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Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016



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BILLS DIGEST NO. 26, 2016-17 18 OCTOBER 2016

Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016 Michael Klapdor Social Policy Section This Bills Digest updates earlier digests for the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 and the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015.

Contents

History of the Bill ................................................................. 2

Purpose of the Bill ............................................................... 2

Background ......................................................................... 2

Previous proposals and measures passed ............................... 3

Budget Savings (Omnibus) Act 2016 changes ......................... 3

Savings to be directed towards the Jobs for Families Child Care Package .................................................................. 3

Committee consideration .................................................... 4

Senate Education and Employment Legislation Committee ............................................................................... 4

Senate Standing Committee for the Scrutiny of Bills .............. 4

Committee consideration of the previous Bills ....................... 4

Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 ............................................................... 4

Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 ................................................... 5

Policy position of non-government parties/independents ..... 5

Position of major interest groups ......................................... 6

National Welfare Rights Network ............................................ 6

Australian Council of Social Service ......................................... 6

Australian Council of Trade Unions ......................................... 7

Financial implications .......................................................... 7

Date introduced: 1 September 2016

House: House of Representatives

Portfolio: Social Services

Commencement: Schedule 1 and Part 3 of Schedule 3 on 1 July 2018; Schedule 2 on 1 July 2017; Part 1 of Schedule 3 on 1 July 2016; and Part 2 of Schedule 3 on 1 July 2017.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at

October 2016.

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Statement of Compatibility with Human Rights .................... 7

Parliamentary Joint Committee on Human Rights .................. 7

Key issues and provisions..................................................... 8

Concluding comments ......................................................... 8

History of the Bill Similar measures to those proposed in the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016 (the 2016 Bill) were proposed in two previous Bills. These measures were first contained in the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 (the No. 1 Bill).1 These measures were removed from the No. 1 Bill prior to it being passed by the Parliament on 30 November 2015. The measures were then reintroduced, with some small amendments, in the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 (the No. 2 Bill) on 2 December 2015.2 The No. 2 Bill passed the House of Representatives 10 February 2016 and was introduced to the Senate on 22 February 2016. The No. 2 Bill was not debated in the Senate and lapsed at prorogation on 17 April 2016.

The only significant difference between the 2016 Bill and the No. 2 Bill is that the commencement date for Schedule 2 has been pushed back from 1 July 2016 (in the No. 2 Bill) to 1 July 2017 (in the 2016 Bill).

Purpose of the Bill The 2016 Bill amends the A New Tax System (Family Assistance) Act 1999 (the FA Act), the A New Tax System (Family Assistance) (Administration) Act 1999 and the Social Security Act 1991 (the SS Act) to:

• from 1 July 2018, increase the fortnightly rate of Family Tax Benefit Part A (FTB-A) by $10.08 and increase by $7.48 per fortnight the rate of Youth Allowance for those aged under 18 and living at home, and the rates of Disability Support Pension (DSP) paid to a single recipient aged under 18 who is not living away from their parent’s home due to a medical condition (as well as some related payment rates)

• from 1 July 2017:

- increase the standard rate of Family Tax Benefit Part B (FTB-B) by $1000.10 per year for families whose youngest child is aged under one - reduce the rate of FTB-B for single parents with a youngest child aged 13-16 to $1000.10 per annum (from the 2015-16 rate of $2,784.95 per annum)—single parents aged at least 60 years and grandparent

or great-grandparent carers are exempt from this measure and - remove FTB-B for single parents with a youngest child aged 17 or 18—single parents aged at least 60 years and grandparent or great-grandparent carers are also exempt from this measure and • phase out the FTB-A and FTB-B supplements by:

- reducing the FTB-A supplement from the 2015-16 rate of $726.35 per child to $602.25 for 2016-17, to $302.95 for 2017-18 and removing the supplement from 1 July 2018 and - reducing the FTB-B supplement from the 2015-16 rate of $354.05 per family to $302.95 for 2016-17, to $153.30 for 2017-18 and removing the supplement from 1 July 2018.

