House of Representatives

Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Bill 2007

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP)

Schedule 2 - Civil penalties

Summary

This Schedule introduces a civil penalty and infringement notice scheme. The amendments provide that the Minister may seek a civil penalty order from the Federal Court of Australia or the Federal Magistrates Court where an approved child care service contravenes a civil penalty provision. The civil penalties scheme will operate in conjunction with an infringement notice scheme. An infringement notice that is issued to an approved child care service will provide the service with the option of paying the lesser penalty set out in the notice or proceeding to a court to determine liability.

Background

The family assistance law currently provides criminal penalties for those approved child care services and former operators of approved child care services that fail to comply with the obligations imposed by the family assistance law. Approved child care services have a direct role in the delivery of CCB. Compliance with the obligations imposed by the family assistance law is therefore essential for the proper administration of CCB.

The introduction of a civil penalties scheme will enhance the range of penalties that may be applied to an approved child care service to ensure compliance with the obligations imposed under the family assistance law.

The civil penalties and infringement notice scheme will not directly affect individuals receiving CCB. An individual will only be affected where an approved child care service consistently fails to comply with its obligations under family assistance law, through either the application of existing sanction provisions or the suspension of a service's approval under new section 219TSQ.

The civil penalty and infringement notice scheme will commence on 1 July 2007.

Explanation of the changes

Item 1 inserts the definition 'civil penalty provision' into subsection 3(1). This definition sets out the proposed provisions in the bill which are civil penalty provisions. The following provisions are civil penalty provisions: subsection 219EA(2) and subsection 219TSB(1). Civil penalty provisions may attract a pecuniary penalty if breached (see new section 219TSC).

Item 2 amends subsection 104(1) by inserting a new paragraph (e) to provide that the Secretary may not review on his own initiative a decision under Division 2 of new Part 8C (inserted by item 7 ) (infringement notices).

Decisions made in relation to infringement notices are not reviewable under the review provisions in Division 1 of Part 5 of the Family Assistance Administration Act.

Item 3 amends subsection 108(2) by inserting a new paragraph (g) to provide that a decision under Division 2 of Part 8C (infringement notices) may not be reviewed on application under section 109A. Decisions made in relation to infringement notices are not reviewable under the review provisions in Division 1 of Part 5 of the Family Assistance Administration Act.

Item 4 amends subsection 111(1A) to provide that a decision made personally by the Secretary under Division 2 of Part 8C (infringement notices) may not be reviewed by the Social Security Appeals Tribunal.

The proposed amendments in this bill relating to the infringement notices (see item 7 ) require the Secretary to make two decisions personally under Division 2 of Part 8C. The first decision is the appointment of an authorised person under section 219TSO. The second decision is to grant an extension of time for a person to pay an infringement notice (subparagraph 219TSJ(e)(ii)). The Family Assistance Administration Act presently provides that decisions in relation to child care services under Part 8 of the Act are not reviewable by the Social Security Appeals Tribunal. This provision continues the present scheme of the Act.

Item 5 amends subsection 144(1) by inserting new paragraphs (oa) and (ob).

New subparagraph (oa) provides that a decision made under new subsection 219TSQ(1) to suspend the approval of an approved child care service may be reviewed by the Administrative Appeals Tribunal.

New subparagraph (ob) provides that a decision made under new subparagraph 219TSQ(3) to revoke the suspension of an approved child care service from a particular day may be reviewed by the Administrative Appeals Tribunal.

The Secretary must suspend the approval of an approved child care service if the person has been given 10 infringement notices under new section 219TSI (in item 7 ) within a period of 12 months. The time for paying a penalty under each of the 10 infringement notices must have ended before the end of the 12 months.

Item 6 inserts new section 219EA.

New section 219EA imposes a further obligation on an approved child care service to provide information to the Secretary in relation to child care places at the service.

New subsection 219EA(1) provides that new section 219EA will apply where the Minister has determined rules under subsection 205(1) that require an approved child care service to provide, by a particular time, information in relation to the number of child care places provided by the service, or likely to be provided, during a particular period.

Subsection 205(1) of the Family Assistance Administration Act provides that the Minister may determine rules relating to the eligibility of a service to be approved and to continue to be approved. The Minister has determined rules, which are set out in the Child Care Benefit (Eligibility of Child Care services for Approval and Continued Approval) Determination 2000 .

New subsection 219EA(2) provides that the service must provide the information at the time and in the form, manner or way specified in the request. New subsection 219EA(3) provides that subsection 219EA(2) is a civil penalty provision (see item 1 ).

The Secretary currently collects information from approved child care services on the number of child care places occupied for the past week and the number of child care places that are likely to be available in the next week. If, for example, an approved child care service is required to provide information in relation to the number of child care places provided by the service, or likely to be provided, each Friday by 8:00 pm and the service fails to provide the information by that time, the service will have contravened a civil penalty provision.

