House of Representatives

Explanatory Memorandum

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

Outline and financial impact statement

This Bill contains various amendments to the Social Security Act 1991, the A New Tax System (Bonuses for Older Australians) Act 1999, the Social Security (Administration) Act 1999, and the Social Security (Administration and International Agreements)(Consequential Amendments) Act 1999.

Schedule 1 of the Bill amends the double orphan pension provisions of the Social Security Act 1991 to guarantee the rate of family allowance in relation to double orphans at the rate that was applicable at the time the child became a double orphan. This amendment is retrospective, applying to children who became double orphans on or after 1 July 1998.

In addition, the definition of a double orphan in subsection 993(2) of the Social Security Act 1991 is expanded to include the situation where one parent is dead and the other parent is a long term remandee (at the moment, the definition only applies where that other person was serving a long-term sentence).

Schedule 2 amends the A New Tax System (Bonuses for Older Australians) Act 1999 to ensure that the disqualifying period for the self funded retirees bonus ends on 30 June 2000 (rather than 1 July 2000), avoiding a 1-day overlap with the revised income support provisions which commence on 1 July 2000 as part of the tax reform package.

Schedule 3 contains a range of technical amendments to the Social Security Act 1991, consisting of the repeal of redundant provisions and correcting various cross-references and minor drafting errors.

Schedule 4 contains amendments to the Social Security (Administration) Act 1999 and the Social Security (Administration and International Agreements) (Consequential Amendments) Act 1999 to correct minor inaccuracies.

The financial impact of these measures is:

•

Amendments to the double orphan pension provisions to guarantee the rate of family allowance in relation to double orphans at the rate that was applicable at the time the child became a double orphan:

2000-2001

$ 0.3m

2001-2002

$ 0.2m

2002-2003

$ 0.3m

2003-2004

$ 0.4m

•

The amendments to the double orphan provisions to expand the definition of "long-term prisoner" has a negligible financial impact.

•

The remainder of the Bill has no financial impact.

Notes on clauses

Clause 1 - Short title

Clause 1 of the Family and Community Services Legislation Amendment Bill 2000 sets out how the Act is to be cited.

Clause 2 - Commencement

Clause 2 provides for the commencement of the Act and its schedules.

Except as follows, the Act commences on the day on which it receives the Royal Assent: - subclause 2(2):

Schedule 1 - Amendments relating to double orphan pension

Part 2 of Schedule 1 commences with retrospective effect to 1 July 1998 - subclause 2(2).

•

these measures either confer a benefit on various customers affected by the measures, enabling an additional amount to be paid to them in respect the retrospective period and thereafter (items 2 to 5 inclusive) or are technical (item 1).

Part 3 of Schedule 1 commences on 1 July 2000, to confer a similar benefit on family tax benefit customers from that date - subclause 2(3).

•

With the introduction of the A New Tax System (Family Assistance) Act 1999, family allowance will be replaced by family tax benefit with effect from 1 July 2000.

Schedule 3 - Miscellaneous amendments

Item 18 of Schedule 3 commences, or will be taken to have commenced, on 1 March 2000 - subclause 2(4).

•

Should the Act not have commenced by 1 March 2000, then subclause 2(4) provides for the retrospective commencement of Item 18 of Schedule 3 with effect from that date.

•

Item 18 is a technical amendment only, to correct an imprecise cross-reference to the Veterans' Entitlements Act 1986. No person's rights are affected by Item 18.

Schedule 4 - Amendments of the social security administration legislation

Item 1 of Schedule 4 commences, or will be taken to have commenced, on 20 March 2000 - subclause 2(5).

•

Should the Social Security (Administration) Act not have commenced by 20 March 2000, subclause 2(5) provides for the retrospective commencement of Item 1 Schedule 4 with effect from that date.

•

Item 1 of Schedule 4 restores a paragraph of the Social Security Act 1991 that was omitted by the Social Security (Administration and International Agreements) (Consequential Amendments) Act 1999. The restoration of this paragraph is a beneficial measure that will ensure that the customers are able to use the standardised provisions introduced by the Social Security (Administration) Act 1999.