Background Background to these measures is provided in the Bills Digest for the No. 1 Bill.3

1. Parliament of Australia, ‘Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 homepage’, Australian Parliament website. 2. Parliament of Australia, ‘Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 homepage’, Australian Parliament website. 3. M Klapdor, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015, Bills digest, 50,

2015-16, Parliamentary Library, Canberra, 18 November 2015.

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Previous proposals and measures passed The No. 1 Bill, as amended and passed, removed FTB-B for couple families whose youngest child was aged 13 years or above (with grandparent and great-grandparent carers exempt). The No. 1 Bill had included the measures proposed in the No. 2 Bill and the 2016 Bill but with a number of important differences:

• single parents aged 60 years or above were not exempt from the FTB-B rate reduction measure, only grandparent carers

• grandparent carer couple families with a youngest child aged 13-16 in receipt of FTB-B were to have their maximum rate reduced to $1000.10 per annum and

• FTB-B was to be removed for all family-types with a youngest child aged 17 or 18.

Budget Savings (Omnibus) Act 2016 changes As part of a deal between the Government and Opposition to secure passage of the Budget Savings (Omnibus) Bill 2016, an income limit of $80,000 was placed on the FTB-A supplement commencing 1 July 2016.4 This means that only families with adjusted taxable income below $80,000 are eligible to receive the FTB-A supplement.

The Government has stated that despite this new limit, it will proceed with the proposal to phase out the supplements altogether via the 2016 Bill.5 It is unclear how the new limit will affect the fiscal impact of the phase-out (given an estimated 380,000 families are no longer eligible for the supplement).6

Another component of this deal was that the Government would not proceed with the increase in FTB-B rates for families whose youngest child is aged less than one year (one component of Schedule 2 of the 2016 Bill).7 This measure had been described as a new ‘baby bonus’.8 This will increase the expected savings from the 2016 Bill. The Parliamentary Budget Office, costing an Australian Labor Party election policy, estimated that not proceeding with the ‘baby bonus’ would save $372.0 million over the forward estimates.9

Savings to be directed towards the Jobs for Families Child Care Package In the 2015-16 Budget, the Government announced a package of child care reforms including a major overhaul of the fee assistance payment system: the Jobs for Families Package. The Government linked additional funding for the package with Family Tax Benefit (FTB) savings proposed in the 2014-15 Budget but stalled in the Senate.10

The measures first proposed in the No. 1 Bill, announced in October 2015, replaced the 2014-15 FTB savings and were again linked with the 2015-16 Budget’s child care package.11

In introducing the 2016 Bill, the Minister for Social Services stated that the Jobs for Families child care package would be funded by the FTB savings in the 2016 Bill.12 The financial impact of the 2016 Bill, as announced, is estimated to be a saving of $5.8 billion over the forward estimates.13 However, the new expenditure provided under the Jobs for Families Child Care Package is expected to be $3.0 billion.14 This provides a net saving of $2.8 billion. The savings from these particular FTB measures will be affected by the amendments in the Budget

4. M Klapdor, ‘Omnibus Bill compromise to find further savings from family payments’, FlagPost, Parliamentary Library blog, 14 September 2016. 5. S Morrison (Treasurer) and M Cormann (Minister for Finance), Government secures support for over $6 billion in budget savings, joint media release, 13 September 2016; D Crowe, ‘Families to wear cost of budget savings deal’, The Australian, 14 September 2016, p. 1. 6. Klapdor, ‘Omnibus Bill compromise to find further savings from family payments’, op. cit. 7. Crowe, ‘Families to wear cost of budget savings deal’, op. cit., p. 1. 8. Ibid.

9. Parliamentary Budget Office (PBO), ‘Appendix F: costing documentation of Labor’s election commitments’, Post-election report of election commitments: 2016 general election, PBO, Canberra, August 2016, p. 183. 10. T Abbott (Prime Minister) and S Morrison (Minister for Social Services), Jobs for Families child care package delivers choice for families, joint media release, 10 May 2015; M Sheppard, ‘Early childhood education and care’, Budget review 2015-16, Research paper series, 2014-15,

Parliamentary Library, Canberra, May 2015, pp. 133-35. 11. C Porter, ‘Second reading speech: Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015’, House of Representatives, Debates, 21 October 2015, p. 11919. 12. C Porter, ‘Second reading speech: Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill

2016’, House of Representatives, Debates, 1 September 2016, pp. 277-80. 13. Explanatory Memorandum, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016, p. 2. 14. Explanatory Memorandum, Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, p. 4.

