Senate

Revised Explanatory Memorandum

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

Notes on Clauses

Abbreviations used in this explanatory memorandum

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Social Security Act means the Social Security Act 1991;

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Family Assistance Act means the A New Tax System (Family Assistance) Act 1999;

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Paid Parental Leave Act means the Paid Parental Leave Act 2010;

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Farm Household Support Act means the Farm Household Support Act 2014;

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NARWP means newly arrived resident's waiting period.

Clause 1 sets out how the new Act is to be cited - that is, as the Social Services and Other Legislation Amendment (Promoting Sustainable Welfare) Act 2018.

Clause 2 provides a table setting out the commencement date of the new Act.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

Schedule 1 - Social security amendments

Summary

This Schedule will increase the existing newly arrived resident's waiting period (NARWP) from 104 weeks to 208 weeks for various working age social security payments and concession cards, introduce a 208 week NARWP for bereavement allowance and parenting payment and introduce a 52 week NARWP for carer allowance.

Background

Waiting periods for newly arrived migrants are a long standing feature of the social security system. A NARWP was first introduced for certain payments in 1993, with the current 104 week NARWP introduced in 1997. The NARWP aims to encourage new migrants to make provisions to be self-sufficient when they first settle in Australia.

The 104 week NARWP applies to newstart allowance, youth allowance, austudy, sickness allowance, carer payment, special benefit, mobility allowance, pensioner education supplement, health care card (low income) and seniors health card.

In most cases, the NARWP applies to people settling permanently in Australia. This is because eligibility for these social security payments and concession cards is generally restricted to people who are Australian residents (that is, a person who resides in Australia and is an Australian citizen, the holder of a permanent visa or a Special Category Visa (SCV) holder who is a protected SCV holder). However, in some cases, a person may qualify for special benefit or certain concession cards if they are the holder of a temporary visa. These temporary visa holders may also be subject to a NARWP.

This Schedule will increase the current NARWP from 104 weeks to 208 weeks for the above working age social security payments and concession cards, except carer payment (the NARWP for carer payment is not being amended and will remain at 104 weeks).

A 208 week NARWP will also be introduced for bereavement allowance and parenting payment to align these payments with other working age social security payments. These payments are not currently subject to a NARWP, although they do have qualifying residence requirements, including a 104 week qualifying residence period (unless other conditions are satisfied). The qualifying residence period affects a person's qualification for payment, whereas the NARWP affects payability. The new NARWP provisions for these payments mirror the existing provisions for social security payments already subject to a NARWP.

The current 104 week qualifying residence period for bereavement allowance and parenting payment will continue to be a factor for qualification, and will run concurrently with the 208 week NARWP to be consistent with other working age social security payments. The other existing qualification requirements will be retained in the relevant provisions so that the qualification requirements are not broadened by these amendments. The new NARWP will be applied in addition to the existing qualification requirements, to affect payability rather than qualification.

A 52 week NARWP will also be introduced for carer allowance. Currently, there is no waiting period or qualifying residence period for carer allowance, there is only a requirement that both the carer and care receiver must be Australian residents.

Introducing a NARWP to additional social security payments will enhance the self-sufficiency expectation for newly arrived migrants.

Under the amendments in this Schedule, a person will be required to serve a NARWP of between 52 and 208 weeks before a relevant social security payment is payable, or before a person will qualify to receive a seniors health card or health care card (low income).

Existing exemption provisions from the NARWP will continue to apply to the payments currently subject to a NARWP and will also apply to the NARWP for bereavement allowance, parenting payment and carer allowance. This includes for people who have a qualifying residence exemption, people who are a refugee or former refugee at the time of claim and people who are an Australian citizen at the time of claim. Certain additional exemptions will also continue to apply for particular payments. For example, certain specified carer visas are exempt from the NARWP for carer payment and this exemption will also apply to the new NARWP for carer allowance. People who have become a lone parent may be exempt from the NARWP for parenting payment, newstart allowance and youth allowance and people who experience a substantial change in circumstances may be exempt from the NARWP for special benefit. There will be no change to the substantial change in circumstances exemption. The existing exemption will remain in place and will continue to provide protections for those in Australia - including, for example, where a person has applied for a temporary partner visa - who experience a substantial change in circumstances through access to special benefit payments. This provides certainty that there are no detrimental changes included in the legislation to the substantial change in circumstances exemption for special benefit.

The amendments made by the Schedule will apply to all newly arrived residents who first become the holder of a permanent visa (or in some cases, the holder of certain temporary visas) on or after 1 January 2019.

The application provisions mean that a person who became the holder of a permanent visa (or temporary visa if applicable) prior to the commencement date will continue to be subject to the current rules. For example, a person granted a permanent visa before commencement would be subject to the existing 104 week NARWP for social security payments that are currently subject to a NARWP, such as newstart allowance, and would be subject to no NARWP for payments that are not currently subject to a NARWP, such as carer allowance.

Applying this measure only to those granted a relevant visa on or after commencement is intended to enable individuals and families seeking to migrate to Australia to make informed decisions when applying for a visa, including making arrangements to support themselves during the waiting period.

The amendments made by this Schedule will not apply to people granted an Orphan Relative or Remaining Relative visa on or after commencement. These visa holders are often young people who have experienced refugee-type experiences or other trauma and who may be disproportionally affected if subject to the changes in the Bill. These visa holders will continue to be subject to the current rules, that is, the existing 104 week NARWP for social security payments that are currently subject to a NARWP, such as newstart allowance, and no NARWP for payments that are not currently subject to a NARWP, such as carer allowance.

The amendments made by this Schedule will not apply to those people who are protected SCV holders. Protected SCV holders are generally those who were the holder of a SCV on or prior to 26 February 2001 and who were excluded from changes to access to social security payments that occurred from 26 February 2001. This cohort of people will be subject to the current NARWP rules, as in place prior to these amendments being introduced. Maintaining existing rules for protected SCV holders is consistent with the principle that people granted a relevant visa before commencement should not be affected by this measure. The exclusion of protected SCV holders from the amendments in this Schedule reflects the existing legislative intent for these SCV holders.

In addition, all SCV holders will be excluded from the changes to the NARWP for the health care card (low income) and the seniors health card. SCV holders will remain subject to the current 104 week NARWP for these concession cards.

Explanation of the changes

Part 1 - Extending existing newly arrived resident's waiting periods

Social Security Act

Items 3 to 16 amend various provisions of the Social Security Act to extend the existing NARWPs of 104 weeks to 208 weeks for the following payments:

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youth allowance

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austudy payment

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newstart allowance

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sickness allowance

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special benefit

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mobility allowance

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pensioner education supplement.

Items 17 to 20 amend various provisions of the Social Security Act, to extend the existing NARWPs of 104 weeks to 208 weeks for the seniors health card and the health care card (low income).

Item 21 provides the application provisions for the amendments in Part 1.

Sub-item 21(1) provides that the amendments made by items 3 to 10 and 13 to 16 apply in relation to a person who becomes the holder of a permanent visa on or after the commencement of these items. This provision covers the payments listed above, except for special benefit (see separate sub-items below for special benefit). Temporary visa holders are generally not qualified for these payments and are therefore not affected by these amendments regardless of this application provision. The exception are protected special category visa holders which are covered by a separate application provision.

Sub-items 21(2) and 21(3) provide that the amendments made by item 11 for special benefit apply in relation to a person who applies for a visa covered by paragraph 739A(3)(b) or who becomes the holder of a visa covered by paragraph 739(4)(b) of the Social Security Act, on or after the commencement of this item. This provision covers people who become the holder of a relevant temporary visa for special benefit. Certain temporary visa holders are qualified for special benefit by virtue of a determination under paragraph 729(2)(f)(v). For holders of temporary visa types also covered by a determination under paragraph 739A(3)(b) or 739A(4)(b), the NARWP starts from the date on which the person applied for that visa. The current determination for the purposes of paragraph 739A(3)(b) covers temporary partner and partner (provisional) visas. There is no current determination under paragraph 739A(4)(b).

