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2002
THE
PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
FAMILY AND
COMMUNITY SERVICES LEGISLATION AMENDMENT (AUSTRALIANS WORKING
TOGETHER
AND OTHER 2001 BUDGET MEASURES)
BILL 2002
EXPLANATORY
MEMORANDUM
(Circulated by
authority of the Minister for Family
and
Community Services,
Senator the Hon Amanda
Vanstone)
FAMILY AND COMMUNITY
SERVICES LEGISLATION AMENDMENT (AUSTRALIANS WORKING
TOGETHER
AND OTHER 2001 BUDGET MEASURES)
BILL 2002
This Bill gives effect to the “Australians Working
Together” package of measures announced as part of the 2001 Budget. The
Bill also gives effect to other Budget measures as set out below.
From 20 September 2002, people on specified income
support payments who are undertaking approved language, literacy and numeracy
training programs will be paid a fortnightly supplement of $20.80 to help with
the incidental costs associated with the training. The specified income support
payments are newstart allowance, youth allowance, parenting payment, mature age
allowance, widow allowance, partner allowance and disability support
pension.
From 28 April 2003, the working credit will improve
employment incentives for workforce age income support customers. The main
feature is to allow customers to build up credits at times when they have little
or no income, which they can use to reduce later earnings under the income test.
There will be a simpler and more consistent approach to measuring income from
employment for all workforce age customers. It will also be easier for
workforce age customers to resume their income support payments if they lose
their job within 12 weeks after those payments stop.
From 1 July 2003, people receiving parenting payment
whose youngest child is aged 13 to 15 years will be subject to a participation
requirement to help them prepare for a return to work and to help them access
services to acquire or improve their work skills. The requirement will be to
undertake one or more activities such as job search, education, training or
community work for up to 150 hours in a 6 month
period.
The new participation requirement will
not apply to parents caring for a child with a serious
disability.
The Personal Support Programme (PSP) replaces and
expands the Community Support Program from 1 July
2002.
The PSP will assist people who have
multiple non-vocational barriers such as homelessness, drug and alcohol
problems, mental illness or domestic violence. These people are generally not
able to participate in employment-related activities nor can they benefit from
employment assistance because of their barriers. The PSP will encourage social
as well as economic participation by establishing outcomes that match
participant’s individual abilities, capacity and
circumstances.
The PSP will be an activity
available under the activity test for newstart allowance and youth allowance and
will be an activity that can be included in a person’s activity agreement.
PSP will also be an activity that can be included in a person’s parenting
payment participation agreement from 1 July 2003.
From 1 July 2003, there will be no new entrants
to mature age allowance or partner allowance. Instead, newstart allowance will
be available to working aged people who would have qualified for those payments,
along with full access to support services and programs to help them increase
their economic and social engagement.
Customers
who are receiving mature age allowance or partner allowance at the
implementation of this measure will be ‘saved’ on those payments
while their payment remains current.
Under this
measure, mature age allowance will be completely phased out by 2008 and partner
allowance by 2020.
This measure introduces more flexible arrangements for
newstart allowance claimants and recipients who are aged at least 50. The
measure involves a more flexible approach to the application of the activity
test and provides access to an expanded range of services and programs to help
maximise economic and social participation.
A
participation agreement will be negotiated with new claimants and current
recipients who are aged at least 50 which will set out those activities that the
person agrees to undertake, or participate in, during the life of the agreement.
While the proposed new participation framework maintains the current focus on
economic participation for those with the capacity to undertake paid work, it
also provides the flexibility to accommodate those with limited prospects of
employment in the short-term.
In effect, this
new approach will mean that activities that would not previously have been
considered appropriate for newstart allowance purposes might now be accepted
activities.
If, without a reasonable excuse, a
person fails to comply with the terms of the agreement, then an appropriate
penalty will be applied. Significantly, where a person ‘rectifies’
that failure, it will be possible for any residual amount of the penalty to be
waived.
The measure also provides for people
aged at least 50 who are complying with agreement (which does not require the
person to undertake job search) to be able to travel overseas for a period not
exceeding 26 weeks.
The measure also maintains
and clarifies the intended operation of the provisions dealing with the liquid
assets test waiting period.
|
|
Total Outlays $m
|
|
||||||
|
Element
|
2001-02
|
2002-03
|
2003-04
|
2004-05
|
4 year
|
|||
|
Language Literacy and Numeracy
|
0.8
|
5.8
|
6.8
|
7
|
20.4
|
|||
|
Working Credit
|
10.5
|
60.5
|
171.9
|
189.7
|
432.6
|
|||
|
Participation Requirements for Parents
|
18.1
|
58.5
|
82.6
|
92.1
|
251.3
|
|||
|
Personal Support Programme
|
2.7
|
7.7
|
17.7
|
33.8
|
61.9
|
|||
|
Mature Aged (Close MAA/PA and
Participation)
|
2.6
|
21.9
|
56.2
|
65.7
|
146.4
|
|||
|
|
|
|
|
|
|
|||
|
Total
|
34.7
|
154.4
|
335.2
|
388.3
|
912.6
|
|||
Other 2001 Budget
measures
Research into homelessness
indicates that, for many families who become homeless, there is a lead-up period
in which they frequently move house and experience financial crisis.
Through the new Family Homelessness Prevention and Early
Intervention Pilot, families at risk of homelessness will be identified using
Centrelink data, with the aim of preventing homelessness, unmanageable debt and
other forms of crisis.
Amendments are made to
enable Centrelink customer data to be used for this purpose. The amendments
become operative on 1 July 2002.
Total funding
for the Family Homelessness Prevention and Early Intervention Pilot is estimated
to be $5.0 million over 3 years.
FAMILY AND COMMUNITY SERVICES
LEGISLATION AMENDMENT (AUSTRALIANS WORKING
TOGETHER
AND OTHER 2001 BUDGET MEASURES)
BILL 2002
Clause 1 sets out how the Act is to be cited, that
is, the Family and Community Services Legislation Amendment (Australians
Working Together and other 2001 Budget Measures) Act
2002.
Clause 2 provides a table that
sets out the commencement dates of the various sections in and Schedules to the
Act.
Clause 3 provides that each Act
that is specified in a Schedule is amended or repealed as set out in that
Schedule.
For ease of description, this
explanatory memorandum uses the following
abbreviations:
“Social Security
Act” means the Social Security Act 1991;
and
“Administration Act” means the
Social Security (Administration) Act 1999.
Schedule 1 – Parenting Payment
Participation Agreements
From 1 July 2003, most people receiving parenting payment
whose youngest child is aged 13 to 15 years will be subject to a participation
requirement to help them prepare for a return to work and to help them access
services to acquire or improve their work skills. The requirement will be to
undertake one or more activities such as job search, education, training or
community work for up to 150 hours in a 6 month period. It would be open to the
Secretary and person to negotiate a lesser requirement, having regard to the
person’s circumstances.
A participation
agreement will set out those activities that the person agrees to undertake, or
participate in, during the life of the
agreement.
The new participation requirement
will not apply to parents caring for a child with a serious
disability.
A participation agreement may be varied to take account of
changes in a person’s circumstances. The variation could involve a change
in the types of activities that the person agrees to undertake, or participate
in, or the number of hours of activity required under a participation agreement.
There may be occasion where a person’s participation agreement becomes
irrelevant and another participation agreement needs to be
negotiated.
As a general proposition, a
person’s compliance with his or her participation agreement will be tested
every 6 months. It is at this time that a decision will be made about whether
the person has complied with his or her obligations under the agreement. The
usual reasonableness standards will apply in making such a
determination.
If the person has not complied
with his or her requirements under a participation agreement, the requirements
were appropriate and the person does not have a reasonable excuse for the
failure, then an appropriate penalty will be applied. The person’s
compliance will then be monitored at shorter intervals until the person starts
to comply. Compliance with the terms of an agreement will trigger waiver of a
breach penalty applicable to the person in specified circumstances.
There will be no administrative breach
penalties applicable to parenting payment customers (as is the case
now).
Parents, both partnered and sole, who remain out of the
workforce and on income support for long periods often face great difficulty in
returning to the workforce later on when children are older, due to lack of
recent experience, skills, contacts and confidence. This can create a
significant risk of poverty and long term welfare dependence for both themselves
and their children.
Departmental research has
shown that over half the sole parents on parenting payment when their youngest
child turns 16 are still on income support 5 years later, and that children
who grow up in families reliant on income support are more likely to become
reliant on income support themselves as young
adults.
Further, a pilot study of parenting
payment customers revealed that a third with teenage children had not thought
about what they would do when their youngest child turned 16 and they were no
longer qualified for parenting payment. In the same study, only a third of
customers with teenage children agreed to plan economic activity and only a
third of those subsequently followed through on that
agreement.
While the voluntary Jobs, Education
and Training program has been very successful for participants, customers most
in need of help are least likely to access voluntary
programs.
The Helping Parents Return to Work
measure is designed to assist parenting payment customers by encouraging and
helping them to prepare to return to work as children grow older. Parents with
a youngest child aged 6 or over will have an annual participation planning
interview to help them plan for a return to work. This will be done under
existing provisions in the Administration Act. Parents with a youngest child
aged 13-15 will need to do an activity (of 150 hours over a six month
period, averaging about 6 hours per week) to help them prepare to return to
work. Schedule 1 to the Bill makes the relevant amendments to the social
security law.
Explanation of
changes
Part 1 – Amendment of
the Social Security Act 1991
Items 1 to 6 inclusive amend the general
definitions in subsection 23(1) of the Social Security
Act.
The definition of “approved program
of work for unemployment payment” (colloquially known as work for the dole
program) is repealed.
In its place a new
definition of “approved program of work for income support payment" is
inserted. This new definition is the same as its predecessor – it is the
name of the program that has changed to reflect its accessibility to parenting
payment customers. As parenting payment is not an “unemployment
payment”, a name change was
warranted.
The definition of “approved
program of work supplement” is amended to include a reference to new
section 503A which provides for the payment of the supplement to parenting
payment customers who undertake work for the dole
programs.
Several new definitions are also
inserted into subsection
23(1).
“Participation agreement”
will mean an agreement entered into in accordance with a requirement under
new section 501A.
“Participation
agreement breach non-payment period” will mean a participation agreement
breach non-payment period applied to a person under new section
500ZA.
“Participation agreement
breach rate reduction period” will mean a participation agreement breach
rate reduction period applied to a person under new section
503B.
Technical amendments are made by item 7 to various
provisions in section 28 of the Social Security Act and to the heading of
section 28. These amendments reflect the name change from “approved
program of work for unemployment payment” to “approved program of
work for income support payment”.
Section 500 of the Social Security Act sets
out the qualification conditions for parenting
payment.
Item 8 adds another
qualification condition under which a person must satisfy a requirement to enter
into a participation agreement that applies to the person under new Division
2. This new Division sets out the rules relating to parenting payment
participation agreements.
A person who fails to
satisfy this requirement would not qualify for PP. The consequence under
section 80 of the Administration Act would be cancellation or suspension of
payment. Section 118 of the Administration Act would then apply to set the date
of effect of the decision to cancel/suspend. All things being equal, the date
of effect would be the day on which the determination is made or such later day
as is specified in the determination.
In
practice, a person’s PP payment would be suspended for up to 13 weeks. If
qualification/payability is not resumed within the 13 week period, payment would
be cancelled.
If, within that 13 week period,
the person enters into a participation agreement, then the person’s
qualification for parenting payment would be taken, for the purposes of new
paragraph 500(1)(c), never to have ceased. This would enable payment to be
fully restored from the date of suspension. New subsection 500(4),
inserted by item 9, has this
effect.
Otherwise, the person will need to
re-establish qualification and payability through the normal claim process
(payment having been cancelled after 13 weeks) in order to be paid
parenting payment again.
The decision to
cancel/suspend payment would be subject to the usual review
processes.
Item 10 changes the heading
of Subdivision B of Division 1 of Part 2.10. This is a minor consequential
amendment.
Item 11 inserts a new
Subdivision C that sets out the rules relating to payability of parenting
payment where there is a participation agreement
breach.
Under new section 500ZA, PP is
not payable to a person who is qualified for PP while a participation agreement
breach non-payment period applies to the person. The consequence of a loss of
payability in this situation would be suspension or cancellation of payment (in
accordance with section 80 of the Administration
Act).
A participation agreement breach
non-payment period would apply to a person
if:
• the person fails to take reasonable
steps to comply with the terms of the person’s participation agreement
(the latest breach); and
• the latest
breach is the person’s third or subsequent participation agreement breach
within the last 2 years.
New section
500ZB defines a “participation agreement breach” for the
purposes of the 2 year rule as a failure to take reasonable steps to comply with
the terms of a participation agreement that is in force in respect of the
person.
Under new subsection 500ZC(1),
the length of a participation agreement breach non-payment period is 8
weeks.
If, at the time that a participation
agreement breach non-payment period commences, the person is already subject to
a participation agreement breach non-payment period, the pre-existing
non-payment period is taken to end immediately before the commencement of the
participation agreement breach non-payment period (new subsection
500ZC(2) refers). This rule takes account of the potential for overlapping
non-payment periods.
New subsection
500ZC(3) provides for the waiver of a non-payment period in certain
circumstances. The new waiver rule operates as
follows.
A person’s participation
agreement non-payment period is to be waived from the date it commenced if the
person starts or resumes taking reasonable steps to comply
with:
• the terms of a current
participation agreement; or
• if the
person does not have such an agreement, the participation agreement that was in
force when the non-payment period
commenced;
not more than 13 weeks after the
non-payment period commenced.
This waiver would
not only apply to the current participation breach non-payment period but also
any other breach penalty period that commenced within 13 weeks before the
person’s compliance activity starts or
resumes.
For the purposes of new subsection
500ZC(3), a “breach penalty period” includes a participation
agreement breach rate reduction period and a participation agreement breach
non-payment period (new subsection 500ZC(4) refers). Both of these
concepts are defined in subsection 23(1) of the Social Security
Act.
The waiver would apply to the penalty but
not the breach (which would continue to count as a prior breach for the purposes
of determining the appropriate penalty for any subsequent
breach).
New section 500ZD provides for
the start of a participation agreement breach non-payment
period.
If a participation agreement breach
non-payment period applies to a person, the Secretary must give the person a
written notice telling the person of the start of the period. The notice must
tell the person why a participation agreement breach non-payment period is being
applied.
The participation agreement breach
non-payment period would then start on the day on which the notice is given to
the person.
However, if parenting payment
ceases to be payable to the person for a different reason before the
participation agreement breach non-payment period would otherwise start, then
the non-payment period starts on the day on which parenting payment ceases to be
payable for that other reason.
New section
500ZE deals with the interaction between a participation agreement breach
rate reduction period and a participation agreement breach non-payment
period.
Situations will arise where a person
who is serving a participation agreement breach rate reduction period will be
subject to a participation agreement breach non-payment period. Where this
happens, the breach periods should run concurrently during the period of
overlap, with the non-payment period prevailing for that period.
However, any participation agreement breach rate reduction period
that would otherwise apply at the end of the participation agreement breach
non-payment period is effectively
waived.
Item 12 inserts a new
Division 2 into Part 2.10 of the Social Security Act. The new Division sets
out the rules relating to parenting payment participation agreements.
There will be three basic requirements in respect of
parenting payment participation agreements. These requirements, as set out in
new subsection 501(1) are as
follows.
• A person must enter into a
participation agreement when required by the Secretary to do
so.
• The person must be taking
reasonable steps to comply with the terms of the person’s participation
agreement while the agreement is in
force.
• At any time when the person is a
party to a participation agreement, the person must be prepared to enter into
another participation agreement instead of the existing agreement if required to
do so by the Secretary.
The concept of taking
reasonable steps to comply with the terms of a participation agreement are
defined in some detail in the remaining provisions in new section
501.
The test of taking reasonable steps to
comply with the terms of a participation agreement would be satisfied if the
person has attempted in good faith and to the best or his or her ability to
comply or the terms of the agreement were inappropriate for the person. This
test acknowledges that a person may not be able to comply with the terms of an
agreement because the terms were inappropriate when the agreement was first
negotiated or, because of a change in circumstances, the terms have become
inappropriate such that it would be unreasonable to expect the person to comply.
Where terms are inappropriate, the Secretary would have the power to vary terms
under new subsection 501B(5).
In looking
at the appropriateness of terms, the Secretary is to have regard to the
person’s capacity to comply with the terms and the person’s needs.
In having regard to a person’s capacity to comply and the person’s
needs, the Secretary is to take into
account:
• the person’s education,
experience, skills, age and physical
condition;
• the state of the labour
market in the area where the person
lives;
• the participation opportunities
available to the person (this would include consideration of the availability of
education, training, employment and community support services and voluntary
work options);
• family and caring
responsibilities; and
• any matters that the Secretary considers relevant
in the circumstances.