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Savings (Omnibus) Act 2016 and the decision by the Government to no longer proceed with the new ‘baby bonus’ in Schedule 2 of the 2016 Bill (discussed above).

Committee consideration Senate Education and Employment Legislation Committee The 2016 Bill, together with the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, was referred to the Senate Education and Employment Legislation Committee for inquiry. The Committee tabled its report on 10 October 2016. Details of the inquiry are from the inquiry homepage.15

The report of the Committee noted the inquiries into the No. 1 and No. 2 Bills by the Senate Community Affairs Committee and the key issues held by stakeholders had been established by these inquiries.16 The Committee noted the concern from stakeholders over the coupling of the savings measures in the 2016 Bill with the additional funding for the Jobs for Families Child Care Package but found that this was justified.17 The Committee recommended both Bills be passed without amendment.18

Australian Labor Party (Labor) and Australian Greens (Greens) Senators issued dissenting reports (discussed below in the ‘Policy position of non-government parties/independents’ section).

Senate Standing Committee for the Scrutiny of Bills The Senate Standing Committee for the Scrutiny of Bills had no comment on either the No. 2 Bill or the 2016 Bill.19

Committee consideration of the previous Bills The Senate Community Affairs Committee considered both the No. 1 and the No. 2 Bills.

Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 In regards to the No. 1 Bill, the Committee noted that most submitters and witnesses opposed the proposed changes in the Bill, and had expressed concerns about the changes to FTB-B rates for vulnerable families with children aged over 13 years, the phasing out of the FTB-A and FTB-B supplements and the linking of FTB savings to the Jobs for Families child care package.20 The Government-chaired Committee did not accept these concerns:

• in regards to the changes to FTB-B rates, the Committee report stated:

The committee considers that these changes will provide an incentive for parents to re-engage in the workforce, recognising that as children grow older, parents have increased capacity to participate in the workforce. The committee acknowledges that the Bill contains appropriate safeguards for grandparent carers and single parents who have limited capacity to find employment.

21

• in regards to the phasing out of the FTB-A and FTB-B supplements, the Committee report stated:

The committee recognises that a small proportion of families use the supplement for its original purpose to offset debts incurred as a result of FTB overpayments. The committee is satisfied that under the Single Touch Payroll system, families will be able to more accurately estimate payments and less likely to incur a debt. The committee

15. Senate Education and Employment Legislation Committee, Inquiry homepage for the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, and the Social Services Legislation Amendment (Family Payment Structural Reform and Participation Measures) Bill 2016, The Senate, Canberra, 2016.

16. Senate Education and Employment Legislation Committee, Inquiry into the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016 [Provisions] and the Social Services Legislation Amendment (Family Payment Structural Reform and Participation Measures) Bill 2016 [Provisions], The Senate, Canberra, 10 October 2016, p. 28.

17. Ibid.

18. Ibid., p. 29. 19. Senate Standing Committee for the Scrutiny of Bills, Alert digest, 1, 2016, The Senate, 3 February 2016, p. 40; Senate Standing Committee for the Scrutiny of Bills, Alert digest, 6, 2016, The Senate, 14 September 2016, p. 32. 20. Senate Community Affairs Legislation Committee, Social Services Legislation Amendment (Family Payments Structural Reform and

Participation Measures) Bill 2015 [Provisions], The Senate, Canberra, 30 November 2015, p. 7. 21. Ibid., p. 14.

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also recognises that reducing the number of income support supplements is consistent with the recommendations of the McClure Report to improve the sustainability of Australia's welfare system. 22

• in regards to linking the projected savings to the child care package:

The committee considers that using the savings for this purpose is justified and will contribute to increasing productivity and boosting the participation of parents in the workforce. The committee notes that the combination of these measures, together with the Jobs for Families childcare package, will help to support families to support themselves and reduce their dependence on welfare payments.