Sub-item 21(4) provides that the amendments made by item 12 for special benefit apply in relation to a person who becomes the holder of a permanent visa on or after the commencement of this item.

Sub-item 21(5) provides that the amendments made by items 17 to 20 apply in relation to a person who becomes the holder of a permanent visa on or after the commencement of these items. These provisions cover the seniors health card and health care card (low income). SCV holders are qualified for these cards but are not affected by these amendments, whether granted before or after commencement. This reflects the policy intent that SCV holders not be affected by any waiting period changes in this Bill. Holders of other temporary visas are not qualified for these cards.

Sub-item 21(6) provides that the amendments made by this Part do not apply in relation to a protected SCV holder. It is possible that a person was in Australia on a SCV on 26 February 2001 and therefore was a protected SCV holder, but subsequently left Australia before completing a 104 week NARWP. If that person were to subsequently return to Australia after the commencement date, they will be subject to the current rules (a 104 week NARWP) rather than the new rules (a 208 week NARWP). These amendments reflect the principle that people granted a relevant visa prior to commencement should not be subject to this measure.

Sub-item 21(7) provides that the amendments made by Part 1 of Schedule 1 to the Bill do not apply in relation to a person who becomes the holder of a specified Orphan Relative (subclasses 117 and 837) or Remaining Relative (subclasses 115 and 835) visa or a visa of a kind determined by the Minister. Sub-item 21(8) authorises the Minister to determine, by legislative instrument, a kind of visa for the purposes of paragraph 21(7)(c). The inclusion of the capacity to determine additional visas by legislative instrument will accommodate any changes to the name or subclass of these visa types without requiring further amendments.

Part 2 - New newly arrived resident's waiting periods

This Part makes amendments to various provisions of the Social Security Act to create new NARWPs for bereavement allowance, parenting payment and carer allowance.

Social Security Act

Item 22 makes a consequential amendment to the Australian residence definitions in subsection 7(6AA) to include carer allowance as a payment to which the qualifying residence exemption will apply, where the person holds or was the former holder of a visa that is in a class of visas determined by legislative instrument by the Minister. This will have the effect that such persons will not be subjected to a NARWP. This is consistent with existing exemptions for people with a qualifying residence exemption for other payments.

Items 23 and 24 make consequential amendments to the definition of newly arrived resident's waiting period to include the following payments:

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bereavement allowance

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parenting payment

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carer allowance.

Items 25 to 27 make consequential amendments to the definition of waiting period to include the following payments:

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bereavement allowance

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parenting payment

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carer allowance.

Item 28 introduces a NARWP for bereavement allowance by inserting new section 322. New subsection 322(1) provides that a person who has entered Australia and has not been an Australian resident and in Australia for a period of (or periods totalling) 208 weeks is subject to a NARWP. The effect of this provision is that a person will be required to be an Australian resident and in Australia for 208 weeks before bereavement allowance will be payable to that person.

New subsections 322(2) and (3) provide exemptions from the NARWP. These exemptions mirror long standing exemptions that currently apply in relation to payments subject to an existing NARWP.

New subsection 322(2) provides that the NARWP will not apply to a person where the person has a qualifying residence exemption for bereavement allowance. Qualifying residence exemption in relation to bereavement allowance is defined in subsection 7(6) to include a person who resides in Australia and is either a refugee or a former refugee.

New subsection 322(3) provides that the NARWP will not apply to a person if the person is a refugee or a former refugee at the time the person claimed bereavement allowance. The NARWP will similarly not apply to a person who was the family member of a refugee when they became a refugee and:

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the person is still a family member of the refugee when they claim bereavement allowance, or

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where the refugee has died, the person was a family member of the refugee immediately before their death.

The NARWP will not apply to a person who is an Australian citizen at the time they claim bereavement allowance.

New subsection 322(4) defines the terms 'family member', 'former refugee' and 'refugee' by reference to the relevant definitions in section 7.

New section 323 provides for the start day and duration of the NARWP. New subsection 323(1) provides that if a person is subject to a NARWP, the period starts on the day the person first became an Australian resident. New subsection 323(2) provides that the duration of the NARWP is 208 weeks, and that the NARWP ends when the person has been in Australia and an Australian resident for a period of, or periods totalling, 208 weeks after that day. The start day and duration of the NARWP mirror the provisions that currently apply in relation to payments subject to an existing NARWP.

Item 30 introduces a NARWP for parenting payment by inserting new section 500X. New subsection 500X(1) provides that a person who has entered Australia and has not been an Australian resident and in Australia for a period of (or periods totalling) 208 weeks is subject to a NARWP. The effect of this provision is that a person will be required to be an Australian resident and in Australia for 208 weeks before parenting payment will be payable to that person.

New subsections 500X(2), (3) and (4) provide exemptions from the NARWP. The exemptions at subsection 500X(2) and (4) mirror long standing exemptions that currently apply in relation to payments subject to an existing NARWP.

New subsection 500X(2) provides that the NARWP will not apply to a person where the person has a qualifying residence exemption for parenting payment. Qualifying residence exemption in relation to parenting payment is defined in subsection 7(6) and paragraph 7(6AA)(f) to include a person who resides in Australia and is either a refugee or a former refugee, or where the person holds or was the former holder of a visa that is in a class of visas determined by the Minister.

New subsection 500X(3) provides that the NARWP will not apply to a person where the person is the principal carer of one or more children and since becoming an Australian resident, they have become a lone parent. This exemption mirrors an existing qualifying residence requirement for parenting payment and provides that a person who becomes a lone parent since becoming an Australian resident is both immediately qualified and payable for parenting payment (subject to meeting other qualification and payability requirements). This exemption also mirrors the existing exemption from the NARWP for the other main payments paid to people who are the principal carer of one or more children, that is, newstart allowance and youth allowance.

New subsection 500X(4) provides that the NARWP will not apply to a person if the person is a refugee or a former refugee at the time the person claimed parenting payment. The NARWP will similarly not apply to a person who was the family member of a refugee when they became a refugee and:

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the person is still a family member of the refugee when they claim parenting payment, or

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where the refugee has died, the person was a family member of the refugee immediately before their death.

The NARWP will not apply to a person who is an Australian citizen at the time they claim parenting payment.

New subsection 500X(5) defines the terms 'family member', 'former refugee' and 'refugee' by reference to the relevant definitions in section 7.

New section 500Y provides for the start day and duration of the NARWP. New subsection 500Y(1) provides that if a person is subject to a NARWP, the period starts on the day the person first became an Australian resident. New subsection 500Y(2) provides that the duration of the NARWP is 208 weeks, and that the NARWP ends when the person has been in Australia and an Australian resident for a period of, or periods totalling, 208 weeks after that day. The start day and duration of the NARWP mirror the provisions that currently apply in relation to payments subject to an existing NARWP.

Item 31 introduces a NARWP for carer allowance by inserting new section 966. New subsection 966(1) provides that a person who has entered Australia and has not been an Australian resident and in Australia for a period of (or periods totalling) 52 weeks is subject to a NARWP. The effect of this provision is that a person will be required to be an Australian resident and in Australia for 52 weeks before carer allowance will be payable to that person.

New subsections 966(2), (3), (4) and (5) provide exemptions from the NARWP. The exemptions at subsection 966(2), (3) and (5) mirror long standing exemptions that currently apply in relation to payments subject to an existing NARWP.

New subsection 966(2) provides that the NARWP will not apply to a person where the person has a qualifying residence exemption for carer allowance. Qualifying residence exemption in relation to carer allowance is defined in paragraph 7(6AA)(f) to include a person who holds or was the former holder of a visa that is in a class of visas determined by the Minister.

