is nil.

 

The Secretary must not make a deduction if a social housing tenant is a trial participant or voluntary participant in the cashless debit card trial within the meaning of Part 3D of the Social Security Administration Act and the following two criteria are met. Firstly, all or part of the divertible welfare payment is a restrictable payment within Part 3D of the Social Security Administration Act. Secondly, the tenant’s percentage of the payment that is the restricted portion under paragraph 124PJ(1)(a) or subsection 124PJ(2) is 0%.

 

Subsection 124QG(3) enables the Minister, by legislative instrument, to determine that deductions must not be made from divertible welfare payments payable to specified social housing tenants.  A note alerts the reader that subsection 13(3) of the Legislation Act 2003 provides for specification by class.

 

If the Secretary does not make a deduction in accordance with a request made, including where the Secretary deducts less than was requested, the Secretary must give written notice to the lessor of that fact (subsection 124QG(4)).

 

If a divertible welfare payment payable to a social housing tenant is suspended under this Act, but subsequently resumes, the Secretary may deduct any amounts that would otherwise have been deducted under this Part during the period of suspension from payments paid to the tenant after the suspension ends (subsection 124QG(5)). Paragraph 124QG(5)(b) makes clear that the Secretary must make any deduction from more than one payment paid to the tenant after the suspension ends. This reduces the likelihood of a tenant experiencing financial hardship, as it prevents arrears incurred due to a suspension of a payment from being deducted from a single payment.

 

Section 124QH provides that the Secretary is to determine the amount of the deduction. The amount must not exceed the amount specified in a request made under section 124QF, or the amount of the divertible welfare payment remaining after all deductions specifically required by a law of the Commonwealth (other than Part 3E) are made.

 

For a social housing tenant who is also subject to the income management regime within the meaning of Part 3B of the Social Security Administration Act, and all or part of the divertible welfare payment is a payment of a type outlined in paragraph 124QH(3)(b), then the amount of a deduction must not exceed the amount that would be the deductible portion, under Division 5 of Part 3B of the Social Security Administration Act, if no deduction was made under section 124QG.

 

For a social housing tenant who is also a trial participant or voluntary participant in the cashless debit card trial under Part 3D of the Social Security Administration Act, and all or part of the divertible welfare payment is a restrictable payment under Part 3D, then the amount of a deduction must not exceed the amount equal to the tenant’s percentage under paragraph 124PJ(1)(a) or subsection 124PJ(2).

 

Section 124QI sets out the requirements for notifications by social housing lessors. Subsection 124QI(1) provides that a social housing lessor may revoke a request made under section 124QF by giving notice to the Secretary in a way approved by the Secretary.  If a request has been made under section 124QF in relation to a person and the person ceases to be a social housing tenant in relation to that social housing tenant lessor, the lessor must notify the Secretary as soon as practicable (subsection 124QI(2)).  Similarly, if the social housing lessor ceases to be a social housing lessor (other than because of section 124QC(2)),  the authority or body must notify the Secretary as soon as practicable after ceasing to be a social housing lessor (subsection 124QI(3)).  A notification under subsection 124QI(2) or (3) must be given in a way approved by the Secretary (subsection 124QI(4)).

 

Division 3 - Treatment of amounts deducted

 

Under section 124QJ, Division 3 will apply when the Secretary deducts an amount under Division 2 from a divertible welfare payment payable to a social housing tenant.

 

Section 124QK requires the Secretary to pay the amount deducted to the social housing lessor.

 

Section 124QL provides that if the Secretary pays the amount to the social housing lessor and the amount, or a part of the amount relates to a particular liability, then the liability is discharged to the extent of the amount, or part of the amount paid to the social housing lessor.  In other words, if a deduction was sought for combined amounts representing rent and utilities, and a deduction is made, the amount paid to the lessor extinguishes each of the liabilities for rent and utilities, to the extent that part of the deduction relates to that liability.  The liability is extinguished even if the liability is not yet due and payable (subsection 124QL(2)).  However, this section does not reduce a liability in respect of an amount paid to the lessor that gives rise to a debt due to the Commonwealth by the lessor (subsection 124QL(3)). 

 

Section 124QM provides that for the purposes of all laws of the Commonwealth (except any law specified under subsection 124QM(4)), the social housing tenant is taken to have been paid the amount deducted, at the time the divertible welfare payment was paid, or would have been paid but for the deduction, whether or not the Secretary paid the amount to the social housing lessor (subsections 124QM(1) to (3)).  This provision is subject to new section 124QO and any law of the Commonwealth specified in an instrument under subsection 124QM(4).  Subsection 124QM(4) provides that the Minister may, by legislative instrument, make a determination specifying a law of the Commonwealth for the purposes of subsection 124QM(2).

 

Division 4 - Overpayments to social housing lessors

 

Section 124QN applies where a payment to a lessor purportedly made under Division 3 is made in connection with a deduction properly made under Division 2.  If the amount paid to the social housing lessor exceeds the deduction, the excess is a debt due to the Commonwealth by the social housing lessor. A note under subsection 124QN(2) directs the reader to section 124QP for debt recovery.

 

Section 124QO applies where a payment of a deduction has been made to a social housing lessor under Division 3 and the deduction exceeded the amount (which may be nil) determined by the Secretary under section 124QH (subsection 124QO(1)).  In such cases, the amount a social housing tenant is taken to have been paid under subsection 124QM(1) is reduced by the excess (subsection 124QO(2)).  Subsection 124QO(3) provides that the excess is a debt due to the Commonwealth by the social housing lessor.  A note under subsection 124QN(2) directs the reader to section 124QP for debt recovery.

 

Subsection 124QO(4) provides that the Secretary must pay the social housing tenant an amount equal to the excess that was deducted, whether or not the Commonwealth recovers the debt, and that amount will be taken to be a payment of the divertible welfare payment.  Subsection 124QO(5) provides that the Secretary must not pay an amount under subsection 124QO(4) to the extent that the sum of that amount, and the amount that should have been deducted, would exceed the amount of the divertible welfare payment that would have been payable to the tenant apart from Part 3E.  Subsection 124QO(6) provides that subsection 124QO(4) has effect for the purposes of all laws of the Commonwealth, except any law specified by the Minister by legislative instrument under subsection 124QO(7).

 

Section 124QP allows the Secretary to set off amounts payable to a social housing lessor under Division 3 against debts due to the Commonwealth by the lessor under Division 4 (subsection 124QP(1)).  Subsection 124QP(2) provides that the Commonwealth may recover a debt due to it under Division 4 in a court of competent jurisdiction.  A note directs the reader to Part 5.4 of the Social Security Act for other recovery action in relation to debts.