23

The Committee also supported the increase to FTB-A fortnightly rates and recommended the Bill be passed.24

Labor and Greens Senators issued dissenting reports. Labor Senators stated that the measures ‘are not linked to child care’ and additional funding for child care ‘should not come out of the pockets of low income families’.25 Labor Senators recommended that only the measure affecting couple families with children aged over 13 years be passed and the rest of the Bill rejected.26 The Greens recommended the Bill in its entirety be rejected.27

Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 In regards to the No. 2 Bill, the Committee believed the modified versions of measures previously proposed in the No. 1 Bill had appropriately addressed concerns regarding the impact on certain vulnerable families (primarily grandparent carers and older parents).28 The committee made almost identical comments to those in its report on the No. 1 Bill in regards to concerns about the changes to FTB-B rates, the phasing out of the FTB-A and FTB-B supplements and linking the savings to the Government’s child care package.29

Again, Labor and Greens Senators issued dissenting reports recommending that the Bill be rejected.30

Policy position of non-government parties/independents Labor has stated that it remains opposed to the measures proposed in the 2016 Bill. Shadow Minister for Families and Social Services, Jenny Macklin, stated:

Changes to family payments include harsh cuts to Family Tax Benefits that will leave a single parent family on $65,000 a year around $3,000 a year worse off … Labor will continue to oppose these unfair cuts to Australian families. 31

In their dissenting report to the Senate Education and Employment Committee’s inquiry into the 2016 Bill, Labor Senators recommended that the Senate reject the Bill and stated that they ‘oppose the idea that low income families should be held to ransom to pay for early education and care changes’.32

22. Ibid., pp. 14-15. 23. Ibid., p. 15. 24. Ibid., p. 14-15. 25. Labor Senators, Dissenting report, Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment

(Family Payments Structural Reform and Participation Measures) Bill 2015 [Provisions], The Senate, Canberra, 30 November 2015, p. 24. 26. Ibid., p. 25. 27. Australian Greens Senators, Dissenting report, Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation

Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 [Provisions], The Senate, Canberra, 30 November 2015, p. 34. 28. Senate Community Affairs Legislation Committee, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 [Provisions], The Senate, Canberra, 1 March 2016, p. 22. 29. Ibid., p. 22. 30. Labor Senators, Dissenting report, Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment

(Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 [Provisions], The Senate, Canberra, 1 March 2016; Australian Greens Senators, Dissenting report, Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015 [Provisions], The Senate, Canberra, 1 March 2016. 31. J Macklin (Shadow Minister for Families and Social Services), Zombie measures rise again … in the 45th Parliament, media release,

1 September 2016.

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The Greens made commitments in the 2016 Election to oppose Coalition ‘cuts to family payments’ and to actually reverse cuts that had already been made.33 In their dissenting report to the Senate Education and Employment Committee’s inquiry into the 2016 Bill, Greens Senators recommended that the 2016 Bill be rejected.34

Senator Jacqui Lambie has not commented on the 2016 Bill but previously indicated, in regards to the No. 1 and No. 2 Bill, that she would not support any cuts to family payments.35

It is unclear what the position of the other crossbench senators is in regards to the 2016 Bill.

Position of major interest groups National Welfare Rights Network The National Welfare Rights Network (NWRN) stated in its submission to the Senate Education and Employment Committee’s inquiry into the 2016 Bill that it continues to oppose the measures. NWRN stated:

Even with the modest increase for FTB Part A, they represent a significant cut in the disposable incomes of low income households, especially for single parents with children aged 13 and over. This comes on top of a series of cuts already affecting the incomes of families, especially the poorest families reliant on income support payments …

The cumulative impact will be particularly great for single parents on Newstart Allowance with children aged 13 and over, including those moved onto Newstart by the former Government in 2013. In short, the Government continues to place the burden of Budget repair disproportionately on the poorest and vulnerable members of our community.