These factors are
consistent with the factors that the Secretary is required to consider in
approving the terms of a participation
agreement.
Finally, the Secretary cannot
determine that a person has failed to take reasonable steps to comply with the
terms of an agreement unless reasonable steps have been taken to contact the
person concerned, and regard is had to any reasons for non-compliance provided
by the person.
New section 501A sets out
the requirement to enter into a participation
agreement.
Under new subsection 501A(1),
the new participation requirement would apply to a person claiming or receiving
parenting payment whose youngest PP child has turned 13 years. The concept of a
“PP child” is defined in sections 500D to 500H of the Social
Security Act.
However, the requirement would not apply to an exempt
person. The concept of an exempt person is then defined in new subsection
501A(2) as a person who has:
• a PP
child who is a “profoundly disabled child” within the meaning of
section 197 of the Social Security
Act;
• 2 or more PP children who are
disabled children and who, in the Secretary’s opinion, require a level of
care at least equivalent to the level of care required by a profoundly disabled
child; or
• a PP child assessed as having a “recognised
disability”, as specified in a determination made under subsection 38D(3)
of the Social Security Act (currently in Schedule 3 to the Child Disability
Assessment Determination 2001).
The
exceptions in new subsection 501A(2) draw on the qualification rules for
carer payment contained in section 197 and subsection 198(8) and carer allowance
in subparagraph 953(1)(c)(i) of the Social Security Act.
Under new subsection 501A(3), the Secretary may
require a person to enter into a new agreement instead of the existing
agreement. This could be for reasons such as a breach of terms of an existing
agreement or a finding of inappropriate terms. These reasons are set out in new
subsection 501A(4) – the list in this new provision is not
exhaustive.
There are notice requirements that
apply where a person is required to enter into a participation agreement. These
are set out in new subsection 501A(5). The person concerned must be
given written notice of the requirement, the places and times at which the
agreement is to be negotiated and information about the effect of a failure to
comply with the requirement.
New section
501B deals with the nature and terms of a participation
agreement.
A participation agreement is to be in writing and in a
form approved by the Secretary. It is an agreement between the person and the
Secretary and that sets out the activities the person has agreed to do. A
person can be required to undertake up to 150 hours of approved
activities in a 6 month period.
A participation
agreement can include one or more of a specified suite of activities approved by
the Secretary – these activities are listed in new subsection
501B(2) as:
(a) job
search;
(b) a vocational or pre-vocational training
course;
(c) training that would help in searching
for work;
(d) paid
work;
(e) measures designed to eliminate or reduce
any disadvantage or barriers the person has in relation to obtaining
work;
(f) voluntary participation in a work for the
dole program;
(g) participation in a labour market
program;
(h) participation in the
PSP;
(i) participation in a rehabilitation
program;
(j) a course of
education;
(k) another activity regarded by the
Secretary as suitable and which is agreed to by the Secretary and the
person.
Examples of paragraph (e) above could
be literacy training, health rehabilitation, personal or relationship
counselling, budgeting or financial
counselling.
In considering what terms to
include in a person’s participation agreement, the Secretary is to have
regard to the person’s capacity to comply with the proposed terms and the
person’s needs. This is to be done by considering the following
matters:
• the person’s education,
experience, skills, age and physical
condition;
• the state of the labour
market in the area where the person
lives;
• the participation opportunities
available to the person (this would include consideration of the availability of
education, training, employment and community support services and voluntary
work options);
• family and caring
responsibilities; and
• any matters that the Secretary considers relevant
in the circumstances.
Under new subsection
501B(5), a participation agreement with a
person:
• may be varied or suspended by
the Secretary;
• if another participation
agreement is made with the person – may be cancelled by the
Secretary;
• may be reviewed from time to
time by the Secretary at the request of either party to the agreement;
and
• may be cancelled by the Secretary
after a review.
Under new subsection
501B(6), a person will be required to tell the Secretary of any
circumstances that might effect the person’s compliance with his or her
participation agreement. Where this happens, the Secretary would be able to
review the terms of the agreement or negotiate another more appropriate
agreement thereby avoiding an unnecessary
breach.
New subsection 501B(7) sets out
the circumstances in which a person cannot participate in an approved program of
work for income support payment (colloquially known as work for the dole
program), despite having volunteered for the
program.
An approved program of work for income
support payment cannot be included as a term in a person’s participation
agreement if:
• the Secretary is
satisfied that there is medical evidence that the person has an illness,
disability or injury that would be aggravated by the conditions in which the
work would be performed or that performing the work in those conditions would
constitute a risk to health or safety or would contravene an occupational health
and safety law; or
• the program of work
requires the person to move from a home in one place to a home in another
place.
Under new subsection 501B(8), a
person is not to be taken, merely by participating in an approved program of
work for income support payment in accordance with the terms of a participation
agreement, to be:
(a) an employee within the
meaning of section 9 of the Occupational Health and Safety (Commonwealth
Employees) Act 1991; or
(b) an employee within
the meaning of section 5 of the Safety, Rehabilitation and Compensation Act
1988; or
(c) an employee for the purposes of
the Superannuation Guarantee (Administration) Act 1992;
or
(d) an employee for the purposes of the
Workplace Relations Act 1996.
Similar
provisions apply in relation to participation in an approved program of work for
income support payment under newstart allowance and youth
allowance.
New section 501C outlines the
circumstances in which a person is taken to fail to enter into a participation
agreement. This will occur where a person unreasonably delays entering into an
agreement by:
• failing to attend
negotiation of the agreement;
• failing
to respond to correspondence about the
agreement;
• failing to agree to terms
proposed by the Secretary; or
• any other
reason;
and the person is given a notice that
he or she is taken to have failed to enter into a participation
agreement.
The notice must be in writing, set
out the reasons for the decision to give the notice and include a statement
about the person’s review rights.
Item
13 inserts a new heading after the heading to Division 4 of Part 2.10 of the
Social Security Act. This is a technical amendment that places existing section
503 and new section 503A under the new heading of new Subdivision A -
Rate of Parenting Payment.
Item 14
inserts two new sections into new Subdivision A. These are new
sections 503A and 503AA.
New section 503A provides for the payment of an
approved program of work supplement to a person who is receiving parenting
payment and who is participating in an approved program of work for income
support payment (colloquially known as a work for the dole program). The amount
of the supplement is $20.80 per fortnight for each fortnight during which the
person participates in the program.
However,
new section 503AA ensures that an approved program of work supplement
cannot be paid to a person in respect of a particular fortnight if a pensioner
education supplement under Part 2.24A of the Social Security Act or under
ABSTUDY is payable to the person for one or more days in that
fortnight.
Item 14 also inserts a new Subdivision B
that deals with rate reductions following a participation agreement
breach.
Under new section 503B, a
failure to take reasonable steps to comply with the terms of a participation
agreement will impact on a person’s rate of PP if the breach is the
person’s first or second such breach (ie, failure to comply with terms)
within a period of 2 years. The impact on rate is in the form of a rate
reduction period.
The penalty for a third or
subsequent breach in a 2 year period is non-payment for 8 weeks (see new
section 500ZA).
New section
503C provides for the duration of a participation agreement breach rate
reduction period.
The length of a participation
agreement breach rate reduction period is 26 weeks (new subsection
503C(1) refers).
If, at the time that the
participation agreement breach rate reduction period commences, the person is
already subject to a participation agreement breach rate reduction period, the
pre-existing rate reduction period is taken to end immediately before the
commencement of the participation agreement breach rate reduction period. This
rule in new subsection 503C(2) takes account of the potential for
overlapping rate reduction periods where there are 2 participation agreement
breaches in a period of 26 weeks.
New
subsection 503C(3) provides for the waiver of a rate reduction period in
certain circumstances. The new waiver rule operates as
follows.
A person’s participation
agreement rate reduction period is to be waived from the date it commenced if
the person starts or resumes taking reasonable steps to comply with the
person’s participation agreement within 13 weeks after the start of the
person’s rate reduction period.
This
waiver would not only apply to the current participation breach rate reduction
period but also any other breach penalty period that commenced within 13 weeks
before the person’s compliance starts or
resumes.
For the purposes of this provision, a
“breach penalty period” includes a participation agreement breach
rate reduction period and a participation agreement breach non-payment period
(new subsection 503C(5) refers). Both of these concepts are then defined
in subsection 23(1) of the Social Security
Act.
If the person starts or resumes taking
reasonable steps to comply with the terms of the person’s participation
agreement more than 13 weeks after the start of the rate reduction period, then
whatever remains of the rate reduction period is waived from the time that those
reasonable steps are taken. This is the effect of new
subsection 503C(4).
The waiver would
apply to the penalty but not the breach (which would continue to count as a
prior breach for the purposes of determining the appropriate penalty for any
subsequent breach).
New section 503D
provides for the start of a participation agreement breach rate reduction
period.
Under new subsection 503D(1), if
a participation agreement breach rate reduction period applies to a person, the
Secretary must give the person a written notice telling the person of the start
of the period. The participation agreement breach rate reduction period would
start on the day on which the notice is given to the person (new subsection
503D(2) refers).
However, if parenting
payment ceases to be payable to the person before a participation agreement
breach rate reduction period would otherwise start, then the rate reduction
period starts on the day on which parenting payment ceases to be payable (new
subsection 503D(3) refers).
New section
503E provides for the calculation of a person’s rate where a
participation agreement breach rate reduction period
applies.
The person’s rate of PP for the
rate reduction period would be determined as
follows:
The first step would be to work out
the person’s “maximum payment rate” of
PP.
If the person is not a member of a couple,
the person’s “maximum payment rate” would be the sum
of:
• person’s maximum basic rate
as determined under Module B of the Parenting Payment Rate Calculator in
section 1068A; and
• the amount of
the person’s pension supplement determined under Module BA of the
Parenting Payment Rate Calculator in
section 1068A.
If the person is a member
of a couple, the person’s “maximum payment rate” would be the
person’s maximum basic rate as determined under Module C of the
Parenting Payment Rate Calculator in
section 1068B.
The second step would be to
work out the rate reduction amount. If the participation agreement breach is
the person’s first participation agreement breach in the previous
2 years, then the rate reduction amount would be the maximum payment rate
multiplied by 0.18. If the participation agreement breach is the person’s
second participation agreement breach in the previous 2 years, then the
rate reduction amount would be the maximum payment rate multiplied by
0.24.
The third step would be to take the
reduction amount away from the person’s rate of PP worked out in
accordance with the Parenting Payment Rate Calculator in Part 3.6A of the Social
Security Act – the result would be the participation agreement breach
reduced rate.
A new heading would be inserted
after new section 503E, that is, Subdivision C – Accumulation of
parenting payments by CDEP Scheme Participants. Existing section 504N
would come under this new
heading/subdivision.
Items 15 to 34
inclusive make technical amendments to various provisions, headings and notes in
the youth allowance and newstart allowance payment modules. These changes
reflect the name change from “approved program of work for unemployment
payment” to “approved program of work for income support
payment”. They do not have a substantive
effect.
Item 35 amends the qualification
conditions for special benefit in subsection 729(2) of the Social Security
Act. These amendments ensure that a person cannot qualify for special benefit
in the following circumstances:
• where
the person is qualified for parenting payment but the payment is not payable to
the person because the person has failed to comply with the terms of his or her
participation agreement; and
• where the person is not qualified for parenting
payment because the person has failed to enter into a parenting payment
participation agreement.
Similar provisions
currently apply to youth allowance and newstart allowance customers who are
disqualified from payment, or to whom payment is not payable, because of an
activity test breach.
Items 36 and 37
make a number of consequential amendments to subsection 1223(7) of the
Social Security Act. Subsection 1223(7) sets out when an add-on amount is a
debt owed to the Commonwealth. At present, the provision covers the situation
where a person who is receiving YA or newstart allowance has their rate
increased by an approved program of work supplement when the rate should not
have been so increased. Where this happens, the amount of approved program of
work supplement is a debt.
Amendments are made
to subsection 1223(7) so that it also applies where a person who is receiving PP
has their rate increased by an approved program of work supplement when the rate
should not have been so increased. The same consequence would
follow.
The note at the end of this provision
is also repealed.
Part 2 – Amendment of the Social
Security (Administration) Act 1999
Part 2 of the Bill makes a number of consequential
amendments to the Administration Act necessary as a result of the introduction
of new participation requirements for parents. These amendments ensure
consistency between the way that youth allowance and newstart allowance activity
agreements are dealt with in the Administration Act and how the new
participation agreements will be
covered.
Grant of
claim
Section 37 of the Administration
Act provides for the grant of a claim. In some situations, a claim can be
granted despite the claimant not being qualified for payment or an amount not
being payable to the claimant. For example, a claim for youth allowance can be
granted where the claimant is qualified, or expected to qualify, but payment is
not payable because the claimant is subject to an activity test non-payment
period, an activity test breach rate reduction period which reduced the
claimant’s rate to nil or in other specified circumstances (subsection
37(6) of the Administration Act refers). Subsection 37(2) is a similar
provision that applies in relation to claims for newstart
allowance.
Item 38 inserts a similar
rule for parenting payment claims. New subsection 37(1A) allows a
claim for parenting payment to be granted if the Secretary is satisfied
that:
• the person is qualified, or is
expected to be qualified, for the payment; and
• the payment would be payable, apart from either
the application of a participation agreement breach non-payment period or the
application of a participation agreement breach rate reduction period where the
claimant’s rate of parenting payment is reduced to
nil.
Review of
decision
Part 4 of the Administration
Act deals with review of decisions.
Item
39 makes a technical amendment to subsection 127(2) of the Social Security
Act to reflect the name change from “approved program of work for
unemployment payment” to “approved program of work for income
support payment”. This change is not substantive in
nature.
Section 131 of the Administration Act
enables the Secretary to make a declaration to continue payment pending the
outcome of an internal review. Under the existing rules, this power can be
exercised in relation to a decision
where:
• the decision is adverse (that
is, a decision to cancel or suspend payment or reduce the rate of payment);
and
• the decision depends on the
exercise of a discretion or is a decision that would result in the application
of an activity test non-payment period;
and
• a person applies to the Secretary
for internal review of the adverse
decision.
Item 40 extends the operation
of section 131 so that the power to make a declaration continuing payment
pending review can also be exercised where the adverse decision would result in
the application of a participation agreement breach non-payment
period.
Item 41 defines the concept of
“participation agreement breach non-payment
period”.
Section 132 of the
Administration Act requires the Minister to make guidelines relating to the
exercise, by the Secretary, of the discretion to continue payment to
person’s who are subject to an activity test non-payment period pending
the outcome of internal review.
Item 42
amends section 132 to enable Ministerial guidelines to be made in relation to
payments to person’s who are subject to a participation agreement breach
non-payment period.
Section 133 provides for
the continuation of payment of youth allowance where a person applies for
internal review of a decision that the person has failed to enter into a youth
allowance activity agreement (because the person has failed to agree to terms
proposed by the Secretary). Section 134 is a similar provision that applies to
newstart allowance.
Item 43 inserts
new section 132A which is the equivalent rule for a parenting payment
customer who seeks internal review of a decision that the person has failed to
become a party to a participation agreement because of failing to agree to the
terms proposed by the Secretary (see new
subparagraph 501C(1)(b)(iii) of the Social Security
Act).
Section 140 of the Administration Act
makes it clear that certain decisions relating to the terms of an activity
agreement are covered by Subdivision B of Division 3 (and therefore subject to
review by the Social Security Appeals Tribunal (the SSAT)). Item 44
ensures that decisions relating to activities included in a participation
agreement are also be covered in section
140.
Section 143 of the Administration Act sets
out application requirements relating to applications to the SSAT for review of
decisions relating to activities in a youth allowance or newstart allowance
activity agreement. Item 45 inserts a new subsection 143(1A) that
provides similar application requirements for SSAT review of decisions relating
to the terms of a participation
agreement.
Section 145 of the Administration
Act enables the Secretary to make a declaration to continue payment pending the
outcome of review by the SSAT. Under the current provision, this power can be
exercised in relation to a decision
where:
• the decision is adverse (that
is, a decision to cancel or suspend payment or reduce the rate of payment);
and
• the decision depends on the
exercise of a discretion or is a decision that would result in the application
of an activity test non-payment period;
and
• a person applies to the SSAT for
review of the adverse decision.
Item 46
extends the operation of section 145 so that the power to make such a
declaration can also be exercised where the adverse decision would result in the
application of a participation agreement breach non-payment
period.