 

Section 124QQ provides that there is no time limit for the commencing legal proceedings or taking any action under Part 3E for the recovery of a debt or overpayment.

 

Division 5 - Fees

 

Section 124QR enables the Secretary to charge social housing lessors fees, on the Commonwealth’s behalf, for deducting amounts under Division 2, paying amounts to the lessor under Division 3, and for services provided to the lessor in the administration of Part 3E.

 

Item 9 is a consequential amendment.

 

Review of decisions

 

Item 10 inserts new subsection 127(3A), which provides that a decision to make a determination under subsection 124QC(2) is not reviewable by the Secretary.

 

Item 11 inserts new paragraph 129(4)(daa) into section 129.  It provides that a person may not apply under subsection 129(1) for review of a decision to make a determination under subsection 124QC(2).

 

Information management

 

Paragraph 192(db) is amended by item 12 to include a reference to Part 3E in the Secretary’s general information-gathering powers.

 

Item 13 inserts new paragraph 195(1)(cd) to enable the Secretary to require a person to give information about a class of persons to the Department to facilitate the administration of Part 3E.

 

Item 14 inserts new paragraph 195(2)(m) to enable the Secretary to require, about each person in the class of persons, for the purposes of Part 3E, evidence to support a request made by the social housing lessor under section 124QF.

 

Definitions

 

Item 15 inserts new definitions into subclause 1(1) of Schedule 1, for divertible welfare payment , household utilities , social housing lessor and social housing tenant .

 

Part 2 - Consequential amendments

 

Social Security Act

 

Item 16 inserts new paragraph 1235(ca) into the Social Security Act to extend the definition of debt , for the purposes of Part 5 of that Act, to a debt due by a social housing lessor under Division 4 of Part 3E of the Social Security Administration Act.

 

Item 17 adds a reference to Part 3E of the Social Security Administration Act into subsection 1237AB(1), enabling the Secretary, on behalf of the Commonwealth, to decide to waive the Commonwealth’s right to recover debts arising under Part 3E.

 



Schedule 2 - Family Assistance Amendments

 

 

Summary

 

The Family Assistance Administration Act is amended to incorporate a scheme for the automatic deduction of rent and other household payments (the Automatic Rent Deduction Scheme).  The amendments provide that lessors of social (public and community) housing may request the Secretary to deduct payments of rent and household utilities from the family tax benefit payments of tenants and other adult members of their households who have entered into an agreement with the lessor (however described) that authorises deductions being made under the Automatic Rent Deduction Scheme.

 

Background

 

The Automatic Rent Deduction Scheme enables a social housing lessor to request the Secretary make a deduction from a person’s family tax benefit payments (other than family tax benefit advances), to pay for rent or utilities arising as a result of the occupancy of the premises.  In order to request a deduction, a lessor must be a social housing lessor (as defined in Part 3E of the Social Security Administration Act) and the person in receipt of family tax benefit payments must be a social housing tenant (as defined in Part 3E of the Social Security Administration Act).

The Automatic Rent Deduction Scheme also provides for the recovery of overpayments made to social housing lessors, and enables the Secretary to charge a social housing lessor fees for various services associated with the Automatic Rent Deduction Scheme.  Associated amendments are also made to Division 1 (Information gathering) of Part 6 of the Family Assistance Administration Act.

The amendments made by this Schedule commence on the later of the day after Royal Assent and 1 January 2019.

Explanation of the changes

 

Family Assistance Administration Act

 

Definitions

 

Item 1 inserts definitions of household utilities , social housing lessor and social housing tenant . which are given the same meanings as they have in the Social Security Administration Act.  Any determination made by the Minister for the purposes of subsection 124QC(2) will also apply for the purposes of the family assistance law.

 



 

Payment of family tax benefit

 

Item 2 adds references to new Part 3A into subsections 23(6), 24(4) and 24A(2), which relate to the payment of family tax benefit.

 

Inalienability

 

Family tax benefit payments are absolutely inalienable under section 66 of the Family Assistance Administration Act.  Item 3 adds new paragraph 66(2)(ac) to provide that the inalienability of family tax benefit payments is subject to the new Part 3A of the Family Assistance Administration Act inserted by item 5 Item 4 provides similarly in relation to Part 3E of the Social Security Administration Act.

 

Automatic deductions of rent or other household payments

 

Item 5 inserts new Part 3A into the Family Assistance Administration Act.

 

Division 1 - Introduction

 

Sections 67A and 67B set out the simplified outline and the objects of this Part. 

 

Section 67C expressly provides that this Part binds the Crown in each of its capacities. 

 

Division 2 - Deductions from family tax benefit payments

 

Subsection 67D(1) provides that a social housing lessor may request the Secretary to make a deduction from family tax benefit (other than family tax benefit advance), whether an instalment or other payment, payable to a social housing tenant if both of the following conditions apply. Firstly, the tenant has an ongoing or outstanding obligation to pay an amount for rent, household utilities or both, in relation to the tenant’s occupancy of premises let by the lessor. Secondly, the tenant’s agreement with the lessor for occupancy of the premises, or another agreement with the lessor, authorises the lessor to make requests under Part 3E for deductions from family tax benefit payable to the tenant.

 

A tenant’s other agreement with the lessor, referred to in paragraph 67D(1)(b), which is not a tenancy agreement, but authorises the lessor to make requests for deductions, is not required to be in written form.    

 

Subsection 67D(2) provides that a deduction may be requested whether the obligation arose before, on or after the commencement of this section.

 

Subsection 67D(3) provides that the social housing lessor’s request must specify the amount to be deducted, which must not be more than that required to satisfy rent, household utilities or both payable by the tenant, and any outstanding payment or rent, household utilities or both payable by the tenant.  The lessor’s request must also specify the date from which deductions are to be made.

 

Subsection 67D(4) provides that the social housing lessor may amend the request to specify a different amount to be deducted.  An amended request must satisfy the requirements of subsection (3). 

 

Subsection 67D(5) provides that the social housing lessor must give the request and any amendment of the request to the Secretary in a way approved by the Secretary, for the request or amendment to be effective.  The Secretary may approve a way of giving requests and a way of giving amendments.

 

Under section 67E, the Secretary has discretion to deduct an amount from a social housing tenant’s family tax benefit payment, if a request has been made by a social housing lessor under section 67D.  However, the Secretary must not make a deduction if any circumstances outlined in subsection 67E(2) exist.