Items 2 and 3 of Schedule 4 commence on 20 March 2000, or on the day the Act receives the Royal Assent - subclause 2(6).

Items 4, 5 and 6 of Schedule 4 commence, or will be taken to have commenced, on 20 March 2000 - subclause 2(7).

•

Should the Act not have commenced by 20 March 2000, then subclause 2(6) provides for the retrospective commencement of Items 4, 5 and 6 of Schedule 4 with effect from that date.

•

Items 4, 5, 6 and 7 of Schedule 4 restore certain sections of the Social Security Act 1991 that were omitted by the Social Security (Administration and International Agreements)(Consequential Amendments) Act 1999, and make related amendments. These measures are either beneficial (to ensure that certain customers can continue to apply for benefits) or are technical.

Clause 3 - Schedules

Clause 3 provides that each Act specified in the Schedules is amended according to the terms of those Schedules.

Schedule 1 - Amendments relating to double orphan pension

Schedule 1 contains the following measures in relation to double orphans:

•

Amendments to guarantee the rate of family allowance in relation to double orphans at the rate that was applicable at the time the child became a double orphan, with retrospective effect from 1 July 1998, when the problem was first identified - Part 2 and Part 3 of the Schedule (items 3 to 7 inclusive).

-

This is to be achieved by the payment of an additional component of double orphan pension to those double orphan pension (DOP) customers who are means tested out of the family assistance system. It will also be payable to DOP customers who receive less family assistance for an orphaned child than was received for the child by the child's original family;

-

The additional component will be equal to the difference between the carers entitlement to family assistance for the orphaned child and the family assistance entitlement for the orphaned child in their original family;

-

Part 2 operates to give the amendment both current and retrospective operation, while Part 3 ensures that the amendment will be integrated into the new family tax benefit which commences on 1 July 2000, under the auspices of the A New Tax System (Family Assistance) Act 1999;

•

An amendment to expand the definition of "long term prisoner", - Part 1 (item 2);

•

A technical amendment - Part 1 (item 1).

Part 1 - Amendments commencing on Royal Assent

Part 1 of Schedule 1 contains an amendment to expand the definition of "long term prisoner", and a technical amendment.

Item 1 - Technical

Note 6 to section 994 is misleading and is removed by this technical amendment.

Item 2 - "long term prisoner"

This item provides for an additional circumstance where a child may qualify as a double orphan.

At present, section 993 of the Act provides (among other things) that a child is a double orphan if one parent is dead and the other is a long term prisoner. Section 996 of the Act provides that a person is a is a long-term prisoner if the person has been convicted of an offence, has been sentenced to imprisonment for life or for a term of at least 10 years.

It is proposed that the definition of a double orphan in subsection 993(2) of the Social Security Act 1991 (the Act) be expanded to include the situation where one parent is dead and the other parent is a long term remandee.

•

Recently, a case was brought to the attention of Department of Family and Community Services of a child whose mother had died. The childs father had been charged with murder and was being held in custody. However, the child could not attract payment of double orphan pension as a double orphan as the childs father had not been tried and, therefore, was not a long term prisoner.

Part 2 - Amendments taken to have commenced on 1 July 1998

Part 2 of Schedule 1 contains amendments to guarantee the rate of family allowance in relation to double orphans at the rate that was applicable at the time the child became a double orphan, with retrospective effect to include those children who became double orphan on or after 1 July 1998.

-

Part 2 operates to give the amendment both current and retrospective operation, as provided for in items 3, 4 and 5, while Part 3 ensures that the amendment will be integrated into the new family tax benefit which commences on 1 July 2000, under the auspices of the A New Tax System (Family Assistance) Act 1999 - as to which see items 6 and 7.

Items 3, 4 and 5 - Rate of double orphan pension

This measure will ensure that where a child becomes a double orphan, the rate of family allowance that was applicable in respect of the child immediately before that event will be guaranteed as a minimum to a person who assumes care of the child and is entitled to family allowance in that regard.