Section 146 of the Administration Act
requires the Minister to make guidelines relating to the exercise, by the
Secretary, of the discretion to continue payment to person’s who are
subject to an activity test non-payment period pending the outcome of SSAT
review.
Item 47 amends section 146 to
enable Ministerial guidelines to be made in relation to payments to
person’s who are subject to a participation agreement breach non-payment
period.
Section 147 of the Administration Act
provides for the continuation of payment of youth allowance where a person
applies to the SSAT for review of a decision that the person has failed to enter
into a youth allowance activity agreement (because the person has failed to
agree to terms proposed by the Secretary). Section 148 is a similar provision
that applies to newstart allowance.
Item
48 inserts new section 146A which is the equivalent rule for a
parenting payment customer who seeks internal review of a decision that the
person has failed to become a party to a participation agreement because of
failing to agree to the terms proposed by the
Secretary.
Section 150 of the Administration
Act sets out the powers of the SSAT in reviewing a decision relating to the
terms of a youth allowance or newstart activity agreement. The SSAT has the
power to affirm the decision or to set it aside and remit the matter back to the
Secretary for reconsideration. The SSAT cannot substitute its own
terms.
Item 50 amends section 150 so
that a similar restriction operates where the SSAT reviews a decision relating
to the activities in a participation
agreement.
Sections 149 and 151 of the
Administration Act make consequential amendments as a result of the rule in
section 150. Items 49 and 51 make similar consequential amendments to
these provisions as a result of the insertion of new paragraph
150(aa).
Section 152 excludes activity
agreement decisions from its operation. Item 52 creates the same
effect for participation agreement
decisions.
Section 153 of the Administration
Act provides for the date of effect of SSAT review decisions relating to the
terms of a youth allowance or newstart activity agreement. The same date of
effect rules would also apply to SSAT decisions relating to the activities in a
participation agreement by virtue of the amendment made by item
53.
Schedule 2 – Language, literacy
and numeracy supplement
From 20 September 2002, people on specified income support
payments who are undertaking approved language, literacy and numeracy training
programs will be paid a fortnightly supplement of $20.80 to help with the
incidental costs associated with the
training.
The specified income support payments
are newstart allowance, youth allowance, parenting payment, mature age
allowance, widow allowance, partner allowance and disability support
pension.
This measure assists with the additional costs associated
with undertaking language, literacy and numeracy
training.
Poor language, literacy or numeracy
skills make it more difficult to get a job. This training is necessary to help
people with these difficulties to re-enter the workforce and gain valuable
day-to-day living skills.
People on income
support are likely to need extra financial assistance to help with the
incidental costs of attending language, literacy and numeracy training. This
measure will encourage and support people whilst they undertake that
training.
Part 1 – Amendment of the
Social Security Act
New Part 2.21A of the Social Security Act (as inserted by item 1) will provide for the new language, literacy and numeracy supplement.
New Division 1 of Part 2.21A (new section
1047) defines a “designated social security payment” as meaning
a disability support pension, mature age allowance (under Part 2.12B of the
Social Security Act), newstart allowance, parenting payment, partner allowance,
widow allowance and youth allowance.
People who
are receiving a designated social security payment while undertaking approved
language, literacy and numeracy training will qualify for the new language,
literacy and numeracy supplement.
New
Division 2 of Part 2.21A provides the qualification rules for the new
supplement.
Under new section 1048, a person qualifies for the
supplement in a particular fortnight if the person is receiving a designated
social security payment in respect of that fortnight and is attending the
language, literacy and numeracy program administered by the Department of
Education, Science and Training for one or more days during the
fortnight.
New Division 3 of Part 2.21A
sets out the payability rules for the new
supplement.
New section 1049 sets out
the circumstances in which the supplement is not payable.
The supplement is not payable to a person in
respect of a particular fortnight if:
• a
pensioner education supplement under Part 2.24A or under ABSTUDY is also payable
for part or all of that fortnight (see new subsection
(1));
• an approved program of work
supplement is payable to the person in respect of that fortnight (see new
subsection (2)); or
• a CDEP Scheme Participant Supplement is payable to the person in respect of that fortnight (see new subsection (2)).
New subsection 1049(3) ensures that a person can
only receive one language, literacy and numeracy supplement in a given
fortnight.
New subsection 1049(4) makes
it clear that attendance at a language, literacy and numeracy course can be
voluntary or can be required under the activity test or an agreement under the
Social Security Act.
New Division 4
provides for the rate of the new language, literacy and numeracy
supplement.
Under new section 1050, an
amount of $20.80 is to be added to a person’s rate of payment for each
fortnight in which a person is qualified to receive the supplement and nothing
in new section 1049 precludes payability of the supplement in that
fortnight.
Items 2 and 3 make
consequential amendments to subsection 1223(7) of the Social Security Act to
enable a debt to arise where a person’s rate of payment is increased by
the new supplement when it should not have been so increased.
Item 4 inserts a new section 12B into the
Administration Act.
Under new section
12B of the Administration Act, a person will not be required to claim the
new language, literacy and numeracy supplement. Appropriate records will be kept
by Centrelink to trigger payment automatically without the need for a separate
claim process.
The new language, literacy and numeracy supplement will be
tax exempt. In broad terms, this is achieved by including the supplement within
the definition of “supplementary amount” in section 52-15 of the
Income Tax Assessment Act 1997 (the ITAA). Supplementary amounts
are then exempted from income tax by operation of section 52-10 of the
ITAA.
To this end, item 5 repeals the
table in section 52-15 of the ITAA and reinserts a new table. The language,
literacy and numeracy supplement is included as a “supplementary
amount” (along with existing supplementary amounts) for all social
security designated payments.
The opportunity
has also been taken to make some minor technical changes to the table so that it
accurately reflects the supplementary amounts that are available in respect of
the different social security payments. For example, incentive allowance is not
available to special beneficiaries. This is reflected in the new
table.
Section 52-40 of the ITAA lists social
security payments that are wholly or partly exempt from tax and corresponding
provisions in the Social Security Act. Item 22A in the Table in section 52-40
refers to pensioner education supplement under Part 2.27 of the Social Security
Act. This Part reference is incorrect – pensioner education supplement is
paid under Part 2.24A. Item 6 makes this
correction.
Item 7 makes it clear that
these amendments to the taxation legislation apply in relation to assessments
for the first tax year ending after commencement of the new supplement and for
all following tax years.
Schedule 3 – Personal Support
Programme
The Personal Support Programme (PSP) will replace and
expand upon the Community Support Program from 1 July
2002.
In legislative terms, PSP will replace
CSP as an activity available under the activity test and one that can be
included in a person’s activity
agreement.
New penalty waiver rules will ensure
that a breach penalty does not apply while a person is participating in the
PSP.
The PSP will be introduced from 1 July
2002.
In broad terms, the PSP will assist
people with multiple non-vocational barriers to employment such as homelessness,
drug and alcohol problems, domestic violence or mental illness. These are
people who, because of their personal circumstances, are generally unable to
benefit from the employment assistance currently available. The new programme
will not only focus on employment outcomes but will also help participants to
stabilise their lives and enable them to become involved and contribute to the
community over time.
PSP will replace the
Community Support Program (CSP) as an activity available under the activity test
and one that can be included in a person’s activity
agreement.
The activity testing arrangements
for PSP customers will be administered sensitively, having regard to the
multiple barriers faced by these customers and with a view to ensuring that
individual circumstances and any reasons for a failure to comply are fully
considered before a breach decision is
made.
The Department of Family and Community
Services will administer the new programme.
The
PSP will ultimately replace the existing CSP. However, the PSP is a different
programme to the CSP. Some of the key changes to the programme include: an
increase in the number of people in the programme (from 15,000 places in the CSP
to 45,000 participants in the PSP by 2004-2005); an increase in the level of
funding; and expanding the customer base to include people on other payments
apart from newstart allowance and youth allowance (although participation will
be voluntary for these other groups).
CSP is a
2 year programme. While there will be no new referrals to the CSP once PSP
commences on 1 July 2002, CSP will continue to have a presence in the
social security law until mid 2004. This is because CSP providers will be
required to provide assistance to participants for up to 2 years after referrals
to the CSP.
From 1 July 2002, Department of
Family and Community Services will also administer the CSP (the program is
currently administered by the Department of Employment, Workplace Relations and
Small Business to this Department).
Part 1 – Amendment of the
Social Security Act
Items 1 and 2 amend the general definitions in
subsection 23(1) of the Social Security
Act.
The definition of CSP is amended so as to
reflect the new administrative arrangements for the program after 1 July
2002.
A definition of PSP is inserted into
subsection 23(1). PSP is defined as the programme known as the Personal Support
Programme administered by the Department of Family and Community
Services.
Items 3, 4 and 5 amend various
provisions in section 541 (activity test for youth
allowance).
New subsection
541(1A) is inserted into the Social Security Act. Under this provision, a
person satisfies the activity test in respect of a period if, throughout the
period, the person is participating in the
CSP.
Subparagraph 541(2)(c)(v) of the Social
Security Act provides that participation in an activity that is included in the
CSP is a possible requirement under the youth allowance activity test. This
provision is replaced by a requirement that the person participate in the
PSP.
Paragraph 544B(1)(ia) enables an activity
approved by the Secretary under the CSP to be a term in a person’s youth
allowance activity agreement. This provision is repealed by item 6 and
replaced by a new paragraph under which participation in the PSP will be a
possible term in a person’s youth allowance activity
agreement.
Subparagraph 549A(5)(a)(ia) provides
that a liquid assets test waiting period for youth allowance can be waived if a
person has started an activity approved by the Secretary under the CSP. Item
7 provides a similar waiver rule where a person starts participating in the
PSP. The reference to CSP is omitted because there will be no new starts on the
CSP after 30 June 2002.
Under subparagraph 553B(2)(a)(ia), the 26 week non-payment
that applies to a youth allowance customer who moves to an area of low
employment prospects may be waived if the person has started an activity
approved by the Secretary under the CSP. Item 8 replaces this provision
with a similar waiver rule which applies where a person starts to participate in
the PSP. Again, reference to CSP is omitted because there will be no new starts
on the CSP after 30 June 2002.
A seasonal work
preclusion period applies if a person claiming youth allowance, or the
person’s partner, has been engaged in seasonal work at any time during the
6 months immediately preceding the date of claim. The duration of the seasonal
work preclusion period is determined under section 16A of the Social
Security Act.
If a person is subject to a
seasonal worker preclusion period, the person also has an
“employment-related exclusion”. Youth allowance is not payable
while an employment related exclusion
applies.
However, under subsection 553C(4)
of the Social Security Act, a person can be exempted from the application of an
employment-related exclusion during a seasonal work preclusion period if the
person starts formal vocational training in a labour market program or a
rehabilitation program. Item 9 amends this provision so that this
exemption also applies where the person has started to participate in the PSP.
This item also makes a consequential change to the heading of
subsection 553C(4).
Subparagraph
598(8)(a)(ia) provides that a liquid assets test waiting period for newstart
allowance may not apply to a person while the person is undertaking an activity
approved by the Employment Secretary under the CSP. Item 10 restructures
paragraphs 598(8)(a) and (b) so that the waiver rule continues to apply to
people who are participating in the CSP and also applies to people participating
in the PSP.
Under subparagraph 601(2)(a)(iv) of
the Social Security Act, participation in an activity approved by the Employment
Secretary under the CSP is a possible requirement under the newstart allowance
activity test. Item 11 replaces this requirement with a requirement that
a person participate in the PSP. The reference to CSP is no longer required as
there will be no new referrals to the CSP from 1 July 2002.
Item 12 inserts a new subsection 601(6A) to
the effect that a person satisfies the activity test for newstart allowance
while the person is participating in the
CSP.
Paragraph 606(1)(fb) enables an activity
approved by the Employment Secretary under the CSP to be a term in a
person’s Newstart Activity Agreement. Item 13 replaces this
provision with a similar rule covering participation in the PSP as a possible
term in a newstart activity agreement.
Under
subparagraph 620(2)(a)(ia), an ordinary waiting period for newstart allowance
may not apply to a person while the person is undertaking an activity approved
by the Employment Secretary under the CSP. Item 14 restructures
paragraphs 620(2)(a) and (b) so that the waiver rule continues to apply to
people who are participating in the CSP and also applies to people who are
participating in the PSP.
Under subparagraphs
624(2)(a)(ia), 625(2)(a)(ia) and 626(2)(a)(ia), specified activity test
penalties may not apply to a person while the person is undertaking an activity
approved by the Employment Secretary under the
CSP.
Items 15, 16, 17, 18, 19 and 20
retain these rules for CSP (albeit in a modified form), given that people can
continue to participate in the CSP after 1 July 2002. In addition, new
provisions are inserted into sections 624, 625 and 626 to enable an
activity test penalty period applicable under these provisions to be fully
waived once a person starts to participate in the PSP. The waiver would
continue irrespective of whether or not the person completed the
programme.
Section 633 of the Social Security
Act provides that newstart allowance is not payable to a person who is subject
to a seasonal work preclusion period. However, under subsection 633(4), a
person who starts formal vocational training in a labour market program or
rehabilitation program can be exempted from the preclusion period.
Item 21 amends subsection 633(4) to ensure that a
similar waiver may apply where a person has started to participate in the
PSP.
Subparagraph 634(2)(a)(ia) provides that
the 26 week non-payment that applies to a newstart allowance customer who moves
to an area of low employment prospects may not apply while the person is
undertaking an activity approved by the Employment Secretary under the CSP.
Item 22 amends and restructures paragraphs 634(2)(a) and (b) so that
the waiver rule continues to apply to people who are participating in the CSP
and also applies to people who are participating in the PSP.
Part 2 – Amendment of the Social Security Act (Administration) 1999
Section 63 of the Administration Act enables the
Secretary to require a social security claimant or recipient to attend an office
of, or contact, the Department (or Centrelink), attend a particular place for a
particular purpose, or give information to the
Secretary.
If a person fails to comply with a
requirement under section 63, payment becomes not payable and, in the case of
newstart allowance and youth allowance, an administrative breach rate reduction
period applies. Payment can then only be fully restored if the person
subsequently provides a reasonable excuse for the failure. Subsequent
attendance or contact is not a reasonable excuse for the initial failure.
Payment can be restored at a reduced rate due to the application of an
administrative breach rate reduction period where the person does not have a
reasonable excuse for the failure.
Items 23
and 24 amend section 63 of the Administration Act so that youth allowance or
newstart allowance customers who are subject to a requirement to participate in
the PSP are not subject to an administrative breach rate reduction period for
failing to comply with a requirement under section
63.
The effect is as
follows.
If a person who is subject to a
requirement to participate in the PSP fails to comply with a requirement under
section 63, then allowance will not be payable to the person and payment will be
suspended. If payability is re-established at some point within 13 weeks of
suspension of payment (eg, when the person makes contact with Centrelink to
discuss their payment), then section 85 of the Administration Act can be used to
restore payment from the date that payability is re-established. As suspension
of payment will ordinarily occur after the day on which the person fails to
comply with their requirement under section 63 (ie, the day on which payment is
not payable), there is potential for full restoration of payment upon contact
being made. This potential exists whether or not the person had a reasonable
excuse for the initial failure.
Under paragraph 127(2)(a) of the Administration Act, a
decision made by the Employment Secretary approving an activity under the CSP
cannot be reviewed by the Secretary. This provision is not longer required and
is therefore repealed by item 25.
Schedule 4 - Closure of access to mature
age allowance
and partner
allowance
From 1 July 2003, there will be no new entrants to
mature age allowance or partner allowance. Instead, newstart allowance will be
available to working aged people who would have qualified for those payments,
along with full access to support services and programs to help them increase
their economic and social engagement.
Customers
who are receiving mature age allowance or partner allowance at the
implementation of this measure will be ‘saved’ on those payments
while their payment remains current. If payment is cancelled, the customer will
not be able to return to either of these
payments.
Under this measure, mature age
allowance will be completely phased out by 2008 and partner allowance by
2020.
This measure is consistent with the McClure’s Report
suggested approach of payment simplification for older customers, with the
removal of relatively arbitrary boundaries (eg age and gender) between activity
tested and non-activity tested
payments.
Non-activity tested allowees can face
a greater risk of long term dependence on income support payments than activity
tested customers as there are no specific measures in place to require,
encourage and facilitate participation by this group. Long term dependence on
income support in the twenty years prior to retirement can lead to erosion of
skills and assets, the risk of isolation from the community and lower income and
poorer health in retirement. By making newstart allowance the appropriate
payment for this group, activity requirements are introduced and the alignment
of conditions such as waiting periods and access to services is
progressed.
