House of Representatives

A New Tax System (Family Assistance and Related Measures) Bill 2000

Explanatory Memorandum

(Circulated by authority of the Minister for Family and Community Services, Senator the Hon. Jocelyn Newman)

This memorandum takes account of a correction made to the memorandum as tabled in the House of Representatives.

Schedule 3 - amendment of the Social Security Law

Social Security Act 1991

Overview of amendments to the Social Security Act 1991

Schedule 3 to this Bill makes a series of technical and consequential amendments to the Social Security Act.

The Social Security Act is also amended to increase the following social security payments by 4% to compensation for the effects of the goods and services tax:

CDEP Participant Supplement;
pensioners education supplement; and
carer allowance.

Finally, a transitional provision, relating to the application of the seasonal work preclusion period, is inserted into Schedule 1A to the Social Security Act.

Explanation of amendments

Technical and consequential amendments to the Social Security Act

Item 1m repeals subsection 20(2) of the Social Security Act. Subsection 20(2) defines "CPC rate", a term that is used to adjust family allowance child rates. With the repeal of family allowance, this provision becomes redundant.

Item 2 makes a technical amendment to the definition of "family assistance law" in subsection 23(1) of the Social Security Act so that the term includes the transitional and savings provisions dealt with in Schedules 5 and 6 to this Bill.

Item 3 amends the definition of "payday" in subsection 23(1) of the Social Security Act so that the definition no longer refers to non-benefit PP (partnered), family allowance or family tax payment.

Item 4 amends subsection 999(1) of the Social Security Act so that a person is required to satisfy a residence test in order to qualify for double orphan pension (DOP). The requirement in new paragraph 999(1)(d) mirrors the residence requirement for FTB.

This amendment is consistent with the existing qualification rules for DOP. To qualify for DOP, family allowance must be payable to the person for the young person in respect of whom DOP is claimed. It follows that the residence requirements for family allowance must also be satisfied for family allowance to be payable.

Items 6 to 8 make technical changes to the parenting payment rate calculator.

Module A in section 1068B of the Social Security Act outlines the overall rate calculation process for PP (partnered) including non-benefit PP (partnered). Item 51 of Schedule 7 of the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999 (the CA No 1 Act) repeals Module A and substitutes a new Module A that does not provide for the payment of non-benefit PP (partnered). Item 54 makes a consequential amendment to point 1068B-C2.

Schedule 2 to the Further 1998 Budget Legislation Amendment (Social Security) Act 1999 gives legislative effect to the Government's CDEP package, announced as part of the 1998-99 Budget. The relevant changes commence on 20 March 2000.

The 20 March 2000 changes are not reflected in new Module A in section 1068B as inserted by item 51 of Schedule 7 to the CA No 1 Act.

Items 6, 7 and 8 amend section 1068B of the Social Security Act to reflect the 20 March 2000 changes.

Increase the rate of certain social security payments by 4%

Section 1061PZG provides for the payment of the pensioner education supplement. There are two rates of payment, $60 and $30 per fortnight.

The $60 amount is increased by 4% to $62.40 by the A New Tax System (Compensation Measures Legislation Amendment) Act 1999 .

The $30 amount (a new amount introduced from 1 March 2000) is increased by 4% to $31.20 by item 5 .

Items 9 and 10 increasethe $20 CDEP Participant Supplementby 4% to $20.80.

Schedule 1 to the A New Tax System (Compensation Measures Legislation Amendment) Act 1998 inserts a new section 1206GA into the Social Security Act. This new provision operates to increase certain social security rates by 4% on 1 July 2000. One such rate is child disability allowance (see item 1 in Table A in section 1206GA).

From 1 July 1999, child disability allowance was replaced by carer allowance. Subsection 974(2) sets the rate of carer allowance.

Items 11 and 12 amend item 1 in the Table in section 1206GA of the Social Security Act to provide a 4% increase in the rate of carer allowance specified in subsection 974(2) instead of child disability allowance.

Transitional provisions relating to the application of the seasonal work preclusion period

Item 13 inserts a new transitional provision into Schedule 1A to the Social Security Act.

New clause 127 deals with the situation where a person is subject to a seasonal work non-benefit period that starts before 1 July 2000 and would, but for the repeal of non-benefit PP (partnered) and the associated concept of a seasonal work non-benefit period, have continued after that date. In this situation, the period of the seasonal work non-benefit period that would have occurred on and after 1 July 2000 (the residual period) is deemed to be a seasonal worker preclusion period.