 

The Secretary must not make a deduction if the social housing lessor’s request is revoked, if the Secretary is notified under section 67G that the social housing tenant ceases to be a social housing tenant in relation to the lessor, if the social housing lessor ceases to be a social housing lessor, or at any time the tenant is covered by a determination under subsection 67E(3).

 

The Secretary must also not make a deduction if a social housing tenant is subject to the income management regime within the meaning of Part 3B of the Social Security Administration Act and the deductible portion under Division 5 of Part 3B of the Social Security Administration Act is nil.

 

The Secretary must not make a deduction if a social housing tenant is a trial participant or voluntary participant in the cashless debit card trial within the meaning of Part 3D of the Social Security Administration Act and the tenant’s percentage of the restricted portion under paragraph 124PJ(1)(a) or subsection 124PJ(2) of that Act is 0%.

 

Subsection 67E(3) enables the Minister, by legislative instrument, to determine that deductions must not be made from family tax benefit payments payable to specified social housing tenants.  A note alerts the reader that subsection 13(3) of the Legislation Act 2003 provides for specification by class.

 

If the Secretary does not make a deduction in accordance with a request made, including where the Secretary deducts less than was requested, the Secretary must give written notice to the lessor of that fact (subsection 67E(4)).

 

Section 67F provides that the Secretary is to determine the amount of the deduction. The amount must not exceed the amount specified in a request made under section 67D, or the amount of family tax benefit remaining after all deductions specifically required by a law of the Commonwealth (other than Part  3A) are made.

 

For a social housing tenant who is also subject to the income management regime within the meaning of Part 3B of the Social Security Administration Act, then the amount of a deduction must not exceed the amount that would be the deductible portion, under Division 5 of Part 3B of the Social Security Administration Act, of the family tax benefit if no deduction was made under section 67E of this Act.

 

For a social housing tenant who is also a trial participant or voluntary participant in the cashless debit card trial within the meaning of Part 3D of the Social Security Administration Act, then the amount of a deduction must not exceed the amount equal to the tenant’s percentage under paragraph 124PJ(1)(a) or subsection 124PJ(2) of that Act.

 

Section 67G sets out the requirements for notifications by social housing lessors. Subsection 67G(1) provides that a social housing lessor may revoke a request made under section 67D by giving notice to the Secretary in a way approved by the Secretary.  If a request has been made under section 67D in relation to a person and the person ceases to be a social housing tenant in relation to that social housing tenant lessor, the lessor must notify the Secretary as soon as practicable (subsection 67G(2)).  Similarly, if the social housing lessor ceases to be a social housing lessor (other than because of subsection 124QC(2) of the Social Security Administration Act),  the authority or body must notify the Secretary as soon as practicable after ceasing to be a social housing lessor (subsection 67G(3)).  A notification under subsection 67G(2) or (3) must be given in a way approved by the Secretary (subsection 67G(4)).

Division 3 - Treatment of amounts deducted

Under section 67H, Division 3 will apply when the Secretary deducts an amount under Division 2 from family tax benefit payable to a social housing tenant.

 

Section 67J requires the Secretary to pay the amount deducted to the social housing lessor.

 

Section 67K provides that if the Secretary pays the amount to the social housing lessor and the amount, or a part of the amount relates to a particular liability, then the liability is discharged to the extent of the amount paid to the social housing lessor, even if the liability is not yet due and payable.  In other words, if a deduction was requested for combined amounts representing rent and utilities, and a deduction is made, the amount paid to the lessor extinguishes each of the liabilities for rent and utilities to the extent that part of the deduction relates to that liability.  However, this section does not reduce a social housing tenant’s liability in respect of an amount paid to the lessor that gives rise to a debt due to the Commonwealth by the lessor (subsection 67K(3)). 

 

Section 67L provides that for the purposes of all laws of the Commonwealth (except any law specified under subsection 67L(4)), the social housing tenant is taken to have been paid the amount deducted, at the time the family tax benefit payment was paid, or would have been paid but for the deduction, whether or not the Secretary paid the amount to the social housing lessor (subsections 67L(1) to (3)).  This provision is subject to new section 67N and any law of the Commonwealth specified in an instrument under subsection 67L(4).  Subsection 67L(4) provides that the Minister may, by legislative instrument, make a determination specifying a law of the Commonwealth for the purposes of subsection 67L(2).

 

Division 4 - Overpayments to social housing lessors

 

Section 67M applies where a payment to a lessor purportedly made under Division 3 is made in connection with a deduction properly made under Division 2.  If the amount paid to the lessor exceeds the deduction, the excess is a debt due to the Commonwealth by the social housing lessor. A note under subsection 67M(2) directs the reader to section 67P for debt recovery.

 

Section 67N applies where a payment of a deduction has been made to a social housing lessor under Division 3 and the deduction exceeded the amount (which may be nil) determined by the Secretary under section 67F (subsection 67N(1)).  In such cases, the amount a social housing tenant is taken to have been paid under subsection 67L(1) is reduced by the excess (subsection 67N(2)).  Subsection 67N(3) provides that the excess is a debt due to the Commonwealth by the social housing lessor.  A note under subsection 67N(2) directs the reader to section 67P for debt recovery.

 

Subsection 67N(4) provides that the Secretary must pay the social housing tenant an amount equal to the excess that was deducted, whether or not the Commonwealth recovers the debt, and that amount will be taken to be a payment of family tax benefit.  Subsection 67N(5) provides that the Secretary must not pay an amount under subsection 67N(4) to the extent that the sum of that amount, and the amount that should have been deducted, would exceed the amount of family tax benefit that would have been payable to the tenant apart from Part 3A.  Subsection 67N(6) provides that subsection 67N(4) has effect for the purposes of all laws of the Commonwealth, except any law specified by the Minister by legislative instrument under subsection 67N(7).

 

Section 67P allows the Secretary to set off amounts payable to a social housing lessor under Division 3 against debts due to the Commonwealth by the lessor under Division 4 (subsection 67P(1)).  Subsection 67P(2) provides that the Commonwealth may recover a debt due to it under Division 4 in a court of competent jurisdiction.  Subsection 67P(3) provides that Part 4 of the Family Assistance Administration Act does not apply to a debt due by a social housing lessor to the Commonwealth under Division 4.

 

Section 67Q provides that there is no time limit for the commencing legal proceedings or taking any action under Part 3E for the recovery of a debt or overpayment.

 

Division 5 - Fees

 

Section 67R enables the Secretary to charge social housing lessors fees, on the Commonwealth’s behalf, for deducting amounts under Division 2, paying amounts to the lessor under Division 3, and for services provided to the lessor in the administration of Part 3A.