Item 3

This item repeals and replaces section 1010 of the Act, to provide for the introduction of an additional component of double orphan pension, which is to be calculated as the amount which equals the difference between the prior amount of family allowance and the current rate of family allowance.

•

Subsection (3) provides that the additional amount is not available to approved care organisations.

Item 4

This item adjusts the indexation provisions in the Act to take account of the renumbering occasioned by these amendments.

•

It is not necessary to provide that the additional amount itself be indexed; since it is defined as the difference between the previous amount and the current amount of benefit, it is effectively "self-indexing".

Item 5

This Item is an application clause to apply the new provisions to children who became double orphans on or after 1 July 1998.

Part 3 - Amendment commencing on 1 July 2000

Part 3 of the Schedule contains amendments to guarantee the rate of family tax benefit in relation to double orphans. These amendments are complementary to those contained in items 3, 4 and 5 of Part 2 of the Schedule.

These amendments commence on 1 July 2000.

Item 6

This item repeals and replaces section 1010, to make complementary amendments to ensure that the measure guaranteeing the rate of double orphan pension is continued and integrated into the new family tax benefit system which commences with effect from 1 July 2000, under the same conditions as apply under the present family allowance provisions (see Part 1 of the Schedule, items 3 to 5 inclusive).

•

see the A New Tax System (Family Assistance) Act 1999.

Item 7

This Item is an application clause to apply the new provisions to children who became double orphans on or after 1 July 1998.

Schedule 2 - Amendments relating to bonuses for older Australians

This Schedule contains amendments to ensure that older Australians are not disadvantaged in qualifying for a savings bonus on 1 July 2000 under the provisions of the A New Tax System (Bonuses for Older Australians) Act 1999.

Under the existing provisions of that Act, older Australians may be disqualified from receiving a self-funded retirees bonus if they received a "disqualifying payment" (ie an income support payment) during the 3 months ending on 1 July 2000.

Significant changes to income support payments result from the New Tax System which commences on 1 July 2000. These changes will allow many people who are not currently able to receive a payment to be paid an income support payment. This means that if as a result of these changes an older Australian became qualified for an income support payment for the first time on 1 July 2000, then the fact of that 1 day "overlap" with the last day of the 3-month disqualifying period might preclude that person from receiving a self funded retirees bonus.

To avoid this unfair result, Schedule 2 amends the A New Tax System (Bonuses for Older Australians) Act 1999 to ensure that the disqualifying period for the self funded retirees bonus ends on 30 June 2000, avoiding overlap with the revised income support provisions.

Items 1, 2 and 3

These Items amend section 12 of the A New Tax System (Bonuses for Older Australians)1999 to substitute 30 June 2000 as the day on which the "disqualifying period" ends in relation to customers of the Department of Family and Community Services.

Items 4, 5 and 6

These Items amend section 41 of the A New Tax System (Bonuses for Older Australians)1999 to substitute 30 June 2000 as the day on which the "disqualifying period" ends in relation to customers of the Australian Taxation Office.

•

The A New Tax System (Bonuses for Older Australians)1999 divides older Australians into 3 categories for the purposes of paying bonuses under the Act. Thus, customers who are required to lodge a tax return will have their bonus paid by the Australian Taxation Office; customers who normally deal with the Department of Veterans' Affairs will have their bonus paid by that Department; and anyone else will have their bonus paid by the Department of Family and Community Services.

•

Customers of the Department of Veterans' Affairs are not eligible for a self funded retirees bonus under the Act (since, by definition, they are persons who are on income support), so there is no need to amend the provisions that relate to those customers.

Schedule 3 - Miscellaneous amendments

Schedule 3 contains a range of technical amendments to the Social Security Act 1991, consisting of the repeal of redundant provisions and correcting various cross-references and minor drafting errors.