Many of those affected by this
measure will have had limited contact with the labour market in recent years
– the approach that has been adopted recognises the varying circumstances,
skills, levels of social and economic participation and aspirations of older
people. The changes introduced in Schedule 5 recognise the need for increased
flexibility in the types of activities that will be acceptable for people who
need to access newstart allowance as a result of this
measure.
People who are currently receiving
either mature age allowance or partner allowance when the measure commences will
be able to stay on that payment while they remain eligible for the payment.
This measure does not impose any additional requirements on people who are on
either of the relevant non-activity tested payments.
Item 1 replaces the existing Division 1 heading,
‘Preliminary’, with the heading ‘Application of
Part’.
Item 2 inserts new
section 660YAB which deals with time limits on claims for mature age
allowance. The basic effect of new subsection 660YAB(1) is
to close off access to mature age allowance from 1 July 2003 by
creating two requirements in order for a person to be granted mature age
allowance.
Firstly, paragraph 660YBA(1)(a)
provides that a person cannot be granted mature age allowance unless the
person’s claim for the allowance is lodged before 1 July 2003 or
the person’s claim is taken to have been made before that date due to the
operation of sections 12, 13 or 15 of the Administration
Act.
In broad terms, sections 12, 13 and 15 set
out certain situations where a claim can be taken to have been made by a person.
For example, section 13 is generally concerned with situations where a person
contacts the Department (including by post, phone or fax) in relation to a claim
for a social security payment and subsequently lodges an actual claim for the
payment within 14 days after the Department was contacted. In those
circumstances (and when the other stipulated requirements are met), the person
is taken to have made a claim for the payment on the day on which the Department
was contacted. Accordingly, where a person contacts the Department prior to
1 July 2003 in relation to a claim for mature age allowance and then
lodges a claim for that allowance within 14 days (and meets any other
requirements of section 13), the person may be taken to have made a claim for
mature age allowance before 1 July 2003, even though the actual claim
was not lodged until after
1 July 2003.
Secondly, the effect of
new paragraph 660YBA(1)(b) is that, to be granted mature age allowance,
the person must also be qualified for the allowance either on the date of
lodgement of the claim or, where subparagraph 660YAB(1)(a)(ii) applies, on
the date that the person is taken to have made the
claim.
In broad terms, existing section 35 of
the Administration Act provides that a person who is in gaol or undergoing
psychiatric confinement may make a claim up to 3 weeks before the person’s
expected release date.
Subsection 37(7) states
that the Secretary must determine that a claim under section 35 is to be granted
if each of the requirements in paragraphs 37(7)(a) to (e) are
satisfied.
Paragraph (e) requires that the
payment must be expected to be payable to the claimant immediately after the
claimant is released from gaol or psychiatric
confinement.
The purpose of new subsection
660YAB(2) is to make it clear that mature age allowance is not to be granted
to a person based on a claim pursuant to section 35 if the date from which the
allowance would be payable would be on or after
1 July 2003.
In general terms, section 85 of the Administration
Act allows the Secretary to reconsider an earlier decision that a person’s
social security payment has ceased to be payable or is to be cancelled or
suspended. If the Secretary is satisfied that, because of that earlier
decision, the person is not receiving a social security payment that is (or was)
payable to the person, the Secretary is to determine that the payment is (or
was) payable.
The purpose of new subsection
660YAB(3) is to make it clear that the operation of section 85 is not
affected by the operation of new section 660YAB. What that means in
practical terms is that a person who has lost entitlement to mature age
allowance as a result of an incorrect decision will not be prevented from again
receiving that payment following a reconsideration by the Secretary of the
earlier decision, even if that reconsideration takes place on or after
1 July 2003. That is, if, on or after 1 July 2003, a
person’s mature age allowance is cancelled inappropriately, the Secretary
would be able to ‘resume’ the person’s mature age allowance if
the requirements of section 85 were satisfied. As new
subsection 660YAB(1) is concerned with ‘granting’ of mature
age allowance, the operation of section 85 is not restricted by the operation of
new subsection 660YAB(1).
Item 3 inserts new Division 1A which
contains new section 771 which deals with time limits on claims for
partner allowance. The basic effect of new subsection 771(1)
is to close off access to partner allowance from 1 July 2003 by
creating two requirements in order for a person to be granted that
allowance.
Firstly, paragraph 771(1)(a)
provides that a person cannot be granted partner allowance unless the
person’s claim for the allowance is lodged before 1 July 2003 or
the person’s claim is taken to have been made before that date due to the
operation of sections 12, 13 or 15 of the Administration
Act.
In broad terms, sections 12, 13 and 15 set
out certain situations where a claim can be taken to have been made by a person.
For example, section 13 is generally concerned with situations where a person
contacts the Department (including by post, phone or fax) in relation to a claim
for a social security payment and subsequently lodges an actual claim for the
payment within 14 days after the Department was contacted. In those
circumstances (and when the other stipulated requirements are met), the person
is taken to have made a claim for the payment on the day on which the Department
was contacted.
Accordingly, where a person
contacts the Department prior to 1 July 2003 in relation to a claim
for partner allowance and then lodges a claim for that allowance within 14 days
(and meets any other requirements of section 13), the person may be taken to
have made a claim for partner allowance before 1 July 2003, even
though the actual claim was not lodged until after
1 July 2003.
Secondly, the effect of
new paragraph 771(1)(b) is that, to be granted partner allowance, the
person must also be qualified for the allowance either on the date of lodgement
of the claim or, where subparagraph 771(1)(a)(ii) applies, on the date that the
person is taken to have made the claim.
In
broad terms, existing section 35 of the Administration Act provides that a
person who is in gaol or undergoing psychiatric confinement may make a claim for
payment up to 3 weeks before the person’s expected release
date.
Subsection 37(7) states that the
Secretary must determine that a claim under section 35 is to be granted if each
of the requirements in paragraphs 37(7)(a) to (e) are satisfied. Paragraph
(e) requires that the payment must be expected to be payable to the claimant
immediately after the claimant is released from gaol or psychiatric
confinement.
The purpose of new subsection
771(2) is to make it clear that partner allowance is not to be
granted to a person based on a claim pursuant to section 35 if the date from
which the allowance would be payable would be on or after
1 July 2003.
In general terms, section 85 of the Administration
Act allows the Secretary to reconsider an earlier decision that a person’s
social security payment has ceased to be payable or is to be cancelled or
suspended. If the Secretary is satisfied that, because of that earlier
decision, the person is not receiving a social security payment that is (or was)
payable to the person, the Secretary is to determine that the payment is (or
was) payable.
The purpose of new subsection
771(3) is to make it clear that the operation of section 85 is not
affected by the operation of new section 771. What that means in
practical terms is that a person who has lost entitlement to partner allowance
as a result of an incorrect decision will not be prevented from again receiving
that payment following a reconsideration by the Secretary of the earlier
decision, even if that reconsideration takes place on or after
1 July 2003. That is, if, on or after 1 July 2003, a
person’s partner allowance is cancelled inappropriately, the Secretary
would be able to ‘resume’ the person’s partner allowance if
the requirements of section 85 were satisfied. As new subsection 771(1)
is concerned with ‘granting’ of partner allowance, the operation of
section 85 is not restricted by the operation of new subsection
771(1).
Schedule 5 – Flexible
participation requirements for
mature age
newstart allowees
From 1 July 2003, there will be no new entrants to
mature age allowance or partner
allowance.
People who would formerly have been
eligible for these payments will be able to claim newstart allowance, with a
more flexible approach to the application of the activity test and access to an
expanded range of services and programs to help them maximise their economic and
social participation. However, it is recognised that some of the people who
would previously have received mature age allowance or partner allowance may
have limited workforce capacity at the present
time.
Accordingly, while the proposed new
participation framework maintains the current focus on economic participation
for those with the capacity to undertake paid work, it also provides the
flexibility to accommodate those with limited prospects of employment in the
short-term.
New claimants and current
recipients will be interviewed to assess their workforce capacity, to identify
any barriers that might exist in relation to their economic or social
participation and to refer them to relevant services where appropriate. In
effect, this new approach will also mean that activities that might not
previously have been considered as appropriate in order to receive payment of
newstart allowance might now be accepted
activities.
A participation agreement will be
negotiated with the person which will set out those activities that the person
agrees to undertake, or participate in, during the life of the
agreement.
As with other Newstart Activity
Agreements, a participation agreement will be able to be varied to take account
of changes in a person’s circumstances. The variation could involve a
change in the types of activities that the person agrees to undertake, or
participate in, or the number of hours of activity required under a
participation agreement.
There may be occasion
where a person’s participation agreement becomes irrelevant and another
participation agreement needs to be
negotiated.
If the person has not complied with
his or her obligations under a participation agreement and the person does not
have a reasonable explanation for the failure, then an appropriate penalty will
be applied, as is currently the case. Where a person ‘rectifies’ a
breach, it will be possible for any residual amount of a breach penalty
applicable to the person to be waived.
The
measure also provides for people aged at least 50 who are complying with a
Newstart Activity Agreement (which does not require the person to undertake job
search) to be able to travel overseas for a period not exceeding 26 weeks. This
approach is in line with the intention to introduce more flexible arrangements
for allowees aged at least 50 and is similar to existing portability rules
applying to people who receive mature age allowance or partner
allowance.
The measure also maintains and
clarifies the intended operation of the liquid assets test waiting period by
making it clear that, except in cases where incapacity is relevant, the relevant
questions for the purposes of the liquid assets test are ‘when did the
person, or the person’s partner, cease work or cease full time education
or vocational training’.
Background
In Recommendation B5, the McClure Report referred to the
desirability of linking income support and participation assistance more
closely.
The common thread underpinning recent
research outcomes is that there are large numbers of mature age and older
Australians participating, or willing to participate, in a broad range of
activities. It is the remainder that do not participate, or see themselves as
“retired” (if unemployed and on income support between the ages of
50 and 65), that are at greatest risk of long term disengagement from social and
economic activity.
There are no losers from
this measure. The measure assists older people on income support to improve
their labour market prospects through assessment of barriers, development of a
Participation Plan and referrals to programs. Additional places are to be made
available in funded programs. The measure also recognises the circumstances,
skills, levels of social and economic participation and aspirations of older
people.
In general terms, one of the qualification criterion for
newstart allowance is that the person is ‘unemployed’. It is
recognised that some people who are affected by this initiative may not be able
to meet the usual meaning of that term as applied by Tribunals and Courts for
the purposes of the social security law. This would present an immediate
barrier to those people when first endeavouring to gain access to newstart
allowance.
The purpose of item 1 is to
remove that barrier where it would be inappropriate. To achieve that outcome,
new subsection 595(1A) operates to allow a person to be treated as
unemployed where the requirements specified in that subsection are
met.
The first requirement of subsection (1A)
is that the person is at least 50 years old. The second requirement can be
satisfied in either of two ways. Firstly, it will be satisfied if the person
has not been required to enter into a Newstart Activity Agreement. It may also
be satisfied if the person has been required to enter into such an agreement and
the Secretary is satisfied that the person is not unreasonably delaying entering
into that agreement.
Subject to new
subsection 595(1B), where the above requirements are met, the Secretary may
treat the person as unemployed if the Secretary is satisfied it is appropriate
to do so.
Once the person has actually entered
into an activity agreement, the effect of existing subsection 595(2) is that the
person may be treated as unemployed if the person is complying with the
agreement.
At present, a person who is engaged
in, for example, self employment or full time employment would not be able to
qualify for newstart allowance as the person would not be able to satisfy the
qualification criterion relating to being ‘unemployed’. Without
new subsection 595(1B), new subsection 595(1A) would potentially
operate to allow people engaged in self employment or full time remunerative
work to qualify for newstart allowance. This would be an undesirable
consequence and is not intended.
Accordingly,
new subsection 595(1B) excludes people undertaking remunerative work
from the operation of new subsection
595(1A).
Significantly, there is already an
existing discretion for the Secretary to treat a person as unemployed even
though the person is undertaking paid work, where the Secretary is of the
opinion that the work should be disregarded (subsection 595(1) of the Social
Security Act).
Items 2 to 7 make
amendments to the provisions dealing with the liquid assets test waiting period.
In broad terms, where the value of a person’s liquid assets exceeds a
prescribed limit, the person is required to serve a liquid assets test waiting
period prior to receiving income support payments. This approach reflects the
Government’s policy that people with sufficient funds should support
themselves for a time prior to accessing public funds. Significantly, the
provisions are intended to recognise that a person can ‘self-serve’
the waiting period prior to lodging a claim for income support
payment.
At present, the provisions dealing
with the operation of the liquid assets test regularly refer to the time when a
person, or the person’s partner, ‘became unemployed’ or
‘becomes unemployed’. Those references inform the preliminary
enquiry of whether a person’s liquid assets exceed the prescribed limit at
a relevant time and are also relevant to the calculation of the commencement of
the waiting period. The same terms can also be relevant in relation to people
who have undertaken full time education or vocational
training.
However, in certain circumstances,
the application of those terms is, at best, unclear. For example, a person who
takes leave from employment without pay may not be able to be accurately
described as ‘unemployed’. In those circumstances, the
person’s partner may be able to immediately access income support payments
despite the couple having significant liquid assets. This interpretation does
not accord with the purpose for which the provisions were enacted and has the
potential to lead to inequitable outcomes.
The
combined effect of items 2 to 7 is to maintain and clarify the intended
operation of section 598.
The broad effect of
the changes made to section 595 by item 1 is that the Secretary can deem
a person to be unemployed in certain circumstances. It is arguable that this
would have the effect of the person ‘becoming unemployed’ at
the time that the Secretary exercised the discretion under section 595. As the
time at which a person becomes unemployed is significant to the question of
whether the person is required to serve a liquid assets test waiting period,
this interpretation would be an undesirable and unintended consequence of the
changes made by item 1. Amendments are made which make it clear that,
except in cases where incapacity is relevant, the relevant questions for the
purposes of the liquid assets test are ‘when did the person, or the
person’s partner, cease work or cease full time education or vocational
training’.
In broad terms, existing
subsection 598(1) is concerned with whether a person is required to serve a
liquid assets test waiting period. In part, it requires a determination to be
made as to whether the value of a person’s liquid assets exceeds the
prescribed limit on the day on which the person ‘becomes
unemployed’.
The effect of item 2
is to require the consideration to focus on whether the value of a
person’s liquid assets exceeds the prescribed limit on the day
following the day on which the person ceased work or ceased to be enrolled in a
full time course of education or of vocational
training.
Item 7 provides
clarification of the meaning of the concept of ‘ceasing
work’.
Existing subsection 598(3)
deals with the start of the liquid assets test waiting period for people who are
not members of a couple. Currently it provides that the waiting period starts
on the day ‘on which the person became
unemployed’.
The effect of item 3
is to provide for the waiting period to start on the day following the day on
which the person ceased work or ceased to be enrolled in a full time course of
education or of vocational training. Item 7 provides clarification
of the meaning of the concept of ‘ceasing
work’.
Existing subsection 598(3A) deals
with the start of the liquid assets test waiting period for people who are
members of a couple. It provides for the waiting period to start from the
latest of three days (the provision that provides for the third day is not
affected by these changes). At present, the first two days
are:
(a) the day on which the person became
unemployed; or
(b) if, when the claim is made, the
person’s partner is unemployed – the day on which the person’s
partner became unemployed.
The effect of
item 4 for the purposes of (a) above is that the relevant day is changed
to the day following the day on which the person ceased work or ceased to be
enrolled in a full time course of education or of vocational
training.
Item 7 provides
clarification of the meaning of the concept of ‘ceasing
work’.
Item 4 replaces paragraph
(b) above with new paragraphs (b) and (ba). The rationale behind the changes to
section 598 is to maintain and clarify its intended operation. The broad effect
of the changes made to section 595 by item 1 is that the Secretary can
deem a person to be unemployed in certain circumstances. It is arguable that
this had the effect of the person ‘becoming unemployed’ at the time
that the Secretary exercised the discretion under section 595. As the time at
which a person becomes unemployed is significant to the question of whether the
person is required to serve a liquid assets test waiting period, this
interpretation would have been an undesirable and unintended consequence of the
changes made by item 1. With this in mind, item 4
firstly amends existing paragraph 598(3A)(b) by replacing the reference to
‘is unemployed’ with a reference to ‘has ceased
work’ and replacing the reference to ‘became unemployed’ with
a reference to ‘ceased
work’.
Item 7 provides
clarification of the meaning of the concept of ‘ceasing
work’.
Item 4 also provides for
new paragraph (ba). To maintain the existing operation of subsection
598(3A) as it relates to people who have ceased to be enrolled in a full time
course of education or vocational training, the effect of the new paragraph is
that, if, when the claim is made, the person’s partner has ceased to be
enrolled in a full time course of education or of vocational training, one of
the dates that must be considered in determining when the waiting period starts
will be the day following the day on which the person’s partner ceased to
be enrolled.