 

Information gathering

 

Item 6 and 7 inserts new paragraph 154(1)(c) to enable the Secretary to require a person to give information or produce a document to a specified agency if the Secretary considers that the information or document may be relevant to the operation of Part 3A.

 

Item 8 and 9 inserts new paragraph 157(1)(c) to enable the Secretary to require a person to give information about a class of persons to a specified agency to facilitate the administration of Part 3A.

 

Item 10 inserts new paragraph 157(2)(m) enabling the Secretary to require, about each person in the class of persons, for the purposes of Part 3A, evidence to support a request made by the social housing lessor under section 67D.



Schedule 3 - National Rental Affordability Scheme Amendments

 

 

Summary

 

The purpose of this Schedule is to clarify and correct certain ambiguous provisions in the National Rental Affordability Scheme Act 2008 (NRAS Act), and to provide further flexibility in the future administration of the National Rental Affordability Scheme (NRAS) so as to further the objects of the NRAS Act.

 

The Bill clarifies that the objects of the NRAS Act are to be achieved in ways that include protecting tenants in NRAS, protecting investors, providing rights to investors and recognising that State and Territory contributions are complementary to NRAS. The amendments will also allow for the Secretary to accept a voluntary written undertaking from an approved participant in relation to NRAS.

 

The Bill expressly identifies the Constitutional powers being relied upon and giving the NRAS Act operation within the scope of those Constitutional powers.

 

The Bill also clarifies other regulation making powers including to support the making of new regulations to replace the National Rental Affordability Scheme Regulations 2008 (NRAS Regulations), which are due to sunset on 1 April 2019. No new allocations will be made under NRAS and so the Bill will ensure that the new regulations do not need to provide for the approval of new participants under NRAS.

 

 

Background

 

The National Rental Affordability Scheme (NRAS) is established by the National Rental Affordability Scheme Regulations 2008 (NRAS Regulations), made under the National Rental Affordability Scheme Act 2008 (the NRAS Act). The object of the NRAS is to increase the supply of affordable rental housing for low to middle income earners, by enabling eligible individuals and families to rent NRAS dwellings at a rate that is at least 20 per cent below market value rent. NRAS also provides incentives to persons to build and rent NRAS dwellings. Under NRAS, an ‘approved participant’ may apply for an ‘allocation’ in relation to a rental dwelling, subject to certain conditions. If the conditions are satisfied, the approved participant is eligible to receive an ‘incentive’, either in the form of a monetary payment or a tax offset for a period of ten years. The ‘incentive’ is comprised of a Commonwealth component which is paid in accordance with the NRAS Regulations. There is also a State and Territory contribution which is paid in accordance with an agreement between the relevant State/Territory Government and an approved participant. 

Often, an approved participant is not the owner of the rental dwelling; rather the owners are third party ‘investors’. The approved participant usually acts as a service provider to the investor by managing the compliance with the requirements under the NRAS Regulations in exchange for a fee (generally a portion of the incentive). Under NRAS, an approved participant has an obligation to pass on an incentive to an investor if there is a contractual arrangement in place to this effect (regulations 30A and 30B).

There have been issues surrounding approved participants failing to pass on incentive payments to investors and other issues around the conduct of approved participants.

 

Schedule 3 will commence on the day after Royal Assent, except the provisions which require changes to the National Rental Affordability Scheme Regulations 2008 , which are to commence on a single day fixed by Proclamation.

 

 

Explanation of the changes

 

 

Item 1 repeals and substitutes subparagraph 7(2)(b)(ii) of the NRAS Act. The new subparagraph inserted by this item clarifies that the NRAS Regulations must provide that a condition of allocation is that each and every time rent is charged for a dwelling (whether that be on a weekly, fortnightly, monthly or other basis), that rent must be at least 20 per cent below the market value rent.

 

This amendment is made for the sake of clarity to remove any ambiguity about the operation of subparagraph 7(2)(b)(ii), and to protect eligible tenants from being subject to higher rent at any time during the year.

 

Item 1A amends section 3 to insert subsections in order to clarify the object of the NRAS Act.

 

Item 1B inserts a new subsection 3(2) which clarifies that the object of the NRAS Act is to be achieved in ways that include the matters mentioned in new paragraphs 3(2)(a) to (d).

 

Paragraph 3(2)(a) provides for protecting tenants of rental dwellings that are rented during an NRAS year. Section 5 of the NRAS Act provides that the regulations that prescribes NRAS must provide for certain matters that further the objects of the NRAS Act.  Together with the amendments made by item 1K, this item will ensure that regulations can be made in respect of protecting tenants in NRAS.

 

Paragraph 3(2)(b) provides that protecting investors of an NRAS rental dwelling is also a way in which the object of the NRAS Act is to be achieved.

 

Since NRAS began in 2008, there have been instances where approved participants have failed to pass on incentives to investors. Approved participants and investors usually enter into a contract to facilitate this, outside of the Department’s scope, as investors are not defined under the Act. Investors provide a significant proportion of properties in NRAS, and if they are not supported, investors are likely to withdraw their properties from NRAS, which would reduce the number of rental properties in NRAS and likely to impact low to moderate income households. Therefore, the inclusion of investors in this amendment will clarify that the purpose of NRAS is also to protect investors.

 

Paragraph 3(2)(c) provides that the object of the Act is to be achieved by providing rights to investors in NRAS. If investors’ rights are not protected, they may be out of pocket and may seek to remove their properties out of NRAS, which would lead to a decline of available affordable housing for low and moderate income households. Paragraph 3(2)(d) makes clear that there are separate contributions, in cash or in kind, made by States and Territories, to approved participants in NRAS.

 

Item 1C inserts a new section 3A.

 

Section 3A provides that NRAS is supported by a variety of Constitutional powers. The effect of this section is that if a court finds that the Commonwealth’s legislative power does not support the Act, a particular provision or multiple provisions of the Act or the Income Tax Assessment Act 1997 , the Act shall nevertheless be valid to the extent to which it is supported by other legislative powers.

 

Subsections 3A(1) and (2) are provisions relating to the severable operation of the Act.  Subsections 3A(3) to (6) set out additional and severable heads of legislative power under the Constitution which support the Act.

 

Subsection 3A(3) provides that the Act has the effect it would have if its operation were expressly confined to give effect to Australia’s rights and obligations under paragraph 1 of Article 2 and Article 11 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) to which paragraph 51(xxix) of the Constitution applies. NRAS and its goal to provide for more affordable housing is a suitable method for Australia to comply with its international obligations under the ICESCR.