36

Australian Council of Social Service The Australian Council of Social Service (ACOSS), in its submission to the Committee inquiry into the 2016 Bill, recommended that the Bill be rejected in its current form. ACOSS stated:

The numbers affected and the extent of the income losses mean that the changes are likely to lead to an increase in child poverty, noting child poverty is already concentrated in single parent families. There are already 600,000 children living below the poverty line. 37

ACOSS also argued that replacing the two-tiered FTB-B payment with four tiers of payment rates ‘could hardly be called a simplification of the family payments system, nor a reform which improves targeting to need’.38 ACOSS also criticised the Government for not releasing any distributional analysis of the impact of the proposed changes.39

32. Labor Senators, Dissenting report, Senate Education and Employment Legislation Committee, Inquiry into the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016 [Provisions] and the Social Services Legislation Amendment (Family Payment Structural Reform and Participation Measures) Bill 2016 [Provisions], The Senate, Canberra, 10 October 2016, pp. 39-40.

33. Australian Greens, Equality and compassion: lifting income support, Australian Greens policy document, Election 2016. 34. Australian Greens Senators, Dissenting report, Senate Education and Employment Legislation Committee, Inquiry into the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016 [Provisions] and the Social Services Legislation Amendment (Family Payment Structural Reform and Participation Measures) Bill 2016 [Provisions], The Senate, Canberra, 10 October 2016, p. 46.

35. J Lambie, ‘Adjournment: Federal Assistance Grants, Pensions and Benefits, Veterans’ Affairs’, Senate, Debates, 1 December 2016, pp. 9541- 9542. 36. National Welfare Rights Network, Submission, no. 23, to the Senate Education and Employment Legislation Committee, Inquiry into the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, and the Social Services Legislation Amendment

(Family Payment Structural Reform and Participation Measures) Bill 2016, 22 September 2016, p. 5. 37. Australian Council of Social Service, Submission, no. 29, to the Senate Education and Employment Legislation Committee, Inquiry into the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, and the Social Services Legislation Amendment

(Family Payment Structural Reform and Participation Measures) Bill 2016, September 2016, p. 4. 38. Ibid., p. 5. 39. Ibid. p. 5.

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Australian Council of Trade Unions In its submission to the committee inquiry into the 2016 Bill, the Australian Council of Trade Unions (ACTU) stated:

… in our view it is highly inequitable for the Government to target the most vulnerable members of our society in order to provided much-needed support for early learning and development. The reduction in FTB Part B and abolition of end of year supplements will substantially reduce household income for low income and vulnerable families including single parents and families of children with disability and is likely to increase the number of Australian families living below the poverty line.

40

The ACTU is ‘fundamentally opposed’ to funding the child care package by cutting family tax benefit and other supports for families.41

Financial implications The financial impact of the 2016 Bill, as announced, is estimated to be a saving of $5.8 billion over the forward estimates.42

As noted above, one recently legislated measure and one announced change will affect these estimates. Firstly, the new income limit on the FTB-A supplement provided for by the Budget Savings (Omnibus) Act 2016 will reduce the expected savings from the phasing out of the supplement. It is unclear by how much. Secondly, as part of the deal to secure passage of the Budget Savings (Omnibus) Act 2016, the Government announced that it would no longer proceed with the increase in FTB-B rates for families with a youngest child aged less than one year. This will increase the net savings from the 2016 Bill. A costing by the Parliamentary Budget Office of a Labor election commitment to not proceed with this FTB-B rate change suggested it would save $372.0 million over the forward estimates.43

The savings are intended to be directed towards the Jobs for Families child care package. However, as noted above, the estimated savings from the 2016 Bill are greater than the $3.0 billion in additional funding provided for the child care package.