New subsection 966(3) provides that the NARWP will not apply to a person where the person holds a visa that is in a class of visas determined by the Minister for the purposes of subsection 201AA(5). Subsection 201AA(5) refers to subsection 201AA(5B), which is an instrument making power, whereby the Minister may, by legislative instrument, determine a class of visas for the purposes of new subsection 201AA(5). The class must not be a class covered by paragraph 7(6AA)(f). The exemption in 966(3) mirrors the existing exemption from the NARWP for carer payment. This will apply consistent exemptions across the main payments for people with caring responsibilities for a person with disability.

New subsection 966(4) provides that the NARWP will not apply to a person if the person is receiving a social security benefit or pension, or a farm household allowance under the Farm Household Support Act; or if paid parental leave pay or dad and partner pay under the Paid Parental Leave Act is payable to that person. The rationale for this exemption is that if a new migrant is receiving one of the payments referred to in the provision, they are receiving that payment because they are exempt from the NARWP (or other qualifying residence) requirements for that payment. This exemption allows these people to also access carer allowance if they have caring responsibilities for a person with disability (provided all other carer allowance requirements are met).

New subsection 966(5) provides that the NARWP will not apply to a person if the person is a refugee or a former refugee at the time the person claimed carer allowance. The NARWP will similarly not apply to a person who was the family member of a refugee when they became a refugee and:

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the person is still a family member of the refugee when they claim carer allowance, or

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where the refugee has died, the person was a family member of the refugee immediately before their death.

The NARWP will not apply to a person who is an Australian citizen at the time they claim carer allowance.

New subsection 966(6) defines the terms 'family member', 'former refugee' and 'refugee' by reference to the relevant definitions in section 7.

New section 967 provides for the start day and duration of the NARWP. New section 967 provides that if a person is subject to a NARWP, the period starts on the day the person first became an Australian resident and that the NARWP ends when the person has been in Australia and an Australian resident for a period of, or periods totalling, 208 weeks. The start day and duration of the NARWP mirror the provisions that currently apply in relation to payments subject to an existing NARWP.

Item 32 provides the application provisions for the amendments in Part 2.

Sub-item 32(1) provides that the amendments made by items 28 to 31 apply in relation to a person who becomes the holder of a permanent visa on or after the commencement of these items. Temporary visa holders are generally not qualified for these payments and are therefore not affected by these amendments regardless of this application provision. The exception is protected special category visa holders which are covered by a separate application provision.

Sub-item 32(2) provides that the amendments do not apply in relation to a protected SCV holder. It is possible that a person was in Australia on an SCV on 26 February 2001 and therefore was a protected SCV holder, but subsequently left Australia without spending a total of 208 weeks physically present in Australia. If that person were to subsequently return to Australia after the commencement date, they will not be subject to a new NARWP. These amendments reflect the principle that people granted a relevant visa prior to commencement should not be subject to this measure.

Sub-item 32(3) provides that the amendments made by Part 2 of Schedule 1 do not apply in relation to a person who becomes the holder of a specified Orphan Relative (subclasses 117 and 837) or Remaining Relative (subclasses 115 and 835) visa or a visa of a kind determined by the Minister. Sub-item 32(4) authorises the Minister to determine, by legislative instrument, a kind of visa for the purposes of paragraph 32(3)(c). The inclusion of the capacity to determine additional visas by legislative instrument will accommodate any changes to the name or subclass of these visa types without requiring further amendments.

Schedule 2 - Farm household support amendments

Summary

This Schedule will increase the existing newly arrived resident's waiting period (NARWP) from 104 weeks to 208 weeks for farm household allowance.

Background

The farm household allowance is currently subject to a 104 week NARWP. The NARWP for farm household allowance mirrors the NARWP that applies to working age social security payments. This reflects the policy intent, as set out in the Explanatory Memorandum to the Farm Household Support Bill 2014 which introduced farm household allowance, that farm household allowance is aligned where possible with social security payments, particularly newstart allowance and youth allowance.

This Schedule will increase the current NARWP for farm household allowance from 104 weeks to 208 weeks, consistent with the amendments to the NARWP for working age social security payments as outlined in Schedule 1. This approach maintains the alignment between farm household allowance and social security payments, such as newstart allowance, and provides consistency across these payments.

A person will therefore be required to serve a 208 week NARWP before a farm household allowance is payable.

Existing exemption provisions from the NARWP will continue to apply, including for people who become a lone parent, people who are a refugee or former refugee at the time of claim and people who are a citizen at the time of claim. These exemptions mirror the exemptions applicable to newstart allowance.

The amendments in this Schedule will apply to people who first become a permanent resident on or after 1 January 2019.

The application provisions mean that a person who is the holder of a permanent visa prior to the commencement date will continue to be subject to the current NARWP rules.

Applying this measure only to those granted a relevant visa on or after commencement is intended to enable individuals and families seeking to migrate to Australia to make informed decisions when applying for a visa, including making arrangements to support themselves during the waiting period.

The amendments made by this Schedule will not apply to people granted an Orphan Relative or Remaining Relative visa on or after commencement. These visa holders are often young people who have experienced refugee-type experiences or other trauma and who may be disproportionally affected if subject to the changes in the Bill. These visa holders will continue to be subject to the current rules for farm household allowance, that is, the existing 104 week NARWP.

Explanation of the changes

This Schedule will increase the existing NARWP from 104 weeks to 208 weeks for farm household allowance.

Farm Household Support Act

Items 1 and 2 amend subsection 42(1) and paragraph 43(b) of the Farm Household Support Act, to extend the existing NARWP of 104 weeks to 208 weeks for farm household allowance.

Item 3 provides the application provisions for the amendments in Schedule 2.

Sub-item 3(1) provides that the amendments made by items 1 and 2 apply in relation to a person who becomes the holder of a permanent visa on or after the commencement of these items. Temporary visa holders are generally not qualified for farm household allowance and are therefore not affected by these amendments regardless of this application provision. The exception is protected special category visa holders which are covered by a separate application provision.

Sub-item 3(2) provides that the amendments do not apply in relation to a Special Category Visa (SCV) holder who is a protected SCV holder. It is possible that a person was in Australia on an SCV on 26 February 2001 and therefore was a protected SCV holder, but subsequently left Australia before completing a 104 week NARWP. If that person were to subsequently return to Australia after the commencement date, they will be subject to the current rules (a 104 week NARWP) rather than the new rules (a 208 week NARWP). These amendments reflect the principle that people granted a relevant visa prior to commencement should not be subject to this measure.

Sub-item 3(3) provides that the amendments made by items 1 and 2 of Schedule 2 do not apply in relation to a person who becomes the holder of a specified Orphan Relative (subclasses 117 and 837) or Remaining Relative (subclasses 115 and 835) visa or a visa of a kind determined by the Minister. Sub-item 3(4) authorises the Minister to determine, by legislative instrument, a kind of visa for the purposes of paragraph 3(3)(c). The inclusion of the capacity to determine additional visas by legislative instrument will accommodate any changes to the name or subclass of these visa types without requiring further amendments.

Schedule 3 - Family assistance amendments

Summary

This Schedule introduces a newly arrived resident's waiting period (NARWP) for family tax benefit Part A. The change does not affect family tax benefit Part B, child care related payments, double orphan pension or stillborn baby payment.

Background

Currently, there is no waiting period for family assistance payments for newly arrived migrants, there is only a requirement that the person is an Australian resident (that is, a person who resides in Australia and is an Australian citizen, the holder of a permanent visa or a Special Category Visa (SCV) holder who is a protected SCV holder), an SCV holder or the holder of a visa that is qualified for special benefit under the Social Security Act.

This is inconsistent with social security payments and farm household allowance which are currently subject to a NARWP. The NARWP aims to encourage migrants settling in this country to make provisions to be self-sufficient when they first settle here.