 

Subsection 3A(4) provides that the Act has the effect it would have if its operation were expressly confined to:

(a)   the regulation of activities, functions, relationships or business of an investor or approved participant that is a constitutional corporation;

(b)   the creation of rights or privileges belonging to an investor or approved participant that is a constitutional corporation;

(c)   the imposition of obligations on an investor or approved participant that is a constitutional corporation;

                    (i)         in respect of the matters mentioned in paragraphs (a) to (c), the regulation of the employees or shareholders of the constitutional corporation;

(d)   the regulation of persons or entities whose conduct affects or is capable of affecting the activities, functions, relationships or business of an investor or an approved participant that is a constitutional corporation.

 

Subsection 3A(5) provides that the Act has the effect it would have if its operation were expressly confined to determining the tax liability of a person.

 

Subsection 3A(6) provides that the Act has the effect it would have if its operation were expressly confined to apply in relation to the following:

(a)   an approved rental dwelling located in a Territory;

(b)   an approved participant or investor who is a resident in a Territory; or

(c)   an approved participant or investor that is:

                    (i)          a body corporate that is incorporated in a Territory; or

                  (ii)         a body corporate that is taken to be registered in a Territory under section 119A of the Corporations Act 2001 ; or

                 (iii)         a trust, if the proper law of the trust and the law of the trust’s administration are the law of a Territory; or

                 (iv)         an entity, the core or routine activities of which are carried out in or in connection with a Territory.

 

Item 1D amends the definition of ‘allocation’ to substitute ‘an approved rental’ with ‘a rental’. This amendment is required as ‘approved rental dwelling’ is a defined term in the NRAS Regulations and is not defined in the NRAS Act.

 

Item 1E inserts new definitions.

 

A new definition of ‘constitutional corporation’ is inserted to mean a corporation to which paragraph 51(xx) of the Constitution applies.

 

New section 3A will include references to an investor or approved participant that is a constitutional corporation. It is therefore necessary to define ‘constitutional corporation’.

 

A new definition of ‘investor’, similar to the definition in the NRAS Regulations, is also inserted to mean a person who is the legal or beneficial owner of a rental dwelling covered by an allocation and who is not an approved participant in relation to the rental dwelling.

 

A number of other amendments to Schedule 3 to the Bill will result in provisions of the NRAS Act including references to investors.  It is therefore necessary to define ‘investor’.

 

Investors are the owners of rental dwellings covered by an allocation in NRAS who are not approved participants themselves. This amendment will ensure that investors are acknowledged as being part of NRAS.

 

‘Tax law provisions’ is defined to mean item 23 of the table in section 67-23 and provisions of Division 380 of the Income Tax Assessment Act 1997 .

 

New section 3A will include references to tax law provisions. It is therefore necessary to define ‘tax law provisions’.

 

Item 1F repeals paragraph 5(a) and substitutes a new paragraph.

 

Current paragraph 5(a) states that the regulations must prescribe a Scheme about the approval of participants by the Secretary. However, allocations are no longer being made under NRAS and as such, the Secretary is no longer approving new approved participants. Given this, it should be possible for future regulations not to include provisions relating to the approval of participants.

 

Therefore, this item amends the NRAS Act to state that the NRAS Regulations must prescribe a Scheme about the obligations of existing approved participants.

 

Item 1G inserts new paragraph 6(ca). 

 

Section 6 sets out matters for which NRAS, contained in regulations, may provide. New paragraph 6(ca) allows for regulations to be made in relation to the adjustment, in certain circumstances of the amount of an incentive that:

(i)             is to be provided to an approved participant; or

(ii)           has previously been provided to an approved participant;

 

Approved participants are entitled to an incentive if they satisfy the conditions of allocations, set out in the NRAS Regulations, for an NRAS year.  The adjustment of an incentive paid and payable may be required in circumstances where an approved participant has failed to pass on the incentive to the investor. Adjustments will only be made where there has been a transfer under regulation 21A.

 

Item 1H inserts ‘covered by an allocation’ after ‘dwelling’.

 

Section 6 sets out matters for which NRAS, contained in regulations, may provide. Currently, paragraph 6(d) states that NRAS may provide for how the market value rent of a rental dwelling for an NRAS year is to be determined. This current wording appears to be broad and these amendments are a technical amendment because ‘rental dwelling’ is defined in a general way not connected to NRAS.

 

Item 1J inserts new paragraph 6(cb). 

 

Section 6 sets out matters for which NRAS, contained in regulations, may provide.  New paragraph 6(cb) provides that regulations may be made in relation to the passing on of State and Territory contributions, or their monetary equivalent, by approved participants in certain circumstances.

 

Under NRAS, an approved participant that satisfies the conditions of allocation is entitled to a Commonwealth incentive payment.  The relevant State and Territory Government also pays an additional contribution, either through a cash payment or through an in-kind payment.  There have been instances where approved participants have failed to pass on this State/Territory contribution to investors.  However, it is not clear that the NRAS Act currently permits regulations to be made relating to the circumstances in which the State/Territory contribution must be passed on to investors.  New paragraph 6(cb) will clearly allow for such regulations to be made.

 

Item 1K inserts new paragraphs 6(e), (f) and (g). 

 

Section 6 sets out matters for which NRAS, contained in regulations, may provide. New paragraphs 6(e), (f) and (g) provide that regulations may be made in relation to the protection of tenants of rental dwellings in NRAS that are rented during an NRAS year, the protection of investors and the rights of investors.

 

Item 1L inserts a heading ‘Conditions imposed by Secretary under the Scheme’ to clarify that the provisions following it relate to conditions imposed by Secretary under NRAS.

 

Item 2 repeals and substitutes paragraph 7(2)(c) of the NRAS Act. Vacancy periods will continue to be prescribed by the NRAS Regulations, but the substituted provision provides greater flexibility in how maximum vacancy periods are prescribed, including how the vacancy periods may be calculated, or what form they may take.  This is necessary to ensure that approved participants are not subject to excessive penalties as a result of vacancy periods, while ensuring that NRAS continues to meet its objective of increasing the stock of affordable rental dwellings.

 

Item 3 inserts new subsections 7(4) to (6)

 

Current section 7 sets out matters for which NRAS, contained in the NRAS Regulations, must provide.

 

New subsection 7(4) clarifies that the NRAS Regulations made for the purposes of subparagraph 2(b)(i) may provide for the Secretary to make a legislative instrument prescribing matters relating to the income of eligible tenants under NRAS.