Several of these proposals are contained in multiple items (eg repeals of certain redundant references. Proposals which fall into this category are summarised here for ease of reference:

Summary of proposals covered by multiple items

Amendments to repeal redundant savings and transitional provisions from the Social Security Act 199l

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Items 2, 4, 5, 7, 8, 9, 10, 11, 12, 13, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 51, and 52

These amendments repeal savings and transitional provisions which were time-limited, and which are redundant because their "use-by" date has now expired, and as a result their effect is now spent.

Remove redundant references to the Aboriginal Enterprise Incentive Scheme from the Social Security Act

-

Items 1, 3, 6, 42, 43, 44, 45, 46, 47, 48, 49, and 50

The Aboriginal Enterprise Incentive Scheme (AEIS) was operated by ATSIC until 1993, when it was discontinued. These amendments will remove references to AEIS from the Social Security Act 1991.

Item 1

This item repeals a redundant reference to the Aboriginal Enterprise Incentive Scheme - see summary at commencement of Schedule.

Item 2

This item repeals a redundant saving/transitional provision - see summary at commencement of Schedule.

Item 3

This item repeals a redundant reference to the Aboriginal Enterprise Incentive Scheme - see summary at commencement of Schedule.

Item 4

This item repeals a redundant saving/transitional provision - see summary at commencement of Schedule.

Item 5

This item repeals a redundant saving/transitional provision - see summary at commencement of Schedule.

Item 6

This item repeals a redundant reference to the Aboriginal Enterprise Incentive Scheme - see summary at commencement of Schedule.

Items 7 to 13 (inclusive)

These items repeal redundant saving/transitional provisions - see summary at commencement of Schedule.

Item 14

This is a technical amendment to section 694 of the Act, to align the duration of the sickness allowance ordinary waiting period (s694(3)) with equivalent newstart allowance provisions (s621(3)).

Item 15

In relation to the qualification conditions for mobility allowance, s1035(1)(c)(ii)(C) provides:

(C)

the person is undertaking job search activities as part of an activity plan developed by a Disability Panel established by the Secretary;

The Disability Panel is now defunct, and this item will substitute a procedure for an agreement to be reached with the Secretary of the Department.

Item 16

In relation to the qualification conditions for mobility allowance, s1035(1)(ca)(ii)(C) provides:

(C)

the person is undertaking job search activities under the Competitive Employment Placement and Training Program administered by the Health Department;

The function referred to has now been reallocated to the Department of Family and Community Services, and this item makes an appropriate amendment.

Item 17

In assessing qualification for pensioner education supplement, the current provisions only allow the use of a medical certificate provided by an officer of the Commonwealth Rehabilitation Service. This can be too restrictive, and for this reason the equivalent austudy provisions were broadened to allow use of certificate provided by an appropriate medical practitioner who has a detailed knowledge of the person's physical condition.

This amendment similarly broadens the provision relating to pensioner education supplement, to allow the use of a certificate provided by an appropriate medical practitioner who has a detailed knowledge of the person's physical condition

Item 18

This amendment will correct an incorrect cross-reference to the Veterans' Entitlements Act 1986.

Subparagraph 1061PZG(1)(b)(iii) refers to "an invalidity income support supplement under the Veterans' Entitlements Act 1986". In fact, the term used in that Act is "income support supplement" which may be paid on various grounds, including incapacity for work.

This amendment will substitute an accurate cross-reference.

Items 19 to 24 (inclusive)

Under the Social Security Act 1991, a liquid assets waiting period (LAWP) can commence the day a person becomes unemployed. An income maintenance period (IMP) is imposed once a person has received payment for their leave entitlements. The IMP applies to newstart, sickness allowance, youth allowance and austudy payment.

While in the majority of cases it is expected that both periods would commence at the same time, there are situations where leave payments are not paid at the same time, such that the LAWP and the IMP have different commencements. In these cases, the legislation can operate unfairly in relation to persons who are in the same financial circumstances.

These amendments will ensure that in the circumstance summary the IMP will commence at the same time as the LAWP.

Items 25 to 34 (inclusive)

These items repeal redundant saving/transitional provisions - see summary at commencement of Schedule.