This Schedule will introduce a NARWP of 52 week's duration for family tax benefit Part A. This will reinforce expectations across the welfare system that new migrants settling in Australia should be in a position to support themselves and their families during their initial settlement period. The amendments generally reflect the NARWP provisions contained in the Social Security Act for special benefit. This is because family tax benefit Part A can be paid to holders of certain temporary visas that are eligible for special benefit. This will help to align the operation of the NARWP across multiple payments where applicable.

Under the amendments in this Schedule, individuals who become the holder of a permanent visa, or a temporary visa which would provide qualification for special benefit, will be required to wait until they have been in Australia for a period of, or periods totalling 52 weeks before they can be paid family tax benefit Part A at a rate more than nil. Family tax benefit Part B will not be subject to a NARWP and single parent and single income families will still have immediate access to family tax benefit Part B where eligible.

The NARWP for family tax benefit Part A will not prevent an individual being eligible for stillborn baby payment or double orphan pension. This means that migrants who have experienced a stillbirth, or are caring for a child who has lost both their parents, will still have access to financial support to help them meet the unexpected associated costs.

Currently, families that are receiving family tax benefit Part A fortnightly and have income below the low income free area are automatically eligible for a health care card. Health care cards provide access to a range of concessional health benefits under the Medicare Benefits Scheme and Pharmaceutical Benefits Scheme. Families serving a NARWP for family tax benefit Part A will not be eligible for this card. However, to ensure that access to concessional health benefits are not impacted, families with a family tax benefit eligible child will be exempt from the NARWP for the low income health care card. This will enable these families to receive the low income health care card, provided all other card qualification requirements are met, including the income limits.

Exemptions of a similar nature to those applying to special benefit under the Social Security Act will apply to allow immediate access to family tax benefit Part A in particular circumstances. Holders of visa types that are exempt from the NARWP for special benefit will be exempt from the effect of the NARWP for family tax benefit Part A. These are generally temporary visas issued for humanitarian reasons. Holders of one of these visas who subsequently become the holder of a permanent visa will continue to be exempt from the effect of the NARWP for family tax benefit, ensuring access for this group is maintained. Similarly, refugees (or former refugees) and family members of refugees are also exempt from the effect of the NARWP for family tax benefit Part A. These exemptions are designed to enable potentially vulnerable families, who may not be in a position to arrange for their own support prior to coming to Australia, to access family tax benefit Part A immediately, provided they meet all other eligibility requirements.

If the individual is receiving a social security pension or benefit or farm household allowance, they will also be exempt from the effect of the NARWP for family tax benefit Part A. The rationale for this exemption is that if a new migrant is receiving one of the payments referred to in the provision, they are receiving that payment because they are exempt from the NARWP (or other qualifying residence) requirements for that payment. This exemption allows these people to also access family tax benefit Part A if they have an eligible child (provided all other family tax benefit requirements are met). For example, if a person is receiving parenting payment as the result of becoming a lone parent since the start of their current period as an Australian resident, that decision will also exempt them from the effect of the NARWP for family tax benefit Part A. Similarly, if the individual is receiving special benefit because the Secretary is satisfied the individual has suffered a substantial change of circumstances beyond the individual's control since the start of their waiting period, the decision will exempt the person from the effect of the NARWP for family tax benefit Part A. These exemptions will provide consistent access to relevant social security payments and family tax benefit Part A for families who experience a change in circumstances and who may no longer be able to support themselves as originally planned.

People will be exempt from the effect of the NARWP for family tax benefit Part A in respect of any day on which they are an Australian citizen. This enables people who are eligible for and are granted citizenship after coming to Australia as a permanent resident but before the end of the NARWP, to be exempt from the remainder of the NARWP. Similarly, anyone who is already an Australian citizen at the start of the NARWP and remains a citizen will be exempt throughout the NARWP.

The NARWP will not apply to individuals who are the holder of an SCV. SCVs are issued to New Zealand citizens when they enter Australia. The visa allows these New Zealanders to live and work in Australia indefinitely. While SCV holders are generally ineligible for social security payments, they currently have immediate access to family tax benefit, provided they meet all other qualification requirements. Not applying the NARWP for family tax benefit Part A to SCV holders is designed to allow this group to retain this access to family tax benefit. This reflects the unique arrangements in place between Australia and New Zealand under the Trans-Tasman Travel Arrangement. In addition, SCV holders who subsequently become the holder of a permanent visa after the commencement date will continue to be exempt from the NARWP for family tax benefit Part A, again ensuring access for this group is maintained.

The amendments made by this Schedule will apply to individuals who first become the holder of a permanent visa (or in some cases, the holder of certain temporary visas) on or after 1 January 2019.

Application provisions mean that an individual who became the holder of a permanent visa (or temporary visa if applicable) prior to the commencement date will continue to be subject to the current rules. For example, an individual granted a permanent visa before commencement would not be subject to a NARWP for family tax benefit Part A.

Applying the measure only to individuals granted a relevant visa on or after commencement is intended to enable families seeking to migrate to Australia to make informed decisions when they apply for a visa, including making arrangements to support themselves and their children during the waiting period.

In addition, the application provisions mean that the NARWP for family tax benefit Part A will not apply to a person who becomes the holder of an Orphan Relative or Remaining Relative visa. These visa holders are often young people who have experienced refugee-type experiences or other trauma and who may be disproportionately affected if subject to the changes in the Bill.

Further application provisions mean that individuals who held a relevant temporary visa before commencement do not become subject to the NARWP for family tax benefit Part A when they subsequently become the holder of a permanent visa. This provides a consistent exclusion from the application of the NARWP.

Explanation of the changes

Item 1 Inserts a definition of permanent visa into subsection 3(1), to support the substantive change in item 2.

Item 2 introduces a newly arrived resident's waiting period, by inserting new section 61AA into the Family Assistance Act. Subsection 61AA(1) overrides the rate calculation of an individual's Part A rate of family tax benefit in Schedule 1 to the Family Assistance Act and provides that that rate is nil on a day if the day occurs in a NARWP for the individual..

Subsection 61AA(2), subject to the remaining subsections, provides the circumstances in which an individual is subject to a NARWP for family tax benefit Part A.

Subsection 61AA(2) deals with individuals who, on or after commencement of the subsection:

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become the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act, or

•

become the holder of a permanent visa.

Subsection 61AA(2) also specifies that the NARWP for family tax benefit Part A will not apply to a person who becomes the holder of a specified Orphan Relative (subclasses 117 and 837) and Remaining Relative (subclasses 115 and 835) visa or a visa of a kind determined by the Minister. Subsection 61AA(2A) empowers the Minister, by legislative instrument, to determine a kind of visa for the purposes of subsection 61AA(2). The inclusion of the capacity to determine additional visas by legislative instrument will accommodate any changes to the name or subclass of these visa types without requiring further amendments.

Subsections 61AA(3), (4) and (5) provide for the length of the waiting period.

Subsection 61AA(3) applies (unless subsection 61AA(4) applies) where an individual is subject to a NARWP and they hold a visa that is in a class of visas determined by the Minister for the purposes of paragraph 739A(3)(b) of the Social Security Act (dealing with the NARWP for special benefit). The current determination for the purposes of paragraph 739A(3)(b) covers temporary visa subclass 820 (partner) and subclass 309 (partner (provisional)). A person may apply for these visas prior to entering Australia. For such persons, the waiting period starts on the day on which the individual applied for that visa. The waiting period for family tax benefit Part A then ends when the individual has been in Australia for a period of, or periods totalling, 52 weeks after that day.