 

Item 1 of Schedule 3 to the Bill will repeal subparagraph 7(2)(b)(ii) of the Act, and substitute a new subparagraph which has the effect that the NRAS Regulations must provide for the Secretary to make an allocation on the condition that each charge of rent for the rental dwelling is at least 20% less than the market value rent for the dwelling.

 

Evidence given to the Senate Community Affairs Legislation Committee’s inquiry on the Bill suggested that it is possible for a tenant to be overcharged rent inadvertently in a number of circumstances. While the Government’s policy is for each charge of rent to be at least 20 per cent below the market rent, it is appropriate for the NRAS Regulations to be able to set out circumstances in which this rule should not apply.

 

New subsection 7(5) empowers the NRAS Regulations to provide that in certain circumstances, the Secretary may decide that the condition mentioned in subparagraph 7(2)(b)(ii) does not apply if it will not result in an increase in rental costs for low and moderate income households. The NRAS Regulations will confine the Secretary’s power to disapply the condition to very limited circumstances.  The Secretary will only be able to use the discretion in relation to a specific charge for rent, for a specific allocation, where the overcharging of rent was inadvertent and the tenant had been compensated.

 

The ability to implement new and varied conditions of allocations is important to further the objects of NRAS, and to protect eligible tenants and ensure the safety and viability of dwellings. For example, new conditions of allocation may be imposed to deal with certain emerging safety issues, such as a requirement to use certain non-flammable materials, or replace existing dangerous materials.

 

New subsection 7(6) provides express legislative authority for NRAS to impose a new condition or vary conditions of an existing allocation. If the NRAS Regulations provide, the new or varied condition could automatically apply to all existing allocations by force of law, without any further action required by the Department to individually vary those allocations. However, this subsection does not apply to a condition that is varied or imposed by the Secretary (such as special conditions made by the Secretary).

 

New subsection 7(7) provides that subsection 7(6) has effect despite anything in the Act or the NRAS Regulations.

 

Item 4 inserts new paragraphs 8(ba) and 8(bb)

 

The current paragraph 8(b) states that NRAS may provide for the transfer of an allocation to another approved participant in certain circumstances, however it is unclear whether it allows for regulations to be made to allow for the transfer of all of an approved participant’s allocations. In some circumstances, approved participants engage in undesirable conduct in relation to a large number of allocations.

 

Therefore, this item inserts a new paragraph 8(ba) to allow for NRAS to provide for the transfer of all allocations made to an approved participant, in certain circumstances.

 

If the NRAS Regulations provide, the Secretary would have the power to make a ‘bulk’ transfer of all of the participant’s allocations to another approved participant, in certain circumstances. This power would only be exercised on the Secretary’s own initiative, and does not automatically trigger upon every request by an investor.

 

New paragraph 8(bb) confirms that NRAS may provide for the circumstances in which an allocation can be transferred from one rental dwelling to another rental dwelling. This ability is necessary in instances where a dwelling is sold and the new owner does not wish to participate in NRAS.

 

Without this discretion, numerous allocations would fall out of NRAS where the owners of the dwellings no longer wish to participate. This would lead to a significant reduction in the stock of affordable housing provided for under NRAS.

 

Item 4A inserts new sections 10A and 10B

 

The conduct of some approved participants towards investors has at times, been unacceptable. Approved participants have sent incorrect or misleading communications to investors, failed to perform their contractual obligations to investors and taken action to require investors to use particular property management services.

 

This item inserts new sections that allows an approved participant to voluntarily provide a written undertaking to the Secretary in relation to any conduct relating to NRAS.  In appropriate cases, the acceptance of an enforceable undertaking by an approved participant to remedy prior undesirable conduct, or to not engage in the undesirable conduct in the future, may avoid the need for the Secretary to respond to the conduct in another way, for example, by transferring an allocation.

 

Whilst this Bill has not adopted the enforceable undertakings provisions as provided for under Part 6 of the Regulatory Powers (Standard Provisions) Act 2014 , the provisions are similar. These provisions are broader that the Regulatory Powers (Standard Provisions) Act 2014 as it allows the Secretary to enforce broader conduct, not in an Act or a legislative instrument, in relation to NRAS. Through these provisions, the Secretary may accept a voluntary undertaking from an approved participant relating to any conduct connected with NRAS (including the approved participant’s dealings with investors) and then enforce that undertaking, if necessary in the Federal Court. 

 

Subsection 10A(1) enables the Secretary to accept a written undertaking given by an approved participant, committing them to particular action (or inaction) in order to prevent or respond to an undesirable conduct committed by an approved participant in relation to NRAS.

 

Undertakings provide a remedy other than financial sanctions to past or prospective conduct committed by an approved participant in relation to NRAS.

 

Subsection 10A(2) states that the undertaking must be expressed to be an undertaking under this section.

 

Subsection 10A(3) states that the approved participant may withdraw or vary the undertaking at any time, but only if the Secretary provides written consent to the withdrawal or variation.

 

Subsection 10A(4) states that the consent of the Secretary is not a legislative instrument. This is to assist readers to understand the status of consent given under this clause; it does not meet the meaning of legislative instrument under subsection 8(1) of the Legislation Act 2003 , and is not intended as an exemption from that Act.

 

Subsection 10A(5) provides that the Secretary may cancel the undertaking by providing a written notice to the approved participant.

 

Subsection 10B(1) states that the Secretary may apply to the Federal Court of Australia for an order of enforceable undertaking if an approved participant has been given an undertaking under section 10A, the undertaking has not been withdrawn or cancelled, and the Secretary considers that the approved participant has breached the undertaking.

 

Subsection 10B(2) provides the list of orders the Federal Court of Australia may impose to remedy a breach of an undertaking. This includes the ability to make orders to comply with the undertaking, to pay a pecuniary penalty to the Commonwealth, to compensate other people, or to make any other orders the court sees fit, if it is satisfied that the approved participant has breached the undertaking.

 

Item 4B repeals subsection 11(1) and substitutes a new subsection.

 

Current subsection 11(1) states that the Secretary may, by written instrument, delegate their power to approve a participant, to approve a rental dwelling and to decide whether to make an allocation under NRAS, to an SES employee in the Department. However, allocations are no longer being made under NRAS and as such, the Secretary is no longer approving new approved participants or deciding whether to make an allocation. Given this, new delegation instruments are no longer required for the purposes of approving a participant or making an allocation under NRAS.

 

This item substitutes a new subsection to state that the Secretary may still, by written instrument, delegate the Secretary’s power to approve a rental dwelling for the purposes of NRAS, to an SES employee in the Department.

 

Item 5 sets out six application provisions.