In broad terms, existing
subsection 598(3B) provides for the commencement of the waiting period where the
person is a member of a couple and is incapacitated for work. It provides for
the waiting period to start from the latest of three days specified in
paragraphs (c) to (e). Paragraph (d) is concerned with the question of whether
the person’s partner is unemployed as well as the day on which the partner
became unemployed.
Item 5 changes
paragraph (d) by replacing the reference to ‘is unemployed’
with a reference to ‘has ceased work’ and replacing the reference to
‘became unemployed’ with a reference to ‘ceased work’.
Item 7 provides clarification of the meaning of the concept of
‘ceasing work’.
Item 5 also
provides for new paragraph (da). To maintain the existing operation of
paragraph 598(3B)(d) as it relates to people who have ceased to be enrolled in a
full time course of education or vocational training, the effect of the new
paragraph is that, if, when the claim is made, the person’s partner has
ceased to be enrolled in a full time course of education or of vocational
training, one of the dates that must be considered in determining when the
waiting period starts will be the day following the day on which the
person’s partner ceased to be
enrolled.
In part, subsection 598(4A) provides
that a person is not required to serve a liquid assets test waiting period if,
at any time during the 12 months before the day on which the person becomes
unemployed, the person or their partner was serving a liquid assets test waiting
period that started during that 12 months.
The effect of item 6 is to replace the
reference to ‘becomes unemployed’ with a reference to ceased work or
ceased to be enrolled in a full time course of education or of vocational
training. Item 7 provides clarification of the meaning of the
concept of ‘ceasing work’.
Item
7 adds new paragraph 598(9) which is specifically concerned with the
meaning of the words ‘the day on which a person ceased work’. It
also serves to clarify the broader concept of ‘ceasing
work’.
Basically, the day on which a
person ceased work is the day on which the person last performed work. However,
where a person was on paid leave prior to terminating their employment, the
person is taken to have ceased work on the last day that the person was on paid
leave. This approach avoids the inequity that could arise if a person was able
to avoid the application of a liquid assets test waiting period by taking paid
leave prior to formally ceasing work.
Item
7 is to make it clear that the concept of ‘ceasing work’
includes ceasing work both permanently and temporarily. The latter situation
would include situations of people whose usual employment involves casual work.
Where a previous casual job has terminated and the person is now looking for
further employment, it would not be correct to say that the person has ceased
work ‘permanently’. However, a liquid assets test waiting period
should still apply to the person in situations where the person has significant
assets.
The existing limitation that a person
can only serve one liquid assets test waiting period in a 12 month period
(subsection 598(4A) of the Social Security Act) ensures that the provisions
do not result in harsh or inequitable
treatment.
Item 7 also makes it clear
that ‘ceasing work’ includes situations where a person is on unpaid
leave. It does not include situations where a person is on paid leave. The
effect is that paid leave days will be treated in the same manner as days where
the person has not ceased work, thereby ensuring that the purpose for which the
liquid assets test waiting period provisions were enacted is not
avoided.
Item 8 repeals paragraph
600(6)(a). Section 600 is concerned with the power of the Secretary to make
prospective determinations that persons are qualified for newstart allowance for
a period. In practical terms, this allows a person to continue to receive
fortnightly payments of newstart allowance but the person is not required to
lodge the usual fortnightly continuation form. Instead the person is simply
required to lodge a single form which relates to such longer period as
determined by the Secretary to be appropriate (not exceeding 12
weeks).
Among the pre-conditions for the
application of section 600 is the requirement in paragraph 600(1)(d) that one or
more of subsections 600(3) to (7) apply to the person at the start of the
period. In broad terms, subsection 600(6) applies to a person
if:
(a) the person has been receiving an income
support payment for at least 12 months; and
(b) the
person is at least 50; and
(c) the Secretary
considers that the person’s income from employment will not increase in
the period.
In line with this measure’s
objective of providing more flexible arrangements for mature age claimants and
recipients of newstart allowance, the existing requirement that the person has
been receiving income support payment for at least 12 months is no longer
considered appropriate. Item 8 accordingly omits that requirement from
subsection 600(6).
Item 9 adds
new paragraph 601(2E)(c).
Section 601 of
the Social Security Act is concerned with the operation of the activity
test.
One manner of satisfying the activity
test is dealt with by subsection 601(2). In part it provides that a person
satisfies the activity test if:
• the
Secretary is of the opinion that a person should participate in an approved
program of work for unemployment payment;
and
• the Secretary notifies the person that
they are required to participate; and
• the
person takes reasonable steps to comply with the
requirement.
In basic terms, subsection 601(2E)
provides that, in certain specified situations, the Secretary cannot notify a
person that they are required to participate in an approved program of work for
unemployment payment.
The effect of new
paragraph 601(2E)(c) is that a person in receipt of newstart allowance
who is at least 50 years of age cannot be required to participate in an
approved program of work for unemployment payment. Of course, a person may
still choose to undertake this activity on a voluntary
basis.
Item 10 inserts new subsection
603(1A). One of the qualification criterion for newstart allowance is that
the person either satisfies the activity test or is not required to satisfy that
test. Existing section 603 contains a variety of provisions concerned with
‘relief from the activity test’. They essentially provide that a
person is taken to satisfy the activity test (or is not required to satisfy that
test) if the specified conditions are met.
As
with the qualification requirement that the person be ‘unemployed’,
it is recognised that some people who are affected by this initiative may not
satisfy the activity test when they first lodge a claim for newstart allowance.
This would present an immediate barrier to those people when first endeavouring
to gain access to newstart allowance. The purpose of item 10 is to
remove that barrier where it would be inappropriate. To achieve that outcome,
new subsection 603(1A) operates with the effect that a person is taken to
satisfy the activity test (during a period) where the requirements specified in
subsection (1A) are met.
The first requirement
is that the person is at least 50 years old. The second requirement can be
satisfied in either of two ways. Firstly it will be satisfied if the person has
not been required to enter into a Newstart Activity Agreement. It may also be
satisfied if the person has been required to enter into such an agreement and
the Secretary is satisfied that the person is not unreasonably delaying entering
into that agreement.
Where the above
requirements are met, the person is taken to satisfy the activity test during
the period that starts when the person claimed (or is taken to have claimed)
newstart allowance and ending:
• if the
person has been required to enter a Newstart Activity Agreement but has failed,
or is taken to have failed, to enter that agreement – when the person so
failed or is taken to have so failed;
• in
any other case – when the person has entered into such an
agreement.
In relation to the second dot point,
the effect of existing subsection 601(4) is that, once a person has actually
entered into an activity agreement, the person satisfies the activity test if
the person is taking reasonable steps to comply with the terms of that
agreement.
Item 11 repeals and
substitutes paragraph 606(1)(g).
Section 606 is
concerned with the terms of Newstart Activity Agreements. The broad effect of
subsection 606(1) is to provide a list of activities that a person may be
required to undertake as a part of their agreement. As part of this initiative,
it is recognised that the legislation should be sufficiently flexible so as to
provide for a broader range of acceptable activities than is currently
available. New paragraph 606(1)(g) addresses that
issue.
As part of this measure it is intended
that all newstart allowees aged at least 50 will be interviewed to assess their
workforce capacity and to help identify goals and any barriers to economic and
social participation. Centrelink’s broader knowledge and experience in
relation to the services and activities that are available would mean they would
be well placed to offer alternatives and suggestions to customers. However, the
operation of paragraph 606(1)(g) is currently expressed to be limited to
activities proposed by the person.
With
this in mind, the change made by item 11 has the effect of expanding the
operation of paragraph (g) to include any activity that is agreed between the
person and the Secretary, regardless of who proposes the activity. The
provision recognises that the activity must be suitable for the
person.
Item 12 adds new subsection
630A(2) which is concerned with activity test non-payment
periods.
The social security law provides for a
person to incur a penalty in certain circumstances where a person
‘breaches’ a requirement of the social security law. The operation
of the legislation essentially provides that newstart allowance is not payable
if such a ‘breach’ occurs and, if it subsequently becomes payable, a
penalty is applied. For the first and second ‘breach’ in a two year
period, the person incurs an activity test breach rate reduction period. The
penalty for a third or subsequent ‘breach’ in a two year period is
an activity test non-payment period. Section 630A provides that such a
non-payment period is 8 weeks.
As part of this
measure it is intended that, for people aged at least 50 years, certain
concessions will be made available where a person incurs a rate reduction period
or a non-payment period but, prior to that period expiring, the person
‘rectifies’ the breach that gave rise to the penalty
period.
One situation where newstart allowance
would not be payable to a person is where the person fails to enter a Newstart
Activity Agreement (see, for example, section 625). Similarly, the
combined effect of sections 607 and 625 is that newstart allowance would not be
payable to a person if the person is unreasonably delaying entry into such an
agreement. Again, where an agreement is in force, newstart allowance would not
be payable to a person if the person failed to take reasonable steps to comply
with the terms of the agreement (see, for example, section 626). Where this
occurs and it is at least the third ‘breach’ by the person in a two
year period, an eight week activity test non-payment period would apply to the
person if newstart allowance again became payable to the
person.
In broad terms new paragraphs
630A(2)(a), (b) and (c) will apply
where:
(a) newstart allowance becomes not
payable to a person because of any of the situations referred to above;
and
(b) the person is at least 50 years of age when
the ‘breach’ occurs; and
(c) the
Secretary is satisfied that, not more than 8 weeks after the start of a
non-payment period that applies as a result of the breach, the person
‘rectifies’ the breach. For example, if the relevant breach was
that the person had failed to enter an agreement, the person would
‘rectify’ that breach by entering into an
agreement.
If the person does
‘rectify’ the breach, the broad effect of new
subsection 630A(2) is that any residual amount of the eight week
non-payment period that has not been served can be
waived.
New subsection 630A(3)
recognises that there may be some gap between the time when a person does
start to take reasonable steps to comply, or resume compliance, with an
agreement (ie as contemplated by subparagraph 630A(2)(c)(iii)) and the time
when Centrelink is able to make a determination under new subsection
630A(2).. In other words, the waiver can be backdated to the date that the
person ‘rectified’ the breach, rather than it taking effect on the
date that Centrelink actually made the
determination.
Item 13 adds new
subsection 644A(2) which is concerned with activity test breach rate
reduction periods.
The social security law
provides for a person to incur a penalty in certain circumstances where a person
‘breaches’ a requirement of the social security law. The operation
of the legislation essentially provides that newstart allowance is not payable
if such a ‘breach’ occurs and, if it subsequently becomes payable, a
penalty is applied. For the first and second ‘breach’ in a two year
period, the penalty is an activity test rate reduction period.
Section 644AA provides that such a rate reduction period is 26
weeks.
As part of this measure it is intended
that, for people aged at least 50 years, certain concessions will be made
available where a person incurs a rate reduction period but, prior to that
period expiring, the person ‘rectifies’ the breach that gave rise to
the penalty period.
One situation where
newstart allowance would not be payable to a person is where the person fails to
enter a Newstart Activity Agreement (see, for example, section 625).
Similarly, the combined effect of sections 607 and 625 is that newstart
allowance would not be payable to a person who unreasonably delays entering into
such an agreement. Again, where an agreement is in force, newstart allowance
would not be payable to a person if the person failed to take reasonable steps
to comply with the terms of the agreement (see, for example, section
626).
Where this occurs and it is the
person’s first or second ‘breach’ in a two year period, a 26
week activity test breach rate reduction period would apply to the person if
newstart allowance again became payable to the
person.
In broad terms new paragraphs
644AA(2)(a), (b) and (c) will apply
where:
(a) newstart allowance becomes not
payable to a person because of any of the situations mentioned above;
and
(b) the person is at least 50 years of age when
the breach occurs; and
(c) the Secretary is
satisfied that, not more than 26 weeks after the start of a rate reduction
period that applies as a result of a breach referred to in (a), the person
‘rectifies’ the breach. For example, if the relevant breach was
that the person had failed to enter an agreement, the person would
‘rectify’ that breach by entering into an
agreement.
If the person does
‘rectify’ the breach, the broad effect of new
subsection 644AA(2) is that any residual amount of the 26 week rate
reduction period that has not been served can be
waived.
New subsection 644AA(3)
recognises that there may be some gap between the time when a person does
start to take reasonable steps to comply, or resume compliance, with an
agreement (ie as contemplated by subparagraph 644AA(2)(c)(iii)) and the
time when Centrelink is able to make a determination under new subsection
644AA(2). Accordingly, where subparagraph 644AA(2)(c)(iii) is relevant, the
effect of new subsection (3) is to allow the date of effect of a
determination under subsection (2) to be the date that the person started to
take reasonable steps, even if that date is prior to the date of the actual
determination.
Item 14 adds new
subsection 644B(2) which is concerned with situations where it will be
possible to waive an amount of an administrative breach rate reduction
period.
A person can incur an administrative
breach rate reduction period where the person fails to comply with certain
requirements under the social security law. For example, one effect of existing
subsection 63(3) of the Administration Act is that the Secretary can notify a
person who has claimed or is receiving newstart allowance that the person is
required to attend a particular place for a particular purpose. If the person
fails to comply with that requirement, subsection 63(5) essentially provides
that newstart allowance is not payable and, if it subsequently becomes payable,
an administrative breach rate reduction period applies. Section 644B provides
that such a rate reduction period is
13 weeks.
As part of this measure it is
intended that, for people aged at least 50 years, certain concessions will be
made available where a person incurs a rate reduction period but, prior to that
period expiring, the person ‘rectifies’ the breach that gave rise to
the penalty period.
In broad terms, new
subsection 644B(2) provides for the waiver of an amount of an administrative
breach rate reduction period that is applicable because of a failure to comply
with a requirement under subsection 63(3) to attend a particular place at a
particular time. The effect of new paragraph 644B(2)(b) is that the
waiver is only available to people who are at least 50 years of age at the
time of the relevant breach.
The first
situation where a waiver would be applicable is where the person subsequently
attends the specified place for the specified purpose. Where that occurs within
13 weeks of the start of the rate reduction period, any residual amount of the
rate reduction period is to be waived.
In
general terms, the other situation where the waiver would be applicable is
where, within 13 weeks of the start of the rate reduction period, the person
complies with a new requirement that has been notified by the Secretary in
substitution for the original requirement. It is recognised that there may be
situations where a person who has failed to comply with a requirement to attend
a particular place for a particular purpose subsequently indicates a willingness
to comply with that requirement but, for administrative reasons, that intention
cannot be immediately accommodated. Where this occurs, the Secretary will be
able to substitute a new requirement and, if the person complies with that
requirement, any residual amount of the rate reduction period would be
waived.
For example, the original requirement
might have been for the person to attend the office of a Job Network member to
negotiate an agreement with an employee at that office. The person fails to
comply with that requirement. The person subsequently states that he or she is
now willing to comply with the requirement but there is no immediate capacity
for the Job Network member to negotiate the agreement. In these circumstances,
the person could be disadvantaged as it would not be possible to waive any
amount of the rate reduction period until the person has complied with the
original requirement. In these circumstances, it is intended that the Secretary
be able to notify the person (either orally or in writing) of a new requirement
in substitution of the original requirement. For example, the person might
instead be required to attend a Centrelink office and negotiate an agreement
with a Personal Adviser. If the person complies with that substituted
requirement within the relevant 13 week period, any residual amount of the rate
reduction period would be waived.
Part 4.2 of
the Social Security Act is concerned with the overseas portability of social
security payments. In broad terms, section 1217, which is contained in
Part 4.2, contains a table which provides the conditions of portability for
the various payment types. The table is divided into 5
columns:
• Column 1 provides an Item
number;
• Column 2 identifies the payment
type;
• Column 3 identifies the
characteristics of the person;
• Column 4
identifies the nature of the allowable absence;
and
• Column 5 states the maximum portability
period.
Item 15 amends section 1217 by
inserting new item 15A. The effect of that change is that newstart allowance
customers who are:
(i) at least 50 years of
age; and
(ii) subject to a Newstart Activity
Agreement (which does not include ‘job search’ as one of the
terms of the agreement);
will be able to receive newstart allowance while
temporarily absent overseas for a period of up to 26
weeks.
The effect of existing section 1212D is
that the Secretary would still need to be satisfied that the person is taking
reasonable steps to comply with the terms of the
agreement.
Item 15 of the table would still
operate to allow all newstart allowees an absence of up to 26 weeks for
those purposes already specified in the table (namely, to seek eligible medical
treatment, to attend to an acute family crisis and for a humanitarian
purpose).