Subsection 61AA(4) applies where an individual is subject to a NARWP for family tax benefit Part A and, prior to their current visa, they held one or more visas in a class of visas determined by the Minister for the purposes of paragraph 739A(4)(b) of the Social Security Act (dealing with the NARWP for special benefit). For such persons, the waiting period starts on the day on which the individual applied for the last of those visas. This allows time in Australia under an earlier visa to count for the purposes of the NARWP. For example, where a person held a temporary visa specified under paragraph 739A(4)(b) and then subsequently moved to a permanent visa, the NARWP for family tax benefit Part A would start from the date they applied for the temporary visa, ensuring they are not required to serve a second NARWP in respect of the permanent visa. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 52 weeks after that day. There is currently no determination in force under paragraph 739A(4)(b); however, new subsection 61AA(4) ensures that if such a determination is made in the future, the NARWP for family tax benefit Part A and special benefit will operate consistently for the relevant visa holders.

Subsection 61AA(5) applies in all remaining circumstances in which a person is subject to a NARWP for family tax benefit Part A. For such persons, the waiting period starts on the day on which the individual first entered Australia, or became the holder of a permanent visa, whichever occurred last. For persons who hold a temporary visa in circumstances not covered by subsection 61AA(3) and (4) above, this will start the waiting period when the person first entered Australia. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 52 weeks after that day.

Subsections 61AA(6), (7) and (8) provide exemptions from the effect of the NARWP for family tax benefit Part A.

Subsection 61AA(6) allows an individual to receive family tax benefit Part A despite a NARWP applying in respect of a day, if on that day the individual holds a visa in a class of visas determined by the Minister for the purposes of subsection 739A(6) of the Social Security Act. This means that ministerial determinations made exempting various visa holders from the NARWP for special benefit will also apply to exempt the person from the effect of the NARWP for family tax benefit Part A. The current determination under subsection 739A(6) includes the following visa types: subclass 060 (Bridging F), subclass 070 (Bridging (Removal Pending)), subclass 449 (Humanitarian Stay (Temporary)), subclass 785 (Temporary Protection), subclass 786 (Temporary (Humanitarian Concern)), subclass 790 (Safe Haven Enterprise) and if certain circumstances are met, a criminal justice stay visa. Former holders of such visas are similarly exempt. The new subsection focuses on a day. An individual may not receive family tax benefit Part A for any days where an exemption does not apply, but can be paid once the exemption exists.

Subsection 61AA(7) allows an individual to receive family tax benefit Part A despite a NARWP applying in respect of a day, if on that day the individual is receiving a social security pension or benefit, farm household allowance or if parental leave pay or dad and partner pay is payable to the individual. This exempts the individual from the effect of the NARWP for family tax benefit Part A on days when the person is receiving their welfare payment, but not on days when they are not receiving the payment. This reflects the intention that where a person is receiving a welfare payment (for example, because they are exempt from any waiting period for that payment) they are also exempt from the NARWP for family tax benefit Part A.

Subsection 61AA(8) allows an individual to receive family tax benefit Part A despite a NARWP applying in respect of a day (termed the 'assessment day'), if the individual meets one of the specified conditions. This exempts the individual from the effect of the NARWP for family tax benefit Part A.

The first condition is that the individual is a refugee or former refugee. The second is that the individual was a family member of another individual at the time the other individual became a refugee before the assessment day. If so, the individual may receive family tax benefit Part A despite the NARWP applying on that day if they remain the family member of that other individual on the assessment day, or if the other individual has died, the individual was a family member of the other individual immediately before the other individual died. The third is that the person is an Australian citizen on the assessment day. The last is that the individual is residing in Australian on the assessment day, and has held an SCV on any day before the assessment day.

The assessment day has flexible application, and means any day on which rate of family assistance Part A is being calculated. An individual may not receive family tax benefit for any days where an exemption does not apply, but can be paid once the exemption exists, and while the person continues to meet the condition to be exempt.

Subsection 61AA(9) defines the terms 'family member', 'former refugee' and 'refugee' by reference to the relevant definitions in the Social Security Act.

Items 6 to 7 make consequential amendments to the Social Security Act to maintain the qualification for a health care card for persons who become subject to a NARWP for family tax benefit Part A.

Item 6 makes a consequential amendment to the Social Security Act to provide an additional exemption from the NARWP for the health care card (low income) imposed by section 1061ZQ by adding new paragraph 1061ZQ(2)(b) covering a person who has an FTB child. This will allow persons who will no longer qualify for an automatically issued health care card as the result being subject to a NARWP for family tax benefit Part A to claim a health care card (low income) where they meet all other requirements for this card.

Item 7 provides for the application of the amendment of section 1061ZQ. Item 7 provides that the amendments apply to working out if a person is qualified for a health care card for days on or after the commencement of the relevant items.

Schedule 4 - Paid parental leave amendments

Summary

This Schedule introduces a newly arrived resident's waiting period (NARWP) for parental leave pay or dad and partner pay.

Background

Currently, there is no waiting period for parental leave pay or dad and partner pay for newly arrived migrants. There is only a requirement that the person is an Australian resident (that is, a person who resides in Australia and is an Australian citizen, the holder of a permanent visa or a Special Category Visa (SCV) holder who is a protected SCV holder), an SCV holder or the holder of a visa that is qualified for special benefit under the Social Security Act.

This is inconsistent with social security payments and farm household allowance which are currently subject to a NARWP. The NARWP aims to encourage migrants settling in this country make provisions to be self-sufficient when they first settle here.

This Schedule will introduce a NARWP of 104 weeks' duration for parental leave pay and dad and partner pay. This reflects expectations that new migrants settling in Australia should be in a position to support themselves and their families during their initial settlement period, including any new children born or adopted during this period. The amendments generally reflect the NARWP provisions contained in the Social Security Act for special benefit. This is because parental leave pay and dad and partner pay can be paid to holders of certain temporary visas that are eligible for special benefit. This will help to align the operation of the NARWP across multiple payments where applicable.

Under the amendments in this Schedule, individuals who become the holder of a permanent visa, or a temporary visa which would provide qualification for special benefit, will be required to wait until they have been in Australia for a period of, or periods totalling 104 weeks in order to be paid parental leave pay and dad and partner pay. For primary claimants for parental leave pay who under the current rules must be eligible for parental leave pay for each day from the date of birth of their child until the last day of their PPL period, this will require that the child is born after the waiting period is finished.

Exemptions of a similar nature to those applying to special benefit under the Social Security Act will apply to allow immediate access to parental leave pay and dad and partner pay in particular circumstances. Holders of visa types that are exempt from the NARWP for special benefit will be exempt from the effect of the NARWP for parental leave pay and dad and partner pay. These are generally temporary visas issued for humanitarian reasons. Holders of one of these visas who subsequently become the holder of a permanent visa will continue to be exempt from the NARWP for parental leave pay and dad and partner pay, ensuring access for this group is maintained. Similarly, refugees (or former refugees) and family members of refugees will be exempt from the effect of the NARWP for parental leave pay and dad and partner pay. These exemptions are designed to enable potentially vulnerable families, who may not be in a position to arrange for their own support prior to coming to Australia, to access parental leave pay and dad and partner pay immediately, provided they meet all other eligibility requirements.

If the individual is receiving a social security pension or benefit, or farm household allowance on the day before their PPL or DAPP period starts, they will be exempt from the NARWP for parental leave pay and dad and partner pay. If they are a primary claimant for parental leave pay, they must have been receiving the social security pension or benefit or farm household allowance on the date of the birth or adoption and continue to receive it on every day up to the day prior to their PPL period. The rationale for this exemption is that if a new migrant is receiving one of the payments referred to in the provision, they are receiving that payment because they are exempt from the NARWP (or other qualifying residence) requirements for that payment. This exemption enables these people to access parental leave pay and dad and partner pay if they have an eligible child while receiving one of these payments (provided all other parental leave pay and dad and partner pay requirements are met).