Item 7 inserts new Part 8C.

New Part 8C - Civil penalty

New Division 1 - Civil penalty orders

New Division 1 sets out the requirements for the court to make a civil penalty order. The Minister may make an application to either the Federal Court of Australia or the Federal Magistrates Court for a civil penalty order, where a person has contravened a civil penalty provision.

New section 219TSA - Definitions

New section 219TSA sets out the definitions used in Division 1.

civil penalty order

The term 'civil penalty order' is defined as an order made under subsection 219TSC(1). A civil penalty order is an order of the Federal Court of Australia or the Federal Magistrates Court imposing a pecuniary penalty on a person who contravenes a civil penalty provision.

penalty unit

The term 'penalty unit' is defined as having the same meaning as in section 4AA of the Crimes Act 1914 .

New section 219TSB - Ancillary contravention of a civil penalty provision

New subsection 219TSB(1) addresses ancillary contraventions of a civil penalty provision. It provides that a person must not:

attempt to contravene a civil penalty provision; or
aid, abet, counsel or procure a contravention of section 219EA(2); or
induce a contravention of this provision; or
in any way, be, directly or indirectly, knowingly concerned in, or party to, a contravention of this provision; or
conspire with others to effect a contravention of this provision.

These ancillary contravention provisions are similar to the offences in Part 2.4 of the Criminal Code (aiding and abetting and conspiracy), which provide for the extension of responsibility in criminal offences.

New subsection 219TSB(2) provides that new subsection 219TSB(1) is a civil penalty provision.

New section 219TSC - Civil penalty orders

New subsection 219TSC(1) provides that, where the Federal Court of Australia or the Federal Magistrates Court is satisfied that a person has contravened a civil penalty provision, the court may order the person to pay to the Commonwealth a pecuniary penalty. New subsection 219TSC(2) provides that this order is known as a civil penalty order. Only the Minister may make an application to the court for a civil penalty order.

New subsection 219TSC(3) provides that a court, when determining the pecuniary penalty to be paid, must take into account all relevant matters. The relevant matters include:

the nature and extent of the contravention;
the nature and extent of any loss or damage suffered as a result of the contravention;
the circumstances in which the contravention took place; and
the findings and civil penalty orders of a court in previous proceedings under the Family Assistance Administration Act where the person has engaged in similar conduct; this would not enable a court to take into account previous infringement notices given to the defendant, as these are not proceedings under the Act.

New subsection 219TSC(4) provides that the pecuniary penalty is a debt to the Commonwealth. New subsection 219TSC(5) provides that the Commonwealth may enforce a civil penalty order in a court as a judgement debt.

The note at the end of new subsection 219TSC points out that the Secretary may also take action against the service under section 200 of the Family Assistance Administration Act. A service may be sanctioned under that section. Possible sanctions include the imposition of additional conditions for continued approval under subsection 199(2), a variation of a condition for continued approval imposed under subsection 199(2), and suspension of approval or cancellation of approval.

New section 219TSD - Maximum penalties for contravention of civil penalty provisions

New subsection 219TSD sets out the maximum pecuniary penalty payable for a contravention of a civil penalty provision. The maximum penalty payable for a contravention of a civil penalty provision by a body corporate is 60 penalty units. The maximum penalty payable for a contravention of a civil penalty provision by a person other than a body corporate is 30 penalty units.

The maximum penalties for a contravention of a civil penalty provision are 30 penalty units for a natural person and 60 penalty units for a body corporate. Generally, criminal penalties in Commonwealth legislation for a body corporate are five times higher than the penalty imposed on a natural person. The penalty has been set at a 2:1 ratio in this instance because of a number of factors. These factors include the nature of the obligation being imposed on an approved child care service, the fact that a penalty less than 30 penalty units imposed on a natural person would be meaningless, and the usual penalty for non-compliance with provisions of a similar nature in other Commonwealth legislation is 60 penalty units for a body corporate.

New section 219TSE - proceedings may be heard together

New section 219TSE provides that, where the Federal Court of Australia or the Federal Magistrates Court considers it appropriate, 2 or more proceedings for a civil penalty order may be heard together.

New section 219TSF - Time limit for application for an order

New section 219TSF provides that the Minister must make an application for a civil penalty order no later than four years after the contravention.

New section 219TSG - Civil evidence and procedure rules for civil penalty orders

The Federal Court of Australia or the Federal Magistrates Court, when hearing proceedings for a civil penalty order, is to apply the rules of evidence and procedure that apply when the court hears a matter in its civil jurisdiction.