 

Subitem 5(1) provides that paragraph 5(a) of the Act ‘obligations of approved participants’ applies to an obligation that arose before, or arises on or after, the day this item commences as the NRAS Regulations already includes matters relating to the obligations of approved participants.

 

Subitem 5(2) provides that paragraph 6(ca) applies to an incentive provided before, on or after the day this item commences. This would allow the NRAS Regulations to provide for the adjustment of an incentive paid and payable in relation to an allocation in a past period. This would assist investors to recover incentives which had not been passed on to them from past periods.

 

Subitem 5(3) provides that paragraph 6(cb) applies to a contribution made by a State or Territory before, on or after the day this item commences.

 

Subitem 5(4) provides that paragraphs 6(f) and (g) applies in relation to an investor, whether the person becomes an investor in NRAS, before, on or after the day this item commences. In other words, the NRAS Regulations may be made to provide for the protection of investors, including existing ones.

 

Subitem 5(5) provides that subsections 7(5), (6) and (7) apply in relation to an allocation that exists on the day this item commences. This is because no new allocations can be made and all allocations would have already been made on the day this item commences.

 

Subitem 5(6) provides that paragraphs 8(ba) and (bb) apply in relation to an allocation that exists on the day this item commences. This is because no new allocations can be made and all allocations would have already been made on the day this item commences.

 

Item 6 is an application provision providing that subsection 7(4) as inserted by item 3 applies to all allocations, including those made before, on or after the day the Schedule commences. New subsection 7(4) provides that subject to some exceptions, the NRAS Regulations can vary conditions of allocation from time to time. The purpose of this application provision is to ensure that any future variation of conditions of allocation will apply to conditions that were in effect before, on or after the commencement of this Schedule, which will mean that different allocations cannot be subject to different conditions.

 

Item 7: Transitional - variation of condition relating to charges of rent

 

This item provides an exception to paragraph 7(6)(a) of the Act so that the NRAS Regulations may vary the condition of an allocation mentioned in subparagraph 7(2)(b)(ii) of the Act for the purposes of the amendment made by item 1 of this Schedule.

 

This would allow the NRAS Regulations to vary existing allocations with the condition that ‘the rent that is charged is at all times during the year at least 20% less than the market value rent for the dwelling’ to the condition that ‘each charge of rent for the rental dwelling during the year is at least 20% less than the market value rent for the dwelling’.

 

Item 8: Transitional - delegation

 

Subsection 11(1) allows the Secretary to delegate their powers to an SES employee in the Department, through a written instrument. This item clarifies that any existing delegation instrument made under subsection 11(1) of the Act that has been in force before the amendment of subsection 11(1) continues to be in force.

 

This clarifies that despite the repeal of the current subsection 11(1), all existing delegation instruments still continue to be in force.

 





STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SCHEDULE 1 - SOCIAL SECURITY AMENDMENTS

SCHEDULE 2 - FAMILY ASSISTANCE AMENDMENTS



These Schedules are 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 Schedules 1 and 2

Schedules 1 and 2 of the Bill establish the Automatic Rent Deduction Scheme (ARDS).  ARDS will enable rent and other social housing tenancy costs to be deducted from social housing tenants’ social security payments, (other than a student start-up loan or an advance), a payment under the ABSTUDY scheme (other than an ABSTUDY student start up loan or an advance) and family tax benefit.  Deductions will then be able to be changed or ceased only by agreement with the tenant’s social housing provider.

ARDS recognises that social welfare payments should be used towards a person’s and their family’s basic needs and is intended to support security of tenure in housing.  It also recognises that a person’s home is an important precondition to their ability to exercise their human rights and their economic, social and cultural rights in particular.

ARDS aims to:

1.     reduce the risk that social housing tenants will accumulate rental arrears and other housing debt risking their tenancies,

2.     reduce the cost of managing social housing arrears and debt, and

3.     better secure the income stream associated with housing assets.

It is a condition of lease in most jurisdictions that public housing tenants use the Department of Human Services provided (voluntary) Rent Deduction Scheme (RDS) to pay their public housing tenancy costs.  In addition, tenancy tribunals often order defaulting tenants to use RDS to pay for rent, rental arrears and property damage.  Similarly, community housing and Indigenous community housing tenants are expected to use the Department of Human Services (DHS) provided Centrepay service to pay their tenancy costs.

Under social security and family assistance law , social security payments and Family Tax Benefit are ‘absolutely inalienable’.  This enables tenants to bypass their social housing provider and cancel their authorised or tenancy tribunal ordered voluntary rent deductions directly with DHS.

This Bill will amend the Social Security (Administration) Act 1999, Social Security Act 1999 and A New Tax System (Family Assistance) (Administration) Act 1999 to provide that social housing tenants will need to negotiate changes to deduction amounts with their social housing provider, which will advise DHS of any changes.

To the extent that the Bill may limit human rights, those limitations are reasonable, necessary and proportionate to achieving the legitimate objective of preventing evictions due to arrears and debt which may force a person, and their children, into homelessness.

Human rights implications

The Bill engages the following Human Rights.

The 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, including social insurance’ . The ICESCR requires a country to, within its maximum available resources, provide a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.

People subject to ARDS will benefit by way of a reduction of their liability to a social housing lessor.  As such, ARDS will be compatible with the right to social security as expressed in the ICESCR.

Although a person’s ability to choose how to spend social welfare payments may be limited, ARDS applies for rent and utility costs that the person is already obligated to pay. ARDS is designed to ensure persons continue to enjoy an adequate standard of living by reducing the risk of arrears build-up which may lead to eviction and possible homelessness.  ARDS also ensures that a deduction can only be made in relation to actual amounts owing, and safeguards are built into ARDS to prevent a deduction that exceeds the amount specified.

Article 26 of the Convention on the Rights of the Child (CRC) also recognises ‘ for every child the right to benefit from social security ’ and that ‘ benefits should, where appropriate, be granted, taking into account the resources and the circumstances of the child and persons having responsibility for the maintenance of the child ’. 

Article 3 of the CRC provides that in all actions concerning children, the best interests of the child must be a primary consideration. ARDS will work to support this by ensuring that rent is paid on time and in full for households living in social housing, including families with children, to prevent rental arrears and potential eviction.

The Bill recognises that recipients of a range of social security payments and family tax benefit have children and that the best interests of children are served when parents responsibly ensure that their welfare benefits are directed towards housing as a primary and basic need. The Bill also aims to reduce pressure on child protection services by maintaining continuity of accommodation through ARDS .