For example, if on the day before the start of their PPL or DAPP period a person is receiving parenting payment single (because they are exempt from the NARWP), they will be exempt from the NARWP for parental leave pay and dad and partner pay. If the person is a primary parental leave pay claimant, they must also have been receiving parenting payment (or another relevant payment) on the date of birth or adoption and every day up to the day prior to their PPL period. The exemption will allow them to move from parenting payment to parental leave pay or dad and partner pay (provided all other eligibility requirements are met). Similarly, if the individual is receiving special benefit because the Secretary is satisfied the individual has suffered a substantial change of circumstances beyond the individual's control since the start of their waiting period, they may be exempt from the NARWP for parental leave pay and dad and partner pay if the same conditions are met. The exemption will provide consistent access to relevant social security payments and parental leave pay or dad and partner pay for families who experience a change in circumstances and who may no longer be able to support themselves as originally planned.

People will be exempt from the effect of the NARWP for parental leave pay and dad and partner pay in respect of any day on which they are an Australian citizen. This enables people who are eligible for and are granted citizenship after coming to Australia as a permanent resident but before the end of the NARWP, to be exempt from the remainder of the NARWP. Similarly, anyone who is already an Australian citizen at the start of the NARWP and remains a citizen will be exempt throughout the NARWP.

The NARWP will not apply to individuals who are the holder of an SCV, or the former holder of an SCV. SCVs are issued to New Zealand citizens when they enter Australia. The visa allows these New Zealanders to live and work in Australia indefinitely. While SCV holders are generally ineligible for social security payments, they currently have immediate access to family tax benefit and parental leave pay and dad and partner pay, provided they meet all other qualification requirements. Not applying the NARWP to SCV holders for parental leave pay and dad and partner pay is designed to maintain this access for this group. This reflects the unique arrangements in place between Australia and New Zealand under the Trans-Tasman Travel Arrangement.

The amendments made by this Schedule will apply to individuals who first become the holder of a permanent visa (or in some cases, the holder of certain temporary visas) on or after 1 January 2019.

An individual who became the holder of a permanent visa (or temporary visa if applicable) prior to the commencement date will continue to be subject to the current rules. For example, a person granted a permanent visa before commencement would not be subject to a NARWP for parental leave pay or dad and partner pay.

Applying the measure only to individuals granted a relevant visa on or after the commencement date is intended to enable families seeking to migrate to Australia to make informed decisions when applying for a visa, including making arrangements to support themselves and their children during the waiting period.

The amendments made by this Schedule will not apply to people who become the holder of a specified Orphan Relative or Remaining Relative visa. These visa holders are often young people who have experienced refugee-type experiences or other trauma and who may be disproportionately affected if subject to the changes in the Bill. This means that these visa holders will continue to have no waiting period for parental leave pay and dad and partner pay.

The amendments made by this Schedule will not apply to people who become a permanent visa holder where they have held a relevant temporary visa before commencement (such as a temporary partner visa). This provides a consistent exclusion from the application of the NARWP by allowing people who are grandfathered in respect of a temporary visa to remain grandfathered if they transition to a permanent visa.

In addition, the measure will not apply to persons whose baby is born prior to commencement, or during the first 6 months after commencement. This will mean that people who may have already made leave plans prior to the changes commencing are not disadvantaged and can still access parental leave pay or dad and partner pay.

Explanation of the changes

Parental leave pay

Item 1 inserts a definition of permanent visa into section 6, to support the substantive change in item 2.

Item 1A amends section 15 of the Paid Parental Leave Act. The amendment clarifies that for the full amount of parental leave pay for a child to be paid to a secondary claimant, the primary claimant must not be subject to a NARWP or must be exempt from the NARWP on the day the child is born. This ensures no ambiguity arises from the fact section 15 does not refer to the primary claimant being 'eligible'.

Item 2 removes eligibility for parental leave pay for newly arrived residents by adding new subsection 31(6) to the Paid Parental Leave Act. New subsection 31(6) provides that a person is not eligible for parental leave pay in respect of a day in a NARWP for the person.

Item 3 inserts new section 31A, providing for the NARWP.

Subsection 31A(1), subject to the remaining subsections, provides the circumstances in which an individual is subject to a NARWP.

Subsection 31A(1) deals with persons who, on or after commencement of the subsection:

•

become the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act, or

•

become the holder of a permanent visa.

Such persons are subject to a NARWP.

Subsection 31A(1) also specifies that the NARWP for parental leave pay will not apply to a person who becomes the holder of a specified Orphan Relative (subclasses 117 and 837) and Remaining Relative (subclasses 115 and 835) visa or a visa of a kind determined by the Minister.

Subsection 31A(1A) gives the Minister a power to determine a kind of visa for the purposes of new subparagraph 31A(1)(b)(iii). The inclusion of the capacity to determine additional visas by legislative instrument will accommodate any changes to the name or subclass of these visa types without requiring further amendments.

Subsection 31A(1B) provides that a person who becomes the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act before commencement of the subsection is not subject to the NARWP for parental leave pay where they subsequently become the holder of a permanent visa. This applies a consistent exclusion from the application of the NARWP.

Subsections 31A(2), (3) and (4) provide for the length of the waiting period.

Subsection 31A(2) applies (unless subsection 31A(3) applies) where a person is subject to a NARWP and they hold a visa that is in a class of visas determined by the Minister for the purposes of paragraph 739A(3)(b) of the Social Security Act (dealing with the NARWP for special benefit). The current determination for the purposes of paragraph 739A(3)(b) covers temporary visa subclass 820 (partner) and subclass 309 (partner (provisional)). A person may apply for these visas prior to entering Australia. For such persons, the waiting period starts on the day on which the individual applied for the visa they currently hold. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 104 weeks after that day.

Subsection 31A(3) applies where a person is subject to a NARWP and, prior to their current visa, they held one or more visas in a class of visas determined by the Minister for the purposes of paragraph 739A(4)(b) of the Social Security Act (dealing with the NARWP for special benefit). For such persons, the waiting period starts on the day on which the individual applied for the last of those visas. This allows time in Australia under an earlier visa to apply to accruing time in Australia for the purposes of the NARWP. For example, where a person held a temporary visa specified under paragraph 739A(4)(b) and then subsequently moved to a permanent visa, the NARWP would start from the date they applied for the temporary visa, ensuring they are not required to serve a second NARWP in respect of the permanent visa. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 104 weeks after that day. There is currently no determination in force under paragraph 739A(4)(b); however, new subsection 31A(3) ensures that if such a determination is made in the future, the NARWP for parental leave pay and special benefit will operate consistently for the relevant visa holders.

Subsection 31A(4) applies in all remaining circumstances in which a person is subject to a NARWP. For such persons, the waiting period starts on the day on which the individual first entered Australia, or became the holder of a permanent visa, whichever occurred last. For persons who hold a temporary visa in circumstances not covered by subsection 31A(2) and (3) above, this will start the waiting period when the person first entered Australia. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 104 weeks after that day.

Subsections 31A(5), (6), (7) and (7A) provide exemptions from the NARWP or exemptions from the effect of the NARWP.

Subsection 31A(5) provides that a NARWP does not apply to a person if on the day before the day that would be the start of the person's PPL period if a payability determination were made, the person is receiving either a social security pension, a social security benefit or farm household allowance. Additionally, if the person is the primary claimant, the person must have been receiving a social security pension or benefit, or farm household allowance on the day of the child's birth or adoption and on each day after the child's birth up to the day prior to the start of the person's PPL period. The receipt of welfare up to the day prior to the start of the person's PPL period indicates that the person is in need of support, which should include parental leave pay if they otherwise are eligible for the payment.

Subsection 31A(6) limits the operation of the exemption in subsection 31A(5) to situations in which a payability determination would not be made under section 15, which allows the full amount of parental leave pay to be paid to the secondary claimant. Instead, for the cases covered by section 15, a NARWP does not apply if the person is in circumstances prescribed by the PPL rules. The drafting of this element will be complex but only apply to relatively unusual cases, and so more appropriately sits with other more unusual situations currently dealt with in the PPL rules.