Without this transitional provision, parenting payment customers who are being paid non-benefit PP (partnered) because of the application of the seasonal work preclusion rules may, on 1 July 2000, may be entitled to be paid the higher rate of pension PP (single) or benefit PP (partnered), thereby defeating the purpose of those rules. While parenting payment would not be payable to these customers for the residual period, they would probably be entitled to payment of FTB Part B (which replaces non-benefit PP (partnered)).

Social Security (Administration) Act 1999

Overview of amendments to the Social Security (Administration) Act 1999

Schedule 3 to this Bill makes numerous consequential amendments to the Social Security Act (Administration) 1999 (the Social Security Admin Act). These changes are necessary because of the repeal of family related payments from the social security law and the repeal of the Child Care Payments Act 1997 .

Amendments are also made to ensure decisions under subsection 91A(3) of the Child Support (Assessment) Act 1989 (the CSA Act) are no longer reviewable under the social security law. These decisions will be reviewable under the family assistance law from 1 July 2000.

Explanation of amendments

Items 14 to 32, 39 and 48 to 51 make minor consequential amendments to the Social Security Admin Act because of the repeal of family allowance, family tax payment and non-benefit PP (partnered) and the relocation of maternity allowance and maternity immunisation allowance into the family assistance law.

Amendments are made to repeal provisions that are specific to one or more of the repealed payment types. For example, item 22 repeals section 71 of the Social Security Admin Act (section 71 allows the Secretary to give a person who is receiving family allowance or family tax payment a notice that requires the person to notify of a change of address).

Other amendments omit references to repealed payment types or modify existing provisions so that they no longer apply to these payment types. For example, item 14 recasts subsection 3(5) of the Social Security Admin Act so that it no longer refers to family allowance.

Items 46, 47, 52 and 53 make some minor technical changes to specified provisions in the Social Security Admin Act. Remaining references to the Child Care Payments Act 1997 are omitted. Where relevant, they are replaced with references to the family assistance law. Existing incorrect references to the Student and Youth Assistance Act 1973 are also replaced by references to the Student Assistance Act 1973 .

Items 33 to 38 and 40 to 45 amend various provisions in the Social Security Admin Act that relate to the review of decisions under subsection 91A(3) of the CSA Act. The effect of these amendments is that decisions under subsection 91A(3) of the CSA Act are no longer reviewable under the social security law.

These decisions are currently reviewable under the Social Security Admin Act because of the connection between the reasonable maintenance action test (applicable for family allowance) and subsection 91A(3). From 1 July 2000, family allowance will be replaced by FTB. The reasonable maintenance action test will, from that date, be relevant for FTB. Subsection 91A(3) will retain its connection to the reasonable maintenance action test applicable to FTB and will therefore be reviewable under the family assistance law. Various amendments are made to the FA Admin Act in Part 3 of Schedule 2 to this Bill to achieve this outcome.

Social Security (International Agreements) Act 1999

Overview of amendments to the Social Security (International Agreements) Act 1999

Schedule 3 to this Bill makes some technical changes to the portability rate calculation provisions in the Social Security (International Agreements) Act 1999 (the International Agreements Act).

Explanation of amendments

Items 139 and 140 of the A New Tax System (Family Assistance) (Consequential and Relates Measures) Act (No. 2) Act 1999 (CA No. 2 Act) amend the method statement in point 1210 - A1 of the Social Security Act and insert a new

point 1210-A1A. These amendments are consequential upon the repeal of family allowance and the introduction of the new family assistance regime.

Schedule 2 to the Social Security (Administration and International Agreements) (Consequential Amendments) Act 1999 repeals Part 4.1 of the Social Security Act, including point 1210-A1, with effect from 20 March 2000. Part 4.1 of the Social Security Act is replaced by section 13 of Division 1 of Part 3 of the International Agreements Bill. Section 13 does not reflect the amendments made by items 139 and 140 of the CA No. 2 Act to its predecessor, point 1210-A1 of the Social Security Act.

Items 54 and 55 make the relevant technical amendments that are equivalent to those made by items 139 and 140 of the CA No. 2 Act.


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