Statement of Compatibility with Human Rights As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the 2016 Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Statement of Compatibility with Human Rights states that the 2016 Bill engages with the right to social security under Article 9 of the International Covenant on Economic, Social and Cultural Rights, as well right of the child to benefit from social security under Article 26 of the Convention on the Rights of the Child.44 The Government considers that the 2016 Bill is compatible as any changes that limit access to social security are ‘reasonable and proportionate.45

Parliamentary Joint Committee on Human Rights The PJCHR reported on the No.1 and the No. 2 Bills and found that the Statements of Compatibility did not sufficiently justify the limitations on human rights for the purposes of international human rights law.46 The PJCHR requested further information from the Minister for Social Services. The Minister responded in regards to

40. Australian Council of Trade Unions, Submission, no. 21, to the Senate Education and Employment Legislation Committee, Inquiry into the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Bill 2016, and the Social Services Legislation Amendment (Family Payment Structural Reform and Participation Measures) Bill 2016, 22 September 2016, p. 1.

41. Ibid.

42. Explanatory Memorandum, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016, p. 2. 43. PBO, ‘Appendix F: costing documentation of Labor’s election commitments’, op. cit. 44. The Statement of Compatibility with Human Rights can be found at page 12 of the Explanatory Memorandum to the 2016 Bill. Explanatory

Memorandum, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2016, pp. 12-20. 45. Ibid.

46. See M Klapdor, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015, Bills digest, no. 65, 2015-16, Parliamentary Library, Canberra, 19 January 2016, pp. 5-6.

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the No. 1 Bill in a letter providing further reasoning behind the limitations. The PJCHR accepted these justifications and the compatibility of the measures in the No. 1 Bill as introduced.47

The Parliamentary Joint Committee on Human Rights (PJCHR) reported on the 2016 Bill in its seventh report of 2016.48 It noted its assessments of the previous Bills and thanked the Minister for Social Services for including the additional information it requested in regards to the No. 1 Bill in the statement of compatibility for the 2016 Bill.49

Key issues and provisions For analysis of the key issues see the Bills Digest for the No. 1 Bill.50

The provisions in the 2016 Bill are essentially the same as those previously proposed in the No. 2 Bill. The only significant difference between the 2016 Bill and the No. 2 Bill is that the commencement date for Schedule 2 has been pushed back from 1 July 2016 (in the No. 2 Bill) to 1 July 2017 (in the 2016 Bill).

Concluding comments The measures proposed in the 2016 Bill remain contentious amongst the main welfare and community groups. With the Government’s announcement that it would no longer proceed with the increase in FTB-B rates for families with a youngest child aged under one year (part of Schedule 2 of the 2016 Bill), all FTB-A and FTB-B recipients will, over time, receive reduced payments. This is because the increases in maximum FTB-A rates (proposed in Schedule 1) are more than offset by the soon-to-be phased-out FTB-A supplements. Single parents in receipt of FTB-B with older children will be particularly affected through the combined reduction in FTB-B rates, and the withdrawal of the FTB-A and FTB-B supplements.

The FTB program has been a key target in the Government’s quest for budget savings. The FTB-A and FTB-B reductions in the 2016 Bill are further to already legislated family payment savings measures in the previous Parliament, and the recent measures introduced via the Budget Savings (Omnibus) Act 2016.51 The No. 1 Bill provided $525.5 million in FTB savings over the forward estimates.52 The Budget Savings (Omnibus) Act 2016 included measures to derive more than $2 billion in savings from the FTB program.53 The 2016 Bill, as introduced, seeks a further $5.8 billion in savings. While around $3.0 billion is to be diverted to funding the Jobs for Families child care program, the Government will still stand to net significant savings.

The key issue is whether the Government can secure support for these savings given they will arise from reduced assistance to families.

47. Parliamentary Joint Committee on Human Rights, Thirty-seventh report of the 44th Parliament, 2 May 2016, pp. 53-57. 48. Parliamentary Joint Committee on Human Rights, Report, 7, 2016, The Senate, 11 October 2016, pp. 95-96. 49. Ibid.

50. Klapdor, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015, op. cit. 51. Klapdor, ‘Omnibus Bill compromise to find further savings from family payments’, op. cit. 52. Revised Explanatory Memorandum, Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015, p. 1.

53. Klapdor, ‘Omnibus Bill compromise to find further savings from family payments’, op. cit.

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