The right to an adequate standard of living including housing

Article 11.1 of the ICESCR states that everyone has the right to ‘an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions’ and that ‘appropriate steps’ be taken to ‘ensure the realization of this right’.

Under ARDS , amounts will be deducted from their social security payments, ABSTUDY or instalments of family tax benefit and directed to their social housing provider to pay costs for rent and utilities payable under the rental agreement.  This will protect people’s social housing tenancies by preventing arrears build-up and reducing the risk of eviction due to arrears or debt.  As such, ARDS is designed to operate to reduce the likelihood of a person becoming homeless and is compatible with and enhancing the right to an adequate standard of living including housing. 

Article 10 of the ICESCR recognises the rights of the family and child to protection and assistance. The introduction of an ARDS seeks to support this objective through ensuring rental payments are made seamlessly and regularly. This will prevent rental arrears, possible eviction, and will assist with a person’s capacity to meet the basic needs of his or her family.

Article 27 of the CRC also recognises ‘the right of every child to a standard of living adequate for the child's physical, mental, spiritual, moral and social development’.  The Article also states that ‘ States Parties, in accordance with national conditions and within their means, shall take appropriate measures to assist parents and others responsible for the child to implement this right and shall in case of need provide material assistance and support programmes, particularly with regard to nutrition, clothing and housing ’.

By ensuring social housing rent is paid, the Bill is compatible with children’s rights to an adequate standard of living by ensuring children of social welfare payment recipients affected by ARDS are at lower risk of being without a home. 

Article 18.2 of the CDC places an obligation on States to render appropriate assistance to parents and legal guardians in the performance of their child-rearing responsibilities. ARDS will work alongside other available support services, to ensure that tenants continue to be housed safely and affordably while they get the help they need to sustain their tenancies.

The right to protection of the family

Article 10 of the ICESCR recognises the rights of the family and child to the widest possible protection and assistance.  The amendments to the Bill protects individuals and families from financial hardship, and ensures that they are able to meet the basic needs of their family, including the need for housing.

The rights of children

Article 27 of the Convention on the Rights of the Child (CRC) recognises ‘the right of every child to a standard of living adequate for the child's physical, mental, spiritual, moral and social development’.  The Article also states that ‘States Parties, in accordance with national conditions and within their means, shall take appropriate measures to assist parents and others responsible for the child to implement this right and shall in case of need provide material assistance and support programmes, particularly with regard to nutrition, clothing and housing’.  Article 3 of the CRC provides that in all actions concerning children, the best interests of the child must be a primary consideration. 

The amendments to the Bill will support this by ensuring that households in social housing, including families with children, are sustaining their tenancies and are protected from financial hardship. 

The right to self-determination

Article 1 of the ICESCR states that ‘all peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development’ ARDS will be compatible with a person’s right to freely pursue their economic, social or cultural development because ARDS is intended to protect the tenancies of persons affected in recognition of the important role housing plays in a person’s ability to economically, socially and culturally develop. 

The right to privacy

Article 17 of the ICCPR provides that no one shall be subjected to arbitrary or unlawful interference with their privacy.  Privacy guarantees a right to secrecy from the public of personal information.  For interference with privacy not to be arbitrary, it must be in accordance with the provisions, aims and objectives of the ICCPR and should be reasonable in the particular circumstances.  Reasonableness in this context incorporates notions of proportionality to the end sought and necessity in the circumstances.

To operate, ARDS will only require limited information to be provided about a person.  The Secretary will be able to act on a request to make a deduction without requiring sensitive information about a person’s tenancy and circumstances being disclosed. 



Conclusion

Schedules 1 and 2 are compatible with human rights.  ARDS will limit people’s capacity to withdraw from arrangements to pay rent and utility costs relating to their social housing to meet their obligations under their leases.

 

To the extent that this may limit human rights those limitations are reasonable, necessary and proportionate to achieving the legitimate objective of preventing evictions due to arrears and debt which may force a person, and their children, into homelessness.



STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

SCHEDULE 3 - NATIONAL RENTAL AFFORDABILITY SCHEME AMENDMENTS

 

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

The Bill expands and clarifies the objects of the National Rental Affordability Scheme Act 2008 (NRAS Act) and the Constitutional powers that support the NRAS Act.  The Bill also expands and clarifies the power to make regulations under the NRAS Act. The National Rental Affordability Scheme (NRAS) is prescribed in the National Rental Affordability Scheme Regulations 2008.  These amendments made by the Bill are technical in nature and do not impact the rights or freedoms of any person.

 

The Bill includes provisions enabling the Secretary of the Department to accept an enforceable undertaking from an “approved participant” in NRAS.  There are 130 approved participants who have allocations in NRAS associated with rental dwellings, who are entitled to receive an annual incentive for 10 years if the conditions of allocation are satisfied. Some approved participants contract with investors, who own rental dwellings, to make the dwellings available to rent as part of NRAS.  The behaviour of some approved participants to investors is undesirable.  For example, some approved participants delay or fail to pass on incentives to investors or make misleading statements to investors.  Under NRAS, investors may request the Secretary to transfer the allocation associated with their rental dwelling in certain circumstances.  Enforceable undertakings are voluntary and will only be given by an approved participant if the approved participant wishes to do so.  An approved participant cannot be required to give an enforceable undertaking.  However, where an enforceable undertaking is given, the Secretary will be able to enforce the undertaking if the Secretary considers that the undertaking has been breached.

 

Enforceable undertakings will provide a further flexible mechanism to enable the Secretary of the Department to act to protect the interests of investors.  The use of enforceable undertakings may reduce the need to transfer allocations in some circumstances.  For example, if the Secretary accepts an enforceable undertaking from an approved participant not to send particular communications to investors that are misleading, the Secretary may decide not to transfer an allocation to another approved participant, even if previous misleading conduct by the approved participant means that a ground for transfer exists.

Human rights implications

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

Of the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights at section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 , this Schedule engages the right to an adequate standard of living, including housing, as referred to in Article 11.1 of the International Covenant on Economic, Social and Cultural Rights (done at New York on 16 December 1966 ([1976] ATS 5)).

This Schedule supports the right to adequate housing, as it is addresses areas of the NRAS Act that lack clarity. This is a beneficial measure as it will enable improvements to be made to the Scheme that can only be realised through changes to the NRAS Act, thereby providing a clear legislative framework for approved participants in the Scheme to continue to deliver more affordable rental accommodation to tenants.

Conclusion

This Schedule is compatible with human rights because it supports the protection of the right to adequate housing.

[Circulated by the authority of the Minister for Families and Social Services, the Hon Paul Fletcher MP]