Schedule 6 - Working
credit
From its introduction on 28 April 2003, the working credit
will encourage workforce age income support customers to take up full-time,
substantial part-time or irregular casual work by allowing them to keep more of
their income support payments while working. The main feature of this
initiative is to allow customers to build up working credits at times when they
have little or no income, which they can use to reduce the amount of later
earnings that are counted under the income test. The working credit supplements
the existing income test rules that allow people to earn a certain amount of
money before payments begin to reduce. There will be a consistent, simpler
approach to measuring income from employment for all workforce age customers.
It will also be easier for workforce age customers to resume their income
support payments if they lose their job within 12 weeks after those
payments stop.
Ordinary income test and employment
income
Most of the rate calculation
rules in the Social Security Act include an income test. This involves reducing
a person’s rate of payment by a certain percentage of any ordinary income
above a certain free area. For some payments, this is worked out on a yearly
basis and for some on a fortnightly basis, but the result for all payments is
that a daily rate of payment is set.
The
function of the working credit is basically to allow a person’s ordinary
income to be reduced before it is put through this income testing process. This
will allow the person to keep a higher rate of payment, or to keep some payment
that would otherwise be lost altogether. This reduction of ordinary income will
be allowed if some or all of the person’s ordinary income for the
instalment period is from employment and if the person has a working credit
balance greater than nil. Thus, a person will be able to take up employment
opportunities with less adverse effect on
payments.
The working credit rules will be
applied to a workforce age person, whose rate is worked out with regard to the
income test, for each separate day within an instalment period. However, before
the effect of the working credit, and therefore the effect of the income test,
can be worked out, it needs to be established what the person’s ordinary
income from employment (“employment income”) is for each
day.
These amendments will establish the rule
that any actual employment income earned, derived or received during the
person’s instalment period (usually a fortnight) will be spread evenly
over the period and be subject to the working credit and income test rules for
each day in the period, regardless of the actual days the person worked. This
will provide a transparent, equitable rule for all workforce age income support
customers.
Reporting
arrangements
Because of the new
measurement of employment income rules, some workforce age pensioners and
parenting payment recipients with variable or intermittent income will need to
report their income more frequently than they currently do, to avoid being
overpaid or underpaid. Those at the greatest risk of being overpaid or
underpaid because of their earning pattern will have to report their income at
the end of each instalment period. Many customers in this group already report
fortnightly to avoid incorrect payments.
Those
customers whose employment pattern presents a lower risk of incorrect payments
will continue with their current reporting arrangements, and some will be asked
to provide updated income information at the end of each 12 week period, to
allow working credit balances to be maintained
accurately.
Additional ways for people to
report their employment income, such as via the Internet or automated telephone
systems, are being explored. This will provide many customers with alternative
and easier methods of providing employment income information. The use of these
reporting methods, as well as the reporting arrangements themselves, will be at
the Secretary’s discretion, and existing methods of reporting will
continue to be available.
Working credit
rules
Note that the working credit will
not necessarily apply to all workforce age people whose rate is worked out with
regard to the income test. Some will continue to be covered instead by the
existing student income bank for student youth allowance and austudy payment
recipients.
The working credit will accrue to a
maximum of $1,000. Accrual (ie, an increase in the working credit balance) will
occur for a particular day in an instalment period if the person has, for that
day, ordinary income on a fortnightly basis of less than $48. In that case, one
fourteenth of the amount by which $48 exceeds the ordinary income will accrue to
the working credit for the day.
If the person
has ordinary income of $48 or more, but no more than the applicable ordinary
income free area, both on a fortnightly basis, then there is simply no accrual
to the working credit, no reduction to payment rate under the ordinary income
test and no depletion from the working
credit.
The working credit will be depleted, to
reduce ordinary income under the income test, for a particular day in an
instalment period if:
• the person has
employment income for that day; and
• the person’s ordinary income for that day is more than the applicable ordinary income free area, both on a fortnightly basis.
In that case, the working credit will be depleted by an amount equal to the least of the following amounts for that day:
• the employment income;
or
• one fourteenth of the amount by
which the ordinary income exceeds the ordinary income free area, both on a
fortnightly basis; or
• the available
working credit balance.
Thus, the person will
get the benefit of the free area before having to deplete the working credit.
The person’s ordinary income under the income test for that day will be
reduced simultaneously by the same amount by which the working credit is
depleted, converted to a yearly or fortnightly basis as applicable to the
person’s payment.
Changes to
payment
It could be that all of the
person’s ordinary income above the free area is “forgiven” in
this way so that there is no reduction to payment rate under the income test.
However, when the working credit is eventually exhausted, any remaining ordinary
income above the free area for the day on which the working credit balance is
reduced to nil will be income tested in the usual way. As a result, the
person’s rate of payment will generally be reduced with effect from that
day, or suspended/cancelled if the rate of remaining income were so high as to
produce a nil rate.
If the rate is reduced on
that day, it will often be the case that the rate for the subsequent day is
further reduced, or the payment suspended/cancelled, because there will be no
working credit balance left at all (the balance having been reduced to nil on
the previous day). This further rate reduction, or suspension/cancellation,
(due to the effect of the income test) will take effect from that subsequent
day.
Changes to payment may take effect even
later in some circumstances, consistent with the date of effect rules in the
existing automatic cancellation and variation
provisions.
In this way, people will generally
be able to use up their working credit before losing payment. Even people who
would usually cease to be qualified for their payments because of the employment
that is causing them to use up their working credit will be allowed to stay on
payment while any working credit is used up. That is, the person will be taken
to satisfy (as appropriate): the usual unemployment requirement for newstart
allowance; the incapacity for work or study requirement for sickness allowance;
the continuing inability to work requirement for disability support pension; the
20 hour per week limit on paid employment for carer payment; or the youth
allowance activity testing
requirement.
However, a person who qualifies
for an employment entry payment because of starting or increasing employment can
still claim and be paid that payment straight away and not later when the
working credit is used
up.
Non-compliance
A
person who fails to meet his or her income reporting requirement within a
reasonable period (thereby preventing or hindering the application of the above
rules) will lose the payment or have the payment reduced, consistent with the
existing rules for all income support customers who do not comply with a
reporting requirement. However, there will be scope to resume or increase
payment if the person provides the necessary information within an appropriate
period.
Carryovers
Working
credit balances will be transferable to the student income bank (and
vice versa up to $1,000) should a person move between the two
schemes.
If a person stops receiving a payment
to which the working credit applies, any balance remaining at the time the
payment stops will revive should the person resume one of those payments (or a
payment to which the student income bank applies) within 12 months.
Similarly, if a person stops receiving a payment to which the student income
bank applies, any balance (up to $1,000) remaining at the time the payment stops
will revive if the person is granted, within 12 months, a payment to which the
working credit applies.
Easier to resume
payment
If a workforce age
person’s payment is lost because of ordinary income wholly or partly
consisting of employment income, the person will enter into a special period of
concessional treatment. This special period will last for 12 weeks from the end
of the instalment period in which the payment
stopped.
The concessional treatment will
consist mainly of being able to have payment resumed without the need to
re-claim if the payment again becomes payable (ie, generally, if the person
loses the job). Because payment in this case will be resumed rather than
granted, even one of the payments under the Social Security Act for which no new
grants are permitted will be able to start up again in this way if appropriate.
This resumption part of the measure is already allowed by existing provisions,
so no amendments are included in the Bill for this particular
purpose.
The concessional treatment will also
consist of being able to keep for the special period certain additional benefits
that are normally available only to people who are receiving social
security payments. These benefits include (as applicable): concession cards;
exemption from the income test for the person’s family tax benefit and
child care benefit; exemption from the youth allowance parental income test for
the person’s child; rent assistance and partner income test concessions;
the approved program of work supplement; the new language, literacy and numeracy
supplement; pensioner education supplement; and telephone allowance. Specific
amendments in the Bill will allow these benefits to be kept.
Explanation of
changes
Part 1 – Amendment of
the A New Tax System (Family Assistance) Act 1999
Easier to resume
payment
Item 1 repeals the
existing meaning of receiving a social security payment for the purposes of the
family assistance legislation and substitutes a new definition. This is to
allow the Social Security Act extended meaning of receiving a social security
pension or social security benefit (see item 7) to flow through into
three specified provisions in the family assistance legislation. The effect of
this is to exempt a workforce age person from the income test for the
person’s family tax benefit and child care benefit. This will last for a
period of 12 weeks from the end of the instalment period in which the
person’s social security pension or social security benefit stopped, and
will apply only if the payment was lost because of ordinary income consisting
wholly or partly of employment income. This is part of the easier to resume
payment part of the measure.
Part 2 – Amendment of the Social Security Act 1991
Definition of “employment
income”
Items 2 and 5
insert into section 8 of the Social Security Act a new definition of
“employment income”, notably in the form of new subsections
8(1A), (1B) and (1C).
This term is the
basis for the new working credit rules (inserted by item 26) and the
associated Administration Act provisions (inserted by Part 3 of this
Schedule). It is also the basis for the associated rule in
new section 1073B (also inserted by item 26) that
provides for any actual employment income earned, derived or received, or taken
to have been earned, derived or received, during the person’s instalment
period (usually a fortnight) to be spread evenly over the period and be subject
to the working credit and income test rules for each day in the period,
regardless of the actual days the person worked. It is also critical to new
subsection 23(4A) (inserted by item 7) and the amendments to the
concession card provisions (made by items 9 to 20) that provide a special
12 week period of concessional treatment if the person loses payment because of
ordinary income wholly or partly consisting of employment
income.
Thus, it is essentially beneficial for
a person to have ordinary income that is characterised as employment
income.
Employment income of a person is
ordinary income from remunerative work undertaken by the person as an employee
in an employee/employer relationship. Certain types of payment are specifically
included in the definition, but the list of these is not exhaustive. Certain
other types of payment, for which the working credit concession under the income
test would be inappropriate, are specifically
excluded.
The income may be earned, derived or
received by the person or it may be income that the Social Security Act takes
the person to have earned, derived or received. For example, if a person has
disposed of an amount of income in certain circumstances, Division 3 of Part
3.10 has the effect of taking a person’s ordinary income to include the
amount. Such income may be employment income of the
person.
Similarly, existing rules provide that
the ordinary income of a person who is a member of a couple one or both members
of which are pensioners is worked out by adding the couple’s ordinary
incomes and dividing the sum by two. In this way, the person may be treated as
having some of the partner’s ordinary income and vice versa. As provided
by new subsection 8(1B), employment income of the partner attributed to
the person (and vice versa) in this way will retain its employment income
character, so that the amendments made by this Schedule may be applied as
appropriate to each partner in respect of that
income.
Note that even “pension
age” (as defined in section 23, the Social Security Act term for
non-workforce age) people will have employment income. However, it will have no
effect on their payments, under the working credit and employment income
spreading rules discussed below, because those rules do not apply to pension age
people. Importantly, though, their partners will have access to those rules in
respect of any employment income actually earned, derived or received, or taken
to have been earned, derived or received, by the pension age person and
attributed in part to the partner.
However, in
keeping with current arrangements, nothing in these amendments produces a
similar effect for couples neither member of which is a pensioner. These people
may only have employment income in their own right, and the working credit rules
and current partner income test will apply
accordingly.
Easier to resume
payment
These amendments complete the
legislative requirements for the easier to resume payment part of the
measure.
Item 7 inserts new
subsections 23(4A) and (4AA). These will add to the existing meaning of
receiving a social security payment. Subsection 23(4) already provides that,
for the purposes of the Social Security Act, a person is taken to be receiving a
social security payment until the latest day on which it is payable to the
person, even if the last instalment is actually paid later than that day. Under
the normal rate calculation rules, a payment ceases to be payable to a person
when the person’s rate becomes nil (including under the income test), so
this is the point at which the person also ceases to be taken to be receiving
the payment. Accordingly, the legislation also ends the person’s
entitlement to a range of benefits that are normally based on the person
receiving a payment.
However, to reduce work
disincentives, new subsection 23(4A) will take a workforce age recipient
of a social security pension or social security benefit that is worked out with
regard to the income test to be receiving the payment for a more extended
period, as long as the person loses that payment in certain
circumstances.
The circumstances are basically
that employment income of the person or the person’s partner must be at
least partly responsible for the loss of the person’s payment. If
employment income is only partly responsible, the remaining responsibility must
be borne by other ordinary income of the person or partner. For example, a
person may have stable employment income that allows payment to continue under
the income test, but an additional source of ordinary income such as income from
financial investments may result in the payment ceasing to be payable. Also,
the person may lose the payment following the person’s or partner’s
working credit balance, or any student income bank balance of the partner, being
reduced to nil. (If any applicable balance were already nil, however, the
person would lose the payment straight
away.)
The extended meaning of receiving will
last for 12 weeks from the end of the instalment period in which the payment
ceased. However, this will apply only to the extent that the person remains
qualified for the payment. For example, a newstart allowance recipient who took
up a full-time job would cease to be qualified for the allowance and so would
not, or would cease to, attract the benefits flowing from the extended period of
receiving. The extended meaning will also apply only to the extent that the
payment remains payable to the person (disregarding the employment income or
combined income that caused the loss of payment) and only to the extent that the
person remains below pension age.
However, the
extended meaning of receiving does not apply for all Social Security Act
purposes. It applies only for the purposes of the provisions set down in new
subsection 23(4AA), ie, exemption from the youth allowance parental income
test for the person’s child, rent assistance and partner income test
concessions, the approved program of work supplement, the new language, literacy
and numeracy supplement, pensioner education supplement, and telephone
allowance. Also see item 1 for a similar arrangement made in relation to
family tax benefit and child care benefit and the concession card amendments
discussed below.
Items 18 and 20 insert
new sections 1061ZEA and 1061ZMA into the concession card provisions of
the Social Security Act. Qualification for a pensioner concession card (PCC) or
a health care card (HCC) is normally dependent (in part) on a specified social
security pension or social security benefit being payable to a person, or the
person receiving such a payment. The new sections provide, similarly to the new
extended meaning of receiving, that a person who is qualified for a PCC or an
HCC at the time of losing the payment will continue to be qualified for the card
for 12 weeks from the end of the instalment period in which the payment ceased.
This will be the case provided that the payment was lost wholly because of
employment income, or partly because of employment income and partly because of
other ordinary income, of the person or the person’s partner. It will
also be the case only to the extent that the person would be, or would continue
to be, otherwise qualified for the card (because of the payment being payable or
the person receiving the payment, as applicable) and only to the extent that the
person remains below pension age.
There are
already some rules that provide extended qualification for a PCC or an HCC if a
person loses payment because of their, or their partner’s, commencement of
employment or increase in income from employment. These generally apply for a
set number of weeks (more than 12) from such a commencement or increase. People
who qualify under these rules will already be keeping their cards for more than
the 12 weeks targeted by the new sections mentioned above. Accordingly,
they will not have access to the new 12 week extended qualification rules in
addition to their existing
entitlement.
However, it is necessary to amend
those existing rules to make sure that the periods of extended qualification
start, not necessarily from the commencement or increase, but from the
exhaustion of the person’s or the partner’s working credit or
student income bank balance (if applicable). Items 9 to 17 make
these amendments for the PCC provisions and item 19 does so for the one
existing HCC provision.
Preserving
qualification and employment entry
payment
Item 8 inserts a new
section 665AA into Part 2.13 of the Social Security Act, dealing with
employment entry payments (EEPs). This new section works alongside new
section 1073J, inserted by item
26.
One of the most obvious benefits of the
working credit for customers below pension age who start paid employment, or who
start to be paid more for their employment, is that the potential loss of their
social security payment under the income test is deferred. However, for some
payments, that very employment is something that might cause a person to lose
qualification for the payment. That
is:
• a disability support pension
recipient must generally have a continuing inability to work (see section
94);
• a carer payment recipient may not
undertake paid employment for any more than 20 hours per week (see section
198AC);
• a non-student youth allowance
recipient is subject to an activity testing requirement that generally relates
to employment (see sections 540 and
541);
• a newstart allowance recipient
must be unemployed (see section 593);
and
• a sickness allowance recipient must
be incapacitated for work or study (see section
666).
Such a loss of qualification would cause
a person to lose the payment even though they may have available a working
credit balance greater than nil. To allow such a person to use up their working
credit before losing payment, new section 1073J treats the person as
continuing to be qualified for the payment despite the employment. This will
apply to the extent that they otherwise remain qualified for the payment. It
will continue to apply until the earlier of two possible days. The first is the
day on which the working credit balance is reduced to nil. The second is the
day on which the payment ceases, as determined under the date of effect or
automatic cancellation provisions of the Administration
Act:
• because of the loss of
qualification other than related to the employment, such as the person ceasing
to satisfy Australian residence requirements;
or
• because the payment ceases to be
payable to the person, whether because the available working credit balance is
reduced to nil or because of some other payability factor, such as the assets
test or a compensation preclusion.