Items 35 to 39 (inclusive)

These items are technical amendments to the compensation provisions to remove references to section 710 of the Act which has been repealed, and correct a incorrect example relating to section 1168 (item 37).

Item 40

This amendment corrects a drafting error.

Subsection 1179(4) currently provides (emphasis added):

1179.(4)

If the person claiming compensation is not a member of a couple, the recoverable amount is equal to the smallest of the following amounts:

(a)

the sum of the payments of the compensation affected payments payable to the person for:

(i)

the periodic payments period; or

(ii)

if a lump sum compensation payment is received before 20 March 1997-the old lump sum preclusion period; or

(iii)

if a lump sum compensation affected payment is received before 20 March 1997-the new lump sum preclusion period;

Both paragraphs (ii) and (iii) apply "before 20 March 1997" . In fact, the latter paragraph should apply "on or after 20 March 1997" .

This item makes the appropriate amendment.

Item 41

This amendment corrects 2 drafting errors.

Paragraph 1179(5)(c) currently provides (emphasis added):

1179.(5) If:

(a)

the person claiming compensation is a member of a couple; and

(b)

the person's partner neither receives nor claims a compensation affected payment for the periodic payments period or the lump sum preclusion period;

the recoverable amount is equal to the smallest of the following amounts:

(c)

the sum of the payments of the compensation affected payment payable to the person for:

(i)

the periodic payments period; or

(ii)

if a lump sum compensation payment is received before 20 March 1997-the old lump sum preclusion period; or

(iii)

if a lump sum compensation affected payment is received before 20 March 1997-the new lump sum preclusion period;

Both paragraphs (ii) and (iii) apply "before 20 March 1997" . In fact, the latter paragraph should apply "on or after 20 March 1997" .

In addition, the word " affected " is incorrect in this context, and should be omitted.

This item makes the appropriate amendments.

Items 42 to 50 (inclusive)

This items repeal redundant references to the Aboriginal Enterprise Incentive Scheme - see summary at commencement of Schedule.

Items 51 and 52

These items repeal redundant saving/transitional provisions - see summary at commencement of Schedule.

Items 53 and 54

These Items correct drafting errors in Schedule 1B.

Item 96A of Schedule 1B of the Social Security Act 1991 provides (emphasis added):

Application of revised Schedule 1B

96A.(1)

Subject to subclause (2), this Act, as amended by items 1, 2 and 4 of Schedule 14A of the amending Act, applies to claims lodged on or after the date of commencement of those items.

96A.(2)

Despite section 8 of the Acts Interpretation Act 1901, the amendments made by items 1, 2 and 4 of Schedule 14A to the amending Act, apply in relation to:

(a)

all medical, psychiatric or psychological examinations attended, or reports required, under subsection 105(1) on or after the date of commencement of those items; and

(b)

all legal proceedings, applications for review of decisions, or determinations, to the extent that the proceedings, applications or determinations relate to, or involve, a medical, psychiatric or psychological examination referred to in paragraph (a).

96A.(3)

In this clause:

amending Act means the Social Security Legislation Amendment (Family and Other Measures) Act 1997.

In fact, subitem 96A(2) should refer to "Schedule 16" (instead of Schedule 14A) and the reference to the amending Act should refer to the "Social Security and Veterans' Affairs Legislation Amendment (Family and other Measures) Act 1997".

These items make the appropriate amendments.

Schedule 4 - Amendments of social security administration legislation

Schedule 4 contains the following amendments in relation to the Social Security (Administration) Act 1999 and the Social Security (Administration and International Agreements) (Consequential Amendments) Act 1999:

•

an amendment to section 47 of the Social Security (Administration) Act 1999 to include a reference to "pension bonus" which was inadvertently omitted during the drafting process - as to which see item 1;

•

amendments to Schedule 2 of the Social Security (Administration) Act 1999 to insert the correct date of commencement for pensioner education supplement - as to which see items 2 and 3; and

•

amendments to the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999 to restore the effect of certain provisions relating to education entry payment - as to which see items 4, 5 and 7.