New Division 2 - Infringement notices

New Division 2 sets up a system of infringement notices relating to contraventions of civil penalty provisions. It is anticipated that such notices could be given where an authorised person is of the view that there has been a minor breach which could be adequately dealt with by way of an infringement notice, instead of initiating court proceedings.

New section 219TSH - Definitions

New section 219TSH sets out the definitions used in Division 2.

authorised person

An 'authorised person' is the Secretary, or an officer of the Department who is appointed in writing as an authorised person for the purposes of this Division under section 219TSO.

The definition of an authorised person is central to the scheme of issuing infringement notices. Only an authorised person can issue infringement notices under section 219TSI.

civil contravention

This is defined to mean a contravention of a civil penalty provision. The civil penalty provisions are in new subsections 219EA(2) and 219TSC(1).

An infringement notice can be given when an authorised person has reasonable grounds to believe that a person has committed one or more civil contraventions (see new subsection 219TSI(1)).

infringement notice

The term 'infringement notice' is defined as an infringement notice given under section 219TSI.

penalty unit

The term 'penalty unit' is defined as having the same meaning as in section 4AA of the Crimes Act 1914 .

New section 219TSI - when an infringement notice can be given

New subsection 219TSI(1) sets out when an infringement notice may be issued. It provides that an infringement notice may be issued by an 'authorised person' (the Secretary or an officer of the Department - see definition in new section 219TSH) if he or she has reasonable grounds to suspect that a person has contravened a civil penalty provision (see item 1 above for the definition of 'civil penalty provisions').

New subsection 219TSI(2) requires that an infringement notice be given to the person within 12 months of the date that the contravention or contraventions occur.

New section 219TSJ - Matters to be included in an infringement notice

New subsection 219TSJ(1) sets out the requirements of an infringement notice. The notice must contain the following:

the name of the person to whom the notice is given, that is, the person who has allegedly contravened the civil penalty provision;
the name of the approved child care service where the infringement took place;
the name of the authorised person who issued the notice; it is anticipated that, as a matter of administrative practice, the authorised person would sign the notice;
brief details of the alleged civil contraventions (the minimum details to satisfy this requirement are set out in new subsection 219TSJ(2));
a statement setting out that the Federal Court of Australia or the Federal Magistrates Court will not deal with the matters in the alleged contraventions if the penalty is paid within the notified period (either 28 days after the notice is given or longer, if an extension of time for payment is granted by the Secretary);
an explanation of how the payment of the penalty may be made; it is anticipated that the payment will be made directly to the Department; and
any other matters that are specified in the regulations.

New subsection 219TSJ(2) sets out that the notice must include the date of the contravention and the civil penalty provision that was contravened, as part of the brief details about the alleged contravention (under paragraph 219TSJ(1)(d)). This does not limit the details which may be included under this paragraph.

New section 219TSK - Amount of penalty

New section 219TSK sets out two tables indicating the pecuniary penalties payable under an infringement notice. The first table deals with notices given to a body corporate and the second table deals with notices given to an individual.

infringement notice given to a body corporate

New subsection 219TSK(1) provides that, where an infringement notice for a single alleged contravention of a civil penalty provision is given to a body corporate, the penalty must be four penalty units. If the infringement notice relates to more than one alleged contravention of a civil penalty provision the penalty payable is obtained by multiplying four by the number of contraventions.

infringement notice given to a person other than a body corporate

New subsection 219TSK(2) provides that, where an infringement notice for a single alleged contravention of a civil penalty provision is given to a person other than a body corporate, the penalty must be two penalty units. If the infringement notice relates to more than one alleged contravention of a civil penalty provision, the penalty payable is obtained by multiplying two by the number of contraventions.

The infringement scheme penalties have a 2:1 penalty ratio in relation to a body corporate and a natural person. As noted above, the maximum penalty for a civil penalty provision also has a 2:1 penalty ratio in relation to a body corporate and a natural person (see discussion - new section 219TSD). The rationale for maintaining the 2:1 ratio for infringement notices is the same as for a contravention of civil penalty provision (see discussion - new section 219TSD). The information a service is obliged to provide is to be provided weekly. If the infringement notice penalty were the usual 1/5th of the maximum penalty (that is, 12 penalty units) and were imposed for each failure to provide information, the infringement notice scheme could result in severe penalties, which is not the intention of the policy behind these regulatory changes.

New section 219TSL - Withdrawal of an infringement notice

New subsection 219TSL(1) provides that new section 219TSL will apply when a notice has been given to a person.

New subsection 219TSL(2) provides for an authorised person (the Secretary or an officer of the Department - see definition in new section 219TSH), to withdraw an infringement notice that has been given to a person in relation to a contravention of a civil penalty provision. The withdrawal notice must be in writing.