Subsection 31A(7) allows a person to be eligible for parental leave pay despite the NARWP applying in respect of a day, if on that day the individual holds a visa in a class of visas determined by the Minister for the purposes of subsection 739A(6) of the Social Security Act. This exempts the person from the effect of the NARWP. The current determination under subsection 739A(6) includes the following visa types: subclass 060 (Bridging F), subclass 070 (Bridging (Removal Pending)), subclass 449 (Humanitarian Stay (Temporary)), subclass 785 (Temporary Protection), subclass 786 (Temporary (Humanitarian Concern)), subclass 790 (Safe Haven Enterprise) and if certain circumstances are met, a criminal justice stay visa.

Former holders of such visas are similarly exempt. The new subsection focuses on a day. If parental leave pay being payable is dependent upon eligibility being established for a range of days in a NARWP, an exemption would need to apply for all of those days.

Subsection 31A(7A) allows a person to be eligible for parental leave pay despite the NARWP applying in respect of a day (termed the 'assessment day'), if the individual meets one of the specified conditions. This exempts the person from the effect of the NARWP.

The first condition is that the person is a refugee or former refugee. The second is that the person was a family member of another person at the time the other person became a refugee before the assessment day. If so, the person may be eligible for parental leave pay despite the NARWP applying on that day if they remain the family member of that other person on the assessment day, or if the other person has died, the person was a family member of the other person immediately before the other person died. The third is that the person is an Australian citizen on the assessment day. The last is that the person is residing in Australian on the assessment day, and has held a special category visa on any day before the assessment day.

The assessment day has flexible application, and can mean any day on which eligibility for parental leave pay needs to be established. A person is not eligible for parental leave pay for any days where an exemption does not apply. This means if parental leave pay being payable is dependent upon eligibility being established for a range of days in a NARWP, an exemption would need to apply for all those days. Once the PPL period has started, eligibility for parental leave pay would cease if the exemption does not apply on any day.

Subsection 31A(8) defines the terms 'family member', 'former refugee' and 'refugee' by reference to the relevant definitions in the Social Security Act.

Dad and Partner Pay

Item 4 removes eligibility for dad and partner pay for newly arrived residents, by adding new subsection 115CB(9) to the Paid Parental Leave Act. New subsection 115CB(9) provides that a person is not eligible for dad and partner pay in respect of a day in a NARWP for the person.

Item 5 inserts new section 115CBA, providing for the NARWP.

Subsection 115CBA(1), subject to the remaining subsections, provides the circumstances in which an individual is subject to a NARWP.

Subsection 115CBA(1) deals with persons who, on or after commencement of the subsection:

•

become the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act, or

•

become the holder of a permanent visa.

Such persons are subject to a NARWP. Persons who would be subject to a NARWP for special benefit, are also subject to a NARWP for dad and partner pay.

Subsection 115CBA(1) also specifies that a NARWP will not apply to a person who becomes the holder of a specified Orphan Relative (subclasses 117 and 837) or Remaining Relative (subclasses 115 and 835) visa or a visa of a kind determined by the Minister.

Subsection 115CBA(1A) gives the Minister a power to determine a kind of visa for the purposes of new subparagraph 115CBA(1)(b)(iii). The inclusion of the capacity to determine additional visas by legislative instrument will accommodate any changes to the name or subclass of these visa types without requiring further amendments.

Subsection 115CBA(1B) provides that a person who becomes the holder of a visa determined by the Minister for the purposes of subparagraph 729(2)(f)(v) of the Social Security Act before commencement of the subsection is not subject to the NARWP for parental leave pay where they subsequently become the holder of a permanent visa. This applies a consistent exclusion from the application of the NARWP.

Subsections 115CBA(2), (3) and (4) provide for the length of the waiting period.

Subsection 115CBA(2) applies (unless subsection 115CBA(3) applies) where a person is subject to a NARWP and holds a visa that is in a class of visas determined by the Minister for the purposes of paragraph 739A(3)(b) of the Social Security Act (dealing with the NARWP for special benefit). The current determination for the purposes of paragraph 739A(3)(b) covers temporary visa subclass 820 (partner) and subclass 309 (partner (provisional)). A person may apply for these visas prior to entering Australia. For such persons, the waiting period starts on the day on which the individual applied for the visa they currently hold. In general, a person will apply for the visas covered by paragraph 739A(3)(b) prior to entering Australia. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 104 weeks after that day.

Subsection 115CBA(3) applies where a person is subject to a NARWP and, prior to their current visa, they held one or more visas in a class of visas determined by the Minister for the purposes of paragraph 739A(4)(b) of the Social Security Act (dealing with the NARWP for special benefit). For such persons, the waiting period starts on the day on which the individual applied for the last of those visas. This allows time in Australia under an earlier visa to apply to accruing time in Australia for the purposes of the NARWP. For example, where a person held a temporary visa specified under paragraph 739A(4)(b) and then subsequently moved to a permanent visa, the NARWP would start from the date they applied for the temporary visa, ensuring they are not required to serve a second NARWP in respect of the permanent visa. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 104 weeks after that day. There is currently no determination in force under paragraph 739A(4)(b); however, new subsection 115CBA(3) ensures that if such a determination is made in the future, the NARWP for dad and partner pay and special benefit will operate consistently for the relevant visa holders.

Subsection 115CBA(4) applies in all remaining circumstances in which a person is subject to a NARWP. For such persons, the waiting period starts on the day on which the individual first entered Australia, or became the holder of a permanent visa, whichever occurred last. For persons who hold a temporary visa in circumstances not covered by subsection 115CBA(2) and (3) above, this will start the waiting period when the person first entered Australia. The waiting period then ends when the individual has been in Australia for a period of, or periods totalling, 104 weeks after that day.

Subsections 115CBA(5), (6) and (7), provide exemptions from the NARWP or exemptions from the effect of the NARWP.

Subsection 115CBA(5) provides that a NARWP does not apply to a person if on the day before the day that would be the start of the person's DAPP period if a payability determination were made, the person is receiving either a social security pension, a social security benefit or farm household allowance.

Subsection 115CBA(6) allows a person to be eligible for dad and partner pay despite the NARWP applying in respect of a day, if on that day the individual holds a visa in a class of visas determined by the Minister for the purposes of subsection 739A(6) of the Social Security Act. This exempts the person from the effect of the NARWP. The current determination under subsection 739A(6) includes the following visa types: subclass 060 (Bridging F), subclass 070 (Bridging (Removal Pending)), subclass 449 (Humanitarian Stay (Temporary)), subclass 785 (Temporary Protection), subclass 786 (Temporary (Humanitarian Concern)), subclass 790 (Safe Haven Enterprise) and if certain circumstances are met, a criminal justice stay visa. Former holders of such visas are similarly exempt. The new subsection focuses on a day. If dad and partner pay being payable is dependent upon eligibility being established for a range of days in a NARWP, an exemption would need to apply for all of those days.

Subsection 115CBA(7) allows a person to be eligible for dad and partner pay despite the NARWP applying, in respect of a day (termed the 'assessment day'), if the individual meets one of the specified conditions. This exempts the person from the effect of the NARWP.

The first condition is that the person is a refugee or former refugee. The second is that the person was a family member of another person at the time the other person became a refugee before the assessment day. If so, the person may be eligible for dad and partner pay despite the NARWP applying on that day if they remain the family member of that other person on the assessment day, or if the other person has died, the person was a family member of the other person immediately before the other person died. The third is that the person is an Australian citizen on the assessment day. The last is that the person is residing in Australian on the assessment day, and has held a special category visa on any day before the assessment day.