Note that
this preservation of the person’s qualification is merely to put the
person on the same footing as a person, with a working credit balance greater
than nil, who happens not to lose qualification for their payment because
of the employment (eg, a wife pensioner). Such a person will usually lose
payment when their balance is reduced to nil, but may lose it earlier if they
cease to meet one of their usual qualification or payability criteria.
Similarly, this extended qualification ends when the payment is lost, usually
when the working credit is reduced to nil, but maybe because of ceasing to meet
one of the usual qualification or payability
criteria.
(Note also that, during the following
12 week concessional period, the new extended meaning of receiving provided by
new subsection 23(4A), and the new PCC and HCC extended qualification
provisions, new sections 1061ZEA and 1061ZMA, will not apply unless
the person satisfies all of the usual qualification requirements for their
payment. The person must also satisfy all of the usual payability requirements
other than related to the employment income, or combined income, that caused the
loss of payment.)
However, this extended
qualification (which essentially lasts until the person’s working credit
balance is reduced to nil) should not flow through to the EEP provisions. Nor
should the fact that a payment ceasing to be payable to a customer is now
delayed until that balance is reduced to nil flow through to those provisions.
The purpose of an EEP is to assist with the initial costs of a person commencing
employment, such as having to buy a bus pass or a special uniform item. It
would defeat this purpose if the person had to wait until their working credit
balance was reduced to nil before being paid an
EEP.
Accordingly, new section 665AA
specifically provides that, for the purposes only of the EEP provisions, the
person’s loss of qualification or the person’s or partner’s
loss of payability, on which many of the EEP provisions depend, still occurs
when it would if the person had no working credit balance greater than nil.
That is, the EEP provisions will still be able to operate at the commencement of
the employment.
Note that there are other EEP
provisions that are based, not on the person being qualified for a specified
payment, or one being payable to the person, but on the person’s
“income from employment” rising to a point above a specified
threshold. Similar amendments do not need to be made to those EEP provisions to
achieve the same effect because nothing in this Schedule alters the current
meaning of those provisions. That is, income from employment will continue to
have its current meaning, unreduced by the working credit (the working credit
will reduce only “ordinary income”, not “income”), and
it is only then relevant whether it exceeds or not a free-standing threshold
amount. Accordingly, these types of EEP will also be paid at the correct time,
when the income from employment rises beyond the threshold. Any independent
operation of the working credit for the person will be a separate
matter.
Carrying over working credit
balance to the student income bank
The
discussion below in relation to new section 1073E (inserted by item
26) describes how people who cease to be working credit participants, or
people to whom the student income bank applies, may, in certain circumstances,
carry over their past working credit balance, or student income balance to the
extent of $1,000, should they become a working credit participant again, or for
the first time (as applicable).
The reverse is
basically provided by new points 1067G-J7 to 1067G-J10 (inserted by
item 22) for youth allowance and by new points 1067L-E6 and
1067L-E7 (inserted by item 24) for austudy payment. This will
be possible if a person becomes a person to whom the applicable student income
bank applies within 12 months after having ceased to be a working credit
participant, and if the person had a working credit balance greater than nil at
that time.
This may be so because the
person’s working credit payment was cancelled or suspended and the
person’s austudy payment, or youth allowance as a full-time student, claim
was granted with effect from no more than 12 months after the suspension or
cancellation. This allows the person to carry over the balance even if he or
she has to serve a waiting period after grant of the new claim that would end
after the 12 months. It may otherwise be so because the person stayed on youth
allowance but changed status from non-student (covered by the working credit) to
full-time student (covered by the student income bank), or in the unlikely event
that a non-student youth allowance were suspended and resumed, within 12 months,
as a full-time student youth allowance. It may also be so in the further
unlikely event that the person claimed and was granted, within 12 months,
youth allowance as a non-student and had to serve a waiting period, but became a
full-time student before the start day for the youth allowance. All of these
outcomes are to give the maximum benefit to the
person.
There is no limit to the amount that
may be carried over between the working credit and the student income bank,
because the working credit maximum balance ($1,000) is well within the student
income bank maximum ($6,000). However, because austudy payment, and therefore
its student income bank, are available to a person who has reached pension age,
a carryover of a working credit balance is specifically prevented either if the
person ceased to be a working credit participant because of having reached that
age, or if the person has reached that age
subsequently.
Employment income
attribution rules
New Division
1AA is one of the two new divisions being inserted into Part 3.10 by
item 26. The main purpose of the new division is to establish the rule
that any actual employment income earned, derived or received during a
person’s instalment period (usually a fortnight) will be spread evenly
over the period and be subject to the working credit and income test rules for
each day in the period, regardless of the actual days the person worked. This
is provided by new section 1073B.
The
rule will apply to a person who is below pension age and receiving a social
security pension or social security benefit that is worked out with regard to
the income test. It will apply not only to employment income earned, derived or
received by the person during the instalment period, but also to employment
income taken to have been so earned, derived or received during the
instalment period. Such an attribution of employment income may occur because a
provision of the Social Security Act takes the person to have that income when
he or she would normally not have it at all - for
example:
• employment income that is
taken to be included in the person’s ordinary income by Division 3 of Part
3.10 because the person has disposed of the income in certain circumstances;
and
• employment income that was actually
earned, derived or received by the person’s partner but that is attributed
in part to the person under the rules for couples one or both members of which
are pensioners.
However, section 1073B also
envisages an attribution of employment income because a provision of the Social
Security Act has had the effect of spreading certain income amounts across a
particular period that includes the instalment period in question. In this
case, it is a case of an attribution rule having dictated when the person
is taken to have income that it was never in doubt that the person did have.
Examples of such spreading provisions
are:
• point 1068B-D19 (certain income to
be taken into account over a period of up to
52 weeks);
• section 1073 (certain
amounts are taken to be received over 12
months);
• social security benefit
provisions such as point 1068-G7B (lump sum for remunerative work taken to be
received over 12 months); and
• new
section 1073A (see below).
The new rule to
spread employment income evenly over each day in the instalment period will
apply to either of these attribution cases, as well as to more straightforward
cases such as casual earnings for several days within the instalment
period.
Note that relevant provisions in the
Social Security Act that attribute ordinary income in cases such as those
described above use various words to achieve that attribution. For example, a
person may be “taken to receive” an amount, the person’s
ordinary income may be “taken to be” a certain amount, an amount may
be “included in the person’s ordinary income”, or the
attribution may be achieved by “work[ing] out the amount of the
person’s ordinary income” in a certain way. Whatever words are
used, these provisions have the effect of taking a person to have earned,
derived or received ordinary income, or to have earned, derived or received it
at a particular time or over a particular period. Accordingly, all such
provisions will inform the operation of new sections 1073A and 1073B.
This is essentially a beneficial thing for the customer, because ordinary income
attributed to the person in one of these ways, which could not be characterised
as employment income and then spread over the instalment period and attract the
beneficial treatment of the working credit, would be immediately subject to the
income test. The latter outcome would probably be harsher for the
customer.
Note also that perhaps the main
effect of new section 1073B in relation to a source of employment income
that is spread over several instalment periods will be in the first and last
instalment periods affected by the spreading. This is because the rate of
employment income from that source will necessarily be the same over all of the
days in all of the “middle” instalment periods. In the first and
last instalment periods, however, it could be the case that the spreading starts
or ends part way through the instalment period. Therefore, dividing that less
than full instalment period’s worth of employment income by the full
number of days in the instalment period will produce a lower rate of employment
income on each day in those two instalment periods compared to the days in the
middle instalment periods. This effect is in keeping with the intended working
credit and income test operation.
New
section 1073A is a special rule for social security pensioners below pension
age. Under current case law, ordinary income for pensioners of any age may be
spread over appropriate periods to reach a reasonable representation of the
person’s yearly income, which is required for their rate calculation
process. However, now that employment income is being singled out from other
types of ordinary income by new section 1073B, that spreading effect
would be lost for employment income if a further new rule were not
provided.
This is because the existing pension
spreading arrangements are mostly based on case law - there are few provisions
in the Social Security Act that allow the person’s income to be taken to
have been earned, derived or received over any particular period. Therefore,
amounts that should not be taken into account only in the instalment
period of receipt, for example, would be given just that treatment by new
section 1073B. Accordingly, new section 1073A provides a specific
rule to allow, in certain circumstances, pensioners’ employment income to
be spread over such period up to 52 weeks as the Secretary determines.
Only lump sums that either represent a period greater than a fortnight or that
do not represent a period at all but are paid for a result from remunerative
work (such as royalties or commissions) may be spread in this way. This
provision reflects the existing policy rules for spreading contract-related lump
sums over the period of the contract, or spreading commissions and other
result-related lump sums over 12 months. It is not the intention of the
provision to spread casual earnings over a period greater than a
fortnight.
New section 1073C provides
for the result of employment income spread evenly over the instalment period by
new section 1073B to be expressed on a fortnightly or yearly basis, as
applicable to the person’s payment. That is, an amount for each
day in the instalment period is converted back to a rate for the day.
This is to make sure that the outcome under the principal new provision in
new Division 1AA will be meaningful to the person’s rate
calculation process. This is especially important for a person who is not
depleting his or her working credit balance, either because of having a nil
balance or because of having no, or insufficient, employment income on which to
base a depletion. People who do deplete their working credit balance will
notionally come out of the depletion rules with the reduction of their ordinary
income already expressed on a fortnightly or yearly basis, ie, as a rate (see
new sections 1073G and 1073I). However, other people will need to have
their employment income that has been spread over the instalment period
expressed correctly (as a rate, rather than an amount) so that the
person’s income test, which requires a rate, will apply correctly to the
employment income.
Working credit accrual
and depletion rules and their
consequences
The second new division
inserted by item 26 is new Division 1AB, providing the working
credit accrual and depletion rules and some associated rules. The first
section, new section 1073D, establishes the application of the rules.
They apply to a person who is receiving a social security pension or social
security benefit the rate of which is worked out with regard to the income test.
The person must not have reached pension age, and the student income bank,
which, under Module J of the Youth Allowance Rate Calculator or Module E of the
Austudy Payment Rate Calculator, already provides a similar income credit
scheme, must not apply to the person. If all of these criteria are met, the
person is known as a “working credit participant”. Item 4
inserts into section 8 a signpost reference to this definition.
Item 3 inserts into section 8 a definition of “student income
bank”.
New section 1073E deals
with the working credit participant’s opening balance. Normally this is
nil. However, there is provision for a person to carry over a previous working
credit balance lost basically within the last 12
months.
The rule in that case is that, if the
person ceased to be a working credit participant because his or her social
security pension or social security benefit was cancelled or suspended, then the
person’s new opening balance, on again becoming a working credit
participant, is the same as the balance immediately before that cancellation or
suspension as long as the 12 month rule is met. The 12 month rule in the case
of suspension is that the person’s payment must be resumed within 12
months after the date of effect of the suspension. Note, however, that it is
not usually the case in practice that a person’s payment would be
suspended for as long as 12 months – 3 months would be the usual
maximum time, and the payment would then be cancelled. The notable exception is
disability support pension, for which suspension for up to 2 years is
allowed in practice to assist pensioners who obtain work of more than 30 hours
per week to establish themselves in the workforce (see sections 96 and 97 of the
Administration Act). This working credit carryover provision does nothing to
disturb existing suspension arrangements.
The
12 month rule in the case of cancellation (including a cancellation that
followed an earlier suspension) is that the person’s claim for the new
payment must be granted with a date of effect that is within 12 months after the
date of effect of the cancellation, or the suspension if a cancellation followed
an earlier suspension. Note that the date of effect of a grant is not the same
as the start day for the payment - the person may have to serve a waiting period
following grant and before payment starts. Measuring the 12 month period up to
the date of grant allows a person who is granted the payment within the
12 months but whose payment does not start until after the 12 months
(after serving a waiting period) to have the benefit of the
carryover.
The carryover rules between working
credit payments also apply if a person becomes a working credit participant
after having ceased to be a person to whom the student income bank applies and
having had a balance greater than nil at that time. This may be so because the
person’s austudy payment, or youth allowance as a full-time student, was
cancelled or suspended and the person’s working credit payment claim was
granted with effect from no more than 12 months after the suspension or
cancellation. It may otherwise be so because the person stayed on youth
allowance but changed status from full-time student (covered by the student
income bank) to non-student (covered by the working
credit).
Similarly, a person who had a credit
balance greater than nil under the ABSTUDY scheme equivalent to the student
income bank would carry over that balance if he or she were to become a working
credit participant within 12 months of ceasing to be covered by that
ABSTUDY equivalent.
However, in any case of a
carryover from the student income bank to the working credit, a maximum of
$1,000 may become the working credit opening balance, consistent with the usual
working credit maximum balance.
New section
1073F describes when a working credit participant who is receiving a social
security benefit accrues an amount to his or her working credit balance, when
that balance is unaffected and when there is a depletion. This is done in a
method statement.
It is important to note that,
in keeping with the underlying daily rate basis of social security payments,
each step in the method statement operates in respect of each separate
day in an instalment period of the participant. Thus, the method statement
has regard to the amount of employment income for the day (which is also
expressed as a fortnightly rate where necessary), the rate of any
other ordinary income for the day (which is also converted to a daily
amount where necessary) and the applicable income free area for the day.
The amount of employment income for the day will, unless it is nil, be the
amount resulting from the operation of new section 1073B to spread the
income evenly over the instalment
period.
(“Instalment period” is an
existing concept in the social security law, established by section 43 of the
Administration Act. Item 6 inserts into section 23 of the Social
Security Act a formal definition of this existing concept.)
With this daily basis of the method statement emphasised,
its operation is basically as follows. The working credit balance will accrue
to a maximum of $1,000. Accrual (ie, an increase in the working credit balance)
will occur for a day if the person has, for that day, a fortnightly rate of
ordinary income of less than $48. In that case, one fourteenth of the amount by
which $48 exceeds the ordinary income will accrue to the working credit balance
for the day.
If the person has a fortnightly
rate of ordinary income of $48 or more, but no more than the applicable ordinary
income free area on a fortnightly basis, then there is simply no accrual to the
working credit balance and no depletion from the working credit
balance.
The working credit balance will be
depleted for a day if:
• the person has
employment income for that day; and
• the person’s ordinary income for that day is more than the applicable ordinary income free area, both on a fortnightly basis.
In that case, an amount will be drawn against the working credit. This amount will equal the least of the following amounts for that day:
• the employment income;
or
• one fourteenth of the amount by
which the fortnightly rate of ordinary income exceeds the ordinary income free
area on a fortnightly basis; or
• the
available working credit balance.
Thus, the person
will get the benefit of the free area before having to deplete the working
credit balance.
New section 1073G
provides the link between a depletion under the method statement and the
person’s rate of ordinary income for the day. If there is such a
depletion, the person’s rate of ordinary income under the income test for
that day will be reduced simultaneously by the same amount by which the working
credit is depleted, converted to a fortnightly basis. The income test is then
free to operate in its usual way, but using a reduced rate of ordinary
income.
New section 1073H provides basically the same rules
for working credit participants who are receiving social security pensions as
new section 1073F provides for beneficiaries. There are, however, two
extra steps in the method statement because the income test for pensioners
operates on a yearly basis and there are accordingly extra points at which the
rate of ordinary income, and the applicable income free area, need to be
converted to a fortnightly basis to fit in with the rest of the working credit
rules. However, these fortnightly expressions for pensioners below pension age
are purely artificial constructions for the purposes of the working credit -
they have no meaning elsewhere in the legislation.
New section 1073I provides for pensioners below
pension age, as does new section 1073G for beneficiaries, the link
between a depletion under the method statement and the person’s rate of
ordinary income for the day, this time expressed on a yearly
basis.
New section 1073J has already been discussed above
in relation to preserving qualification and employment entry
payment.
Minor consequential and
technical amendments
This Schedule
contains minor consequential or technical amendments to provisions in the Social
Security Act and the Administration Act. In
particular:
• Items 21 and 23
repeal notes that would otherwise be incomplete or misleading after the
commencement of the working
credit.
• Item 25 repeals the two
examples to point 1068B-D19. The first of these examples is no longer an
appropriate one for the point because the casual income cited will now be spread
evenly across the instalment period in question under new
section 1073B. However, the second example illustrates a still valid
application of the point. That is, a commission based salesperson who received
seven payments at irregular intervals in the last year, totalling $13,000, may
still have each income amount spread over a period of 52 weeks, resulting in a
fortnightly income under the associated point 1068B-D20 of $500. Nevertheless,
example 2 cannot, on drafting terms, stand alone without example 1 - it is
repealed rather than amended because the Social Security Act no longer utilises
examples in any significant
way.