A withdrawal of a previously given infringement notice may be considered, for example, where further evidence has come to light since the issuing of the infringement notice to suggest that a person has not contravened a civil penalty provision, or alternatively that further evidence suggests that the breach is more serious than initially believed and consequently would be more appropriately dealt with by a court rather than an infringement notice.

Where a person does not pay a penalty under an infringement notice, the Minister may institute proceedings in the Federal Court of Australia or the Federal Magistrates Court for a civil penalty order. New section 219TSN provides that the court's discretion to determine the amount of a penalty to be imposed on a person who is found in proceedings under Division 1 to have committed a civil contravention is not affected by the person's failure to comply with the infringement notice. However, a person may be required to pay a higher penalty.

New subsection 219TSL(3) provides that, for a withdrawal notice to be effective, the withdrawal notice must be given to the person within 28 days of the person being given the infringement notice.

refund of penalty if infringement notice withdrawn

New subsection 219TSL(4) provides that, where a person has paid the penalty set out in the infringement notice and the authorised person decides to withdraw the notice, the Commonwealth will be liable to refund the amount of the penalty.

New section 219TSM - What happens if the penalty is paid

New subsection 219TSM(1) provides that section 219TSM will apply if:

an infringement notice is given to a person;
the penalty is paid in accordance with the infringement notice; and
the infringement notice is not withdrawn.

New subsection 219TSM(2) provides that any liability of the person for the alleged contravention will be discharged. Therefore, if the factors set out in new subsection 219TSM(1) are satisfied, all liability for the alleged contravention will have been discharged.

New subsection 219TSM(3) provides that no proceedings may be instituted by the Minister for a civil penalty order under new Division 1 against the person for the contravention alleged in the infringement notice.

New section 219TSN - Effect of this Division on civil proceedings

New section 219TSN clarifies the effect of the infringement notice in relation to civil penalty proceedings.

New section 219TSN specifically provides that nothing in this Division:

requires an infringement notice to be given in relation to an alleged civil contravention (new paragraph 219TSN(a));
affects the liability of a person to have court proceedings brought against them under Division 1 if the person does not comply with an infringement notice, an infringement notice is not given to a person, or an infringement notice is withdrawn (new paragraph 219TSN(b));
limits the Federal Court's discretion to determine the amount of a penalty to be imposed on a person who is found in proceedings under Division 1 to have committed a civil contravention (new paragraph 219TSN(c)).

New section 219TSO - Appointment of an authorised person

New section 219TSO enables the Secretary to appoint, in writing, an officer of the Department as an authorised person for the purposes of Division 2. An authorised person is able to issue infringement notices under this Division, (section 219TSI), and may withdraw notices (new section 219TSL).

In addition to those officers specifically appointed as authorised persons under this section, the Secretary is an authorised person for the purpose of this Division (see definition of an 'authorised person' in new section 219TSH). He or she is automatically considered an authorised person without any need to be appointed as such under section 219TSO.

New section 219TSP - Regulations

New section 219TSP provides that the regulations may make further provision in relation to infringement notices. A general regulation-making power is found in section 235 of the Family Assistance Administration Act.

New Division 3 - Suspension of approved child care service's approval

New section 219TSQ - Suspension of approved child care service's approval

New subsection 219TSQ(1) provides that the Secretary must suspend the approval of an approved child care service if the person has been given 10 infringement notices under new section 219TSI within a period of 12 months. The time for paying a penalty under each of the 10 infringement notices must have ended before the end of the 12 months. The Secretary must give the person who operates the service a notice in writing stating that the service's approval has been suspended.

Example: A person is given an infringement notice on 9 July 2007. A further eight notices are given throughout the following 10 months. A tenth infringement notice is given on 23 June 2008. The Secretary would not be able to suspend the service's approval based on the 10 infringement notices because the time for payment of the penalty under the tenth notice would occur outside 12 months from the time the person was given the first infringement notice.

New subsection 219TSQ(2) provides that the notice the Secretary gives the person who operates the service must specify a day from which the service's approval is suspended. The day from which the service's suspension takes effect cannot be a date earlier than the date of the notice. The Secretary must also set out the grounds upon which the Secretary has suspended the approval of the service, that is, that, within a 12 month period, the person has been given 10 infringement notices and the period for paying a penalty under each notice has expired.

New subsection 219TSQ(3) provides that the Secretary may revoke the suspension of the service's approval with effect from the day specified in the notice.

Item 8 amends section 221 by adding a further subsection (4), providing that the Secretary may not delegate any of the Secretary's powers under Division 2 of Part 8C (infringement notices).

Item 9 provides that the obligation to provide information made by item 6 arises after the commencement of the item on 1 July 2007, regardless of whether the information that is to be provided relates to a period before 1 July 2007.


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