•

amendments to the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999 to repeal provisions made redundant by the recent passage of the Further 1998 Budget Measures Legislation Amendment (Social Security) Act 1999 - as to which see item 6.

Item 1

This item amends section 47 of the Social Security (Administration) Act 1999 to include a reference to "pension bonus" which was inadvertently omitted during the drafting process.

Section 47 of the Social Security (Administration) Act 1999 lists various payments for the purposes of applying the administration provisions (such as claims provisions etc) which have been standardised and consolidated into that Act. The omission of "pension bonus" in section 47 means that those standardised provisions could not be availed of in relation to that particular payment. This amendment will remedy the omission by including "pension bonus" in the list of payments in section 47.

Items 2 and 3

These items amend Schedule 2 of the Social Security (Administration) Act 1999 to insert the correct date of commencement for the payment pensioner education supplement.

The provisions relating to pensioner education supplement were moved to the Social Security (Administration) Act 1999 as part of the standardisation and consolidation exercise undertaken by that Act. During that process, the dates of commencement of payment of the supplement were inadvertently altered.

Generally speaking pensioner education supplement is payable according to the semester the student undertakes the course ie 1 January each year for 1st Semester courses and 1 July for 2nd Semester courses. Until now, the now-defunct provisions of the Social Security Act 1991 included the requirement that a person actually commence the course of study before the pensioner education supplement became payable. This requirement was overlooked during the process of translating the provisions to the Social Security (Administration) Act 1999.

Item 4

This item restores two sections of the Social Security Act 1991 that were repealed by the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999.

Item 90 of Schedule 1 to the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999 repealed sections 665I and 665J of the Social Security Act 1991, which relate to claims by widow B pension recipients for education entry payment. In repealing these sections, it was anticipated that they would be redundant following the intended repeal of education entry payment by the Further 1998 Budget Measures Legislation Amendment (Social Security) Act 1998. In the event, the provisions in that Act discontinuing the education entry payment were not agreed to by the Senate, so the sections are still required to enable customers in receipt of widow B pension to make claims for education entry payment.

Item 4 repeals Item 90 of Schedule 1 to the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999, to restore sections 665I and 665J of the Social Security Act 1991.

•

Item 6 of this Schedule contains a savings provision which provides (among other things) that the repeal of sections 665I and 665J is taken not to have occurred.

Item 5

This item restores two sections of the Social Security Act 1991 which were repealed by the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999.

Item 98 of Schedule 1 to the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999 repealed sections 665ZM and 665ZN of the Social Security Act 1991, and substituted a new section 665ZM.

Item 98 provides as follows:

A person is not qualified for an education entry payment under section 665ZL unless the person has made a claim for the payment.

This amendment was intended to replace the existing claims provisions contained in those sections with a new system compatible with the standardisation and consolidation exercise undertaken by the Social Security (Administration) Act 1999. Unfortunately, the repeal dealt with the wrong sections for this purpose; in fact, the provision ought to have repealed sections 665ZN and 665ZP, with the replacement section numbered as 665ZN.

Item 5 makes the necessary adjustment to achieve this purpose, and to restore the inadvertently-repealed section 665ZM.

•

Item 6 of this Schedule contains a savings provision which provides (among other things) that the repeal of section 665ZM is taken not to have occurred.

Item 6

This item repeals items 173, 174 and 175 of Schedule 1 to the Social Security (Administration and International Agreements (Consequential Amendments) Act 1999.

These items are redundant, having been overtaken by the recent passage of the Further 1998 Budget Measures Legislation Amendment (Social Security) Act 1999, that repeals and substitutes the section those items were amending.

Item 7

This is a savings provision relating to items 4 and 5.

Schedule 5 - Repeal of redundant provisions

Schedule 1A of the Social Security Act 1991 contains many "savings" and "transitional" provisions associated with previous amendments to the Act. This Schedule repeals many of those provisions that are now redundant or spent.

Item 1 Repeal

Item 1 repeals redundant or spent clauses in Schedule 1A of the Social Security Act 1991.