The assessment day has flexible application, and means any day on which eligibility for dad and partner pay needs to be established. A person is not eligible for dad and partner pay for any days where an exemption does not apply. This means that dad and partner pay is not payable for days prior to the exemption applying, but can be paid once the exemption exists, and while the person continues to meet the condition to be exempt. Subsection 115CBA(8) defines the terms 'family member', 'former refugee' and 'refugee' by reference to the relevant definitions in the Social Security Act.

Item 6 provides that the measure will not apply where the child is born (or entrusted to the person's care) during the first 6 months after commencement. This means that people who may have already made leave plans prior to the changes commencing are not disadvantaged and can still access parental leave pay or dad and partner pay.

Schedule 5 - Other amendments

Summary

Schedule 5 contains amendments to the Family Assistance Act and Paid Parental Leave Act to implement:

•

the Consistent Treatment for Families Receiving Family Tax Benefit Part A measure announced as part of the 2017-18 Budget, which was originally contained in the Social Services Legislation Amendment (Payment Integrity) Bill 2017

•

elements of the Family Tax Benefit and Paid Parental Leave - Maintaining Income Thresholds measure announced as part of the 2017-18 Mid-Year Economic and Fiscal Outlook, which was originally contained in the Social Services Legislation Amendment (Maintaining Income Thresholds) Bill 2018.

This Schedule implements a one-off increase of $4,672 to the family tax benefit Part A higher income free area, bringing the amount to $98,988.

Additionally, this Schedule extends the current pause on indexation of the family tax benefit Part A higher income free area, the family tax benefit Part B primary earner income limit, the parental leave pay income limit and the dad and partner pay income limit for a further year from 1 July 2020.

This Schedule also implements a new family tax benefit Part A taper structure for the maximum rate of family tax benefit Part A which provides a consistent 30 per cent rate reduction for income above the family tax benefit Part A higher income free area.

Background

Family tax benefit Part A higher income free area

Schedule 5 to the Bill introduces, from 1 July 2019, a new taper structure for the maximum rate of family tax benefit Part A which provides consistency in how family tax benefit Part A is income tested for families with income above the FTB higher income free area.

From 1 July 2019, the maximum rate would be reduced by 20 cents for every dollar earned between the family tax benefit Part A lower income free area (currently $53,728) and higher income free area and 30 cents for every dollar earned above the higher income free area.

The higher income free area amount is currently $94,316. This Schedule provides for a one-off increase to the family tax benefit Part A higher income free area to $98,988.

Schedule 17 to the Budget Savings (Omnibus) Act 2016 amended subclause 3(7) of Schedule 4 to the Family Assistance Act to extend the pause on indexation of the family tax benefit Part A higher income free area in clause 2 of Schedule 1 for an additional three years. The amendments in that Act provided that, in addition to 1 July 2016, there was to be no indexation of the higher income free area amount on 1 July 2017, 1 July 2018 and 1 July 2019, with indexation to resume on 1 July 2020.

This Schedule further extends the pause on indexation of the family tax benefit Part A higher income free area for another year, with indexation now to resume on 1 July 2021. At this time, indexation will apply to the increased family tax benefit Part A higher income free area amount.

FTB Part B primary earner income limit

Schedule 17 to the Budget Savings (Omnibus) Act 2016 amended subclause 3(7) of Schedule 4 to the Family Assistance Act to extend the pause on indexation of the family tax benefit Part B income limit in clause 28B of Schedule 1 (often referred to as the 'primary earner income limit') for an additional three years. The amendments in that Act provided that, in addition to 1 July 2016, there was to be no indexation of this income threshold amount on 1 July 2017, 1 July 2018 and 1 July 2019.

This Schedule further extends the pause on indexation for the family tax benefit Part B primary earner income limit amount for an additional year by pausing the indexation that would otherwise occur on 1 July 2020. The indexation would next occur on 1 July 2021.

Parental leave pay income limit and dad and partner pay income limit

To be eligible for parental leave pay and dad and partner pay, a person must satisfy, among other things, an income test. The Paid Parental Leave Act covers both parental leave pay and dad and partner pay, with the same income test applying to both payments. To satisfy this income test, a person's income for a particular income year must not exceed the PPL income limit in section 41 of the Paid Parental Leave Act. Currently, the PPL income limit is $150,000 until 30 June 2020 and is then to be indexed.

The amendments made by this Schedule will maintain the current PPL income limit until 30 June 2021, with indexation of the income limit to occur on 1 July 2021.

Explanation of the changes

Amendments to the Family Assistance Act - Higher income free area and indexation

Clause 1 of Schedule 5 repeals and substitutes a figure of $98,988 for the higher income free area when calculating rate of family tax benefit Part A.

Clause 2 affects indexation of the higher income free area for family tax benefit Part A, (known as the FTB basic HIFA (A) for indexation purposes). The higher income free area amount substituted by clause 1 is not to be indexed on 1 July 2019 and 1 July 2020, but indexation of the higher amount will resume in 2021. The income limit for family tax benefit (Part B) for the primary earner (described for indexation purposes as the FTB income limit (B)) is also not to be indexed on 1 July 2019 and 1 July 2020, but indexation will resume thereafter.

Clause 3 is an application provision, providing that the new amount will apply in working out the Part A rate of family tax benefit for days on or after commencement.

Amendments to the Paid Parental Leave Act - income limits

Clause 4 amends the guide to Part 2-3 in section 30 to reflect the extension of the pause on the indexation of the PPL income limit from 30 June 2020 to 30 June 2021.

Clauses 5 and 6 amend the references to 1 July 2020 in sections 41 and 42 to 1 July 2021. The effect is that the PPL income limit will not be subject to indexation until 1 July 2021.

Clause 7 amends the guide to Part 3A-3 in section 115CA to reflect the extension of the pause on the indexation of the PPL income limit from 30 June 2020 to 30 June 2021.

Amendments to the Family Assistance Act - Taper rate for Part A rate of family tax benefit (Method 2)

Clause 25 provides the method statement that is to be used in calculating an individual's family tax benefit Part A rate where Method 2 applies. Under step 3 of the method statement, an individual's income and maintenance tested rate is worked out under step 3 of the method statement in clause 3 of Schedule 1 as if the individual's Part A rate were worked out using Method 1 (but disregarding clause 24G). The result is the Method 2 income and maintenance tested rate.

Clause 8 is a consequential amendment that makes the method statement in clause 25 of Schedule 1 subject to the new clause 25D.

Clause 9 inserts a note at the end of the method statement in clause 25 referring the reader to new clause 25D which modifies the application of step 3 of the method statement in clause 25.

Clause 10 then inserts a new clause 25D which sets out those modifications. In effect, the income test that applies in working out an individual's Part A rate under method 1 (step 2 of the method statement in clause 3) is modified for the purposes of working out the individual's Method 2 income and maintenance tested rate so that a taper of 30% applies in relation to an individual's ATI that exceeds the higher income free area. A taper of 20% would continue to apply in relation to ATI that exceeds the individual's income free area and does not exceed the higher income free area.

Clause 25D provides that in applying step 3 of the method statement in clause 25, step 2 of the method statement in clause 3 is replaced by new steps 2 to 2D.

Step 2 requires the individual's income free area to be subtracted from the individual's higher income free area.

Step 2A applies a 20% taper to the result in step 2.

Under step 2B, the individual's higher income free area is subtracted from their ATI.

Step 2C applies a 30% taper to the result in step 2B.

Under step 2D, the sum of the amounts at steps 2A and 2C is the individual's reduction for adjusted taxable income. This amount is then deducted from the individual's maximum rate to arrive at the individual's income tested rate.

Step 3 of the method statement in clause 3 then applies, as modified, to work out the individual's Method 2 income and maintenance tested rate for the purposes of step 3 of clause 25.

Clause 11 provides for the application of the amendments made by this Schedule. The amendments apply in relation to working out an individual's family tax benefit Part A rate for days on or after commencement.