• Items 37, 45, 46 and 54
make technical drafting corrections to some Administration Act provisions.
These corrections would otherwise have been made in conjunction with other
amendments of this sort as a follow up to the enactment of the Administration
Act in 1999. However, since the provisions in question are also affected by the
working credit, it is more efficient to correct them as part of this exercise.
For example, certain common phrases are being corrected and a duplicated
provision (section 112) is being removed. Also, paragraph 100(1)(f), which
was present in that section only as a drafting error when the section was moved
from the Social Security Act as previously in force (as can be seen by comparing
the section with, for example, the former section 74 of the Social Security
Act), is being removed.
Part 2 – Amendment of the Social
Security (Administration) Act 1999
Reporting
arrangements
Items 27 to 31
inclusive amend the provisions under which people may be required to give
information relevant to their social security payments. These amendments are to
make sure that all necessary income details are gathered in a timely way, so
that the working credit and income test may be applied to the person as
efficiently as possible, minimising incorrect
payments.
At present, a person to whom a social
security payment is being paid may be required to give information in one or
both of two different ways. The first way is that the person is required (by
being given a notice under paragraph 68(2)(a) of the Administration Act) to tell
the Department if a specified event or change of circumstances occurs, or is
likely to occur. This method of reporting will be used for people (whether they
are being paid social security pensions or social security benefits) who are at
low risk of incorrect payment because of employment income – that is,
those who tend to have stable, or no, employment income. No amendments are
necessary here as the existing provisions already allow this type of
reporting.
The second way is that the person is
required (by being given a notice under paragraph 68(2)(b)) to give the
Department a statement about a relevant matter, often in respect of a specified
period such as an instalment period. This is the method of reporting that will
be used for people (again, whether they are being paid pensions or benefits)
with less stable employment income, so that income information can be gathered
separately for each instalment period. In this way, the person’s payment
for the instalment period will be clearly based on reported income for the
instalment period, and after the free area and any working credit concessions
are made. However, rather than giving the person one notice requiring a
statement for one instalment period, and so on, the person may be given one
notice requiring him or her to give a statement for each of the following
several instalment periods (typically, for the following 3 months). In that
case, the person will be asked to report by the last day of each of the
instalment periods and these dates will be set out clearly in the notice. These
amendments make the modifications necessary to put this adjusted reporting
method into place, within the existing framework of the reporting provisions.
Following these modifications, some people, who choose and are able to do so,
will be able to report by automated telephone or the Internet instead of having
to lodge a form each fortnight.
The second way
of requiring information (using paragraph 68(2)(b)) is also already available
for a person with quite stable employment income, who will be asked to provide
updated income information at the end of a specified 12 week period, to
allow working credit balances to be maintained
accurately.
Resumption or reinstatement
of payment
Item 32 amends the
existing resumption of payment provision (section
85).
If a person fails to comply with the
reporting requirement imposed on him or her under section 68, his or her
payment may be suspended or cancelled under Division 7 of Part 3 of the
Administration Act, or it may be automatically cancelled under Division 8.
However, if the person subsequently gives the information sought within a
reasonable period, and if the person has a valid reason for not having complied
with the reporting requirement, the payment may be resumed or
reinstated.
The amendment to section 85
makes sure that this will be possible for people who failed to comply with a
paragraph 68(2)(a) notice requirement. The date of effect of the
resumption would be set by the existing date of effect rules set out in Division
9.
A different mechanism will be used for
people who failed to comply with a paragraph 68(2)(b) statement
requirement, and it is not a mechanism that requires any amendments. In this
case, the existing subsection 95(2) may be used to reinstate the payment with
effect from a date determined by the Secretary - technically, the Secretary
determines that the automatic cancellation does not
apply
Note that, because such a payment will be
resumed, or the automatic cancellation will be negated, rather
than the payment being granted, there is no bar to payments that normally
do not allow new grants (such as wife or widow B pension) being started
up again in this way.
Automatic cancellations and
variations
Items 33 to 39, 42 to 44 and 47 make amendments for
the working credit to most of the current provisions in Division 8 of Part 3 of
the Administration Act that automatically cancel a person’s payment, or
automatically reduce the person’s rate. These provisions are technically
self-executing, although clearly they have to be put into effect and when
they are put into effect may govern when they take effect. These
automatic provisions cannot operate unless a valid reporting requirement has
been imposed on the person. The provisions give different results according to
whether or not the person complied with the reporting requirement and according
to whether it was a paragraph 68(2)(a) notice requirement or a paragraph
68(2)(b) statement requirement.
This group of
provisions is part of the bigger issue of when a cessation of, or variation to,
a person’s payment takes effect. There are other provisions in Division 7
that provide non-automatic powers to cease or reduce a payment – the dates
of effect for these are provided by Division 9, notably section
118.
The relevant Division 7 determination
provisions are sections 79, 80 and 81. These oblige the Secretary to reduce the
person's rate or cancel or suspend the person's payment if satisfied that the
payment or rate that is being, or has been, paid to the person is not authorised
by the social security law. Under section 118, the date of effect of such an
adverse determination generally takes effect on the day of the event or matter
that triggers the adverse
determination.
Importantly, however, these
Division 7 powers are not available to the Secretary if another provision
achieves the cancellation, suspension or reduction on the same day or earlier
than the Division 7 determination would take effect. Thus, if one of the
automatic provisions operates (ie, as long as a valid reporting requirement was
imposed on the person) to produce the same or an earlier date of effect, it is
that which applies and a Division 7 determination may not be
made.
The section 93 automatic cancellation (or
section 99 automatic rate reduction) for people complying with a paragraph
68(2)(a) notice requirement, and who lose qualification for, or payability of,
the payment (or whose rate should be reduced), only operates if one or more
instalments have been paid after the event occurs and before the automatic
provision is put into effect. If one instalment has been paid, the automatic
provision takes effect after the end of that instalment period, thus preserving
the validity (or rate) of the paid instalment. If more than one instalment has
been paid, the automatic provision takes effect after the end of the
person’s notification period, thus preserving the validity (or rate) of
the first instalment and probably for some few days
longer.
The section 94 automatic cancellation
(or section 100 automatic rate reduction) for people who do not comply
with a paragraph 68(2)(a) notice requirement, and who lose qualification for, or
payability of, the payment (or whose rate should be reduced), takes effect on
the day of the event, ie, generally
backdated.
All of these automatic provisions
operate on the basis of the event. The event, however, ceases to be a
meaningful focus for the provisions if the person has a working credit balance
that will be reduced to nil, causing the loss of payability (or a reduced rate),
potentially much later than the event itself. Accordingly, the new subsections
inserted in each of these relevant sections allow the automatic cancellations or
rate reductions to take effect within the framework of the existing provisions,
but no earlier than the day on which the working credit balance is reduced to
nil. Thus, the provisions have been beneficially
adjusted.
It is important to note that the
changes to the provisions accommodate two alternative dates of effect, not just
when the working credit balance is reduced to nil. This is because of the
tendency for there to be two separate effects on subsequent days, each
potentially triggering the operation of one of these provisions. This is
illustrated as follows:
• If a
person’s working credit balance is reduced to nil on a particular day, the
person’s remaining ordinary income could cause the person’s payment
rate to be nil on that day – in that case, there could be an automatic
cancellation and it should generally take effect on the day the balance is
reduced to nil.
• Alternatively, the
remaining income might not be sufficiently high to produce a nil rate - in that
case, there could be an automatic rate reduction instead and it should generally
take effect on the day the balance is reduced to
nil.
• If there were a rate reduction
rather than a cancellation on the day on which the balance was reduced to nil,
it is likely that the person’s remaining ordinary income on the subsequent
day (especially noting that the employment income component of that income will
be the same on each day in the instalment period because of new section
1073B) will cause a further
change.
• On this subsequent day (which
has been characterised as the first day on which the person’s opening
balance is nil), the person’s remaining ordinary income could cause the
person’s payment rate to be nil on that day – in that case, there
could be an automatic cancellation and it should generally take effect on that
subsequent day.
• Alternatively, the
remaining income might not be sufficiently high to produce a nil rate – in
that case, there could be an automatic rate reduction instead and it should
generally take effect on that subsequent
day.
The changes to these provisions equally
apply to reductions to nil of a person’s student income bank balance, by
an amount of employment income or any other ordinary income, as they do in
relation to reductions to nil of a person’s working credit balance, by an
amount only of employment income. (Any ordinary income, not just employment
income, may deplete the student income
bank.)
The current section 95 automatic
cancellation for people who do not comply with a paragraph 68(2)(b)
requirement to give a statement in respect of a period simply takes effect from
the beginning of the period, ie, usually the beginning of the instalment period.
This provision does not need to change substantially in relation to a
person’s working credit balance being reduced to nil because it actually
operates as a straight penalty for not giving the statement (unless the
discretion in subsection (2) is exercised to negate the automatic cancellation).
However, subsection 95(1) is repealed and substituted by item 39 to
reflect the changed reporting requirements affecting paragraph 68(2)(b) –
see the discussion above in relation to reporting requirements. In essence, if
a person fails to give a statement required for one period only, or fails to
give a statement required for any one of several periods, the automatic
cancellation takes effect from the beginning of the period in
question.
Items 40 and 41 amend existing
section 98 to insert a new subsection. New subsection 98(2) is an
automatic rate reduction provision that applies when a person’s partner
starts to receive a pension or benefit and, as a result, causes the
person’s payment to reduce. The amendments make sure that the rate
reduction will not take effect until any working credit balance or student
income bank balance of the person is reduced to nil, or the subsequent
day.
Date of effect of
determinations
Items 48 to 53 and 55 to 60 make
amendments for the working credit to several of the date of effect provisions in
Division 9 of Part 3 of the Administration
Act.
The amendments to section 110 (items 48
to 53), relating to favourable determinations (ie, a rate increase or a
resumption of payment), are purely to reflect the operation of new section
1073B. Now that a below pension age person’s employment income for an
instalment period is spread evenly over all of the days in the instalment
period, any favourable determination triggered by a decrease in, or cessation
of, employment income is to take effect from the beginning of the person’s
instalment period, instead of from the later day when the event or matter
occurs. This is equally the case if the favourable determination for the person
is triggered by the person’s below pension age partner’s giving a
paragraph 68(2)(b) statement about a decrease in, or cessation of, the
partner’s employment income. In that case, the person’s favourable
determination takes effect on the day that is the beginning of the
partner’s instalment period.
However, in
the case of new subsection 110(1A), if the person notifies the event any
later than the end of the instalment period, the determination takes effect on
the first day of the instalment period in which the event is notified –
this is comparable to the equivalent existing
rule.
The amendments to section 118 (items
55 to 60), relating to adverse determinations (ie, a rate reduction or a
cancellation or suspension), are to reflect both the operation of new section
1073B and the effect of the working credit and student income bank in
keeping a payment payable for longer, or at a higher
rate.
New subsections 118(2A) and (5A)
override the other rules in section 118 if the adverse determination is
triggered by employment income. The first of these new subsections relates to
people complying with a paragraph 68(2)(a) notice requirement and the second
relates to people complying with a paragraph 68(2)(b) statement requirement. In
each case, the date of effect will be one of three possible days, and the new
provisions deal with the same subsequent day tendency discussed above in
relation to the automatic cancellation and variation
provisions.
If the determination is triggered
by the person’s working credit balance or student income bank balance
being reduced to nil, the date of effect will be the day of that reduction to
nil. If the determination is triggered on the subsequent day by the
person’s working credit balance already being nil, the date of effect will
be that subsequent day (which has again been characterised as the first day on
which the person’s opening balance is nil). Otherwise, ie, if the
person’s working credit balance or student income bank balance was already
nil at the beginning of the instalment period, because of having been used up
previously or never having risen above nil, the date of effect will be the
beginning of the instalment period (to reflect the operation of new section
1073B).
New subsection 118(6A)
similarly deals with the case of the adverse determination for the person
being triggered by the person’s below pension age partner’s giving a
paragraph 68(2)(b) statement about the partner’s employment income.
In that case, the person’s adverse determination takes effect on either
the day the partner’s working credit balance is reduced to nil, the
subsequent day or the beginning of the partner’s instalment period, as
applicable.
Note that new subsections
118(2A) and (2B) do not apply, as existing subsection 118(2) does not
apply, if an instalment has already been paid to the person before the
determination could correct it. If that has happened, it is usual that one of
the automatic cancellation or variation provisions discussed above will apply,
with more lenient effect if the person complied with the reporting requirement.
If one of those provisions does not apply, subsection 118(13) would provide the
date of effect.
New subsections 118(2B) and
(5B) provide comparable rules in relation to a determination that is
triggered either by any ordinary income other than employment income (for
a person of any age) or by employment income (for a person who has reached
pension age) - but only if the person had a student income bank balance that was
reduced to nil during the instalment period. In this case, the determination
will take effect on the day of the reduction to nil or the subsequent day, as
appropriate. However, note that, if the person’s student income bank
balance was already nil at the beginning of the instalment period, because of
having been used up previously or never having risen above nil, the date of
effect is set under the existing subsection (2) or (5), as applicable, at the
day on which the event or matter occurs.
New
subsection 118(6B) similarly deals with the case of the adverse
determination for the person being triggered by the person’s
partner’s giving a paragraph 68(2)(b) statement about either the
partner’s ordinary income other than employment income (for a partner of
any age) or the partner’s employment income (for a partner who has reached
pension age) - but only if the partner had a student income bank balance that
was reduced to nil during the instalment period. In that case, the
person’s adverse determination takes effect on the day of the
partner’s reduction to nil or the subsequent day, as appropriate. Again,
if the partner’s student income balance was already nil at the beginning
of the instalment period, because of having been used up previously or never
having risen above nil, the date of effect is set under the existing provision
(this time, subsection (6)) at the day on which the matter
arose.
These student income bank rules are not
the direct result of the working credit and employment income spreading changes,
but are being inserted now to clarify that the beneficial treatment for these
people is on a similar footing to the treatment for people with a working credit
balance greater than nil.
Schedule 7 – Miscellaneous
amendments
Schedule 7 amends the confidentiality provisions in the
social security and family assistance laws. The amendments enable customer
information held in the records of Centrelink to be used for the purposes of the
Family Homelessness Prevention and Early Intervention Pilot (the
Pilot).
The amendments made by Schedule 7 are
effective from 1 July 2002.
Research into homelessness indicates that, for many
families who become homeless, there is a lead-up period in which they frequently
move house and experience financial crisis.
The
aim of the Pilot is to identify families at risk of homelessness and intervene
to prevent homelessness, unmanageable debt and other forms of
crisis.
Families at risk would be identified
using relevant Centrelink data including: changes of address, debt patterns,
multiple breaches for parents on newstart allowance and youth allowance, and
families frequently calling on emergency relief for advance payments. These
families would then be assisted to regain stability in their housing and
financial circumstances, and to access community services, labour market
programs and employment.
Part 1 – Amendment of the Social
Security (Administration) Act 1999
“Protected information” is defined in the
social security law as including information about a person that is, or was,
held in the records of Centrelink (technically the Commonwealth Services
Delivery Agency). The relevant definition is in subsection 23(1) of the
Social Security Act. Information about a person’s address, debt patterns
etc is covered by the definition of “protected
information”.
Under the relevant
confidentiality provisions, protected information can only be obtained and used
for specified purposes (subsections 202(1) and (2) of the Administration Act
refer). The use of protected information held in Centrelink records for the
purposes of the Pilot (and other programs administered by the Department that do
not have a direct connection with the social security law) does not fall within
those specified purposes.
Items 1 and 2
amend section 202 of the Administration Act to enable protected information to
be obtained and used for the purpose of the
Pilot.
Amendments are also made by item
3 to enable the Minister to specify, from time to time, other purposes
relating to programs administered by the Department for which confidential
information can be obtained, recorded, disclosed or otherwise used. These other
programs would be specified in a disallowable instrument that could not commence
prior to the end of the disallowance period.
This instrument making power might be used,
for example, to enable the Minister to specify purposes relating to programs
flowing from the Pilot, which rely on confidential information.
Consistent with current administrative
practices, the Office of the Federal Privacy Commissioner will be consulted on
any new programs administered by the Department that involve the use of
confidential customer information.
Part 2 – Amendment of the A New
Tax System (Family Assistance) (Administration) Act 1999
Section 162 of the A New Tax System (Family Assistance)
(Administration) Act 1999 is cast in the same terms as section 202 of the
Administration Act. It is the family assistance equivalent of section
202.
The amendments made by items 4, 5 and 6
mirror those made by items 1, 2 and 3.