Explanatory Memorandum
Circulated By the Authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP)Outline and financial impact
This bill gives effect to an important element of the Australian Government's strategy for addressing homelessness, announced in its White Paper, The Road Home: a National Approach to Reducing Homelessness, which was released in December 2008.
This measure enables weekly payments for a 'class of persons' who receive a social security periodic payment, family tax benefit or baby bonus and is intended to include people who are assessed as being vulnerable, such as those who are homeless or at risk of homelessness.
This bill provides for weekly payments under the Social Security (Administration) Act 1999 to come into effect on the commencement of the legislative instrument defining 'vulnerable customers'.
This legislation also updates the A New Tax System (Family Assistance) (Administration) Act 1999 to enable the Government to introduce weekly payments for family tax benefit and baby bonus payments at a later date if evaluation of the social security measure indicates that extension of weekly payments to this customer group is warranted.
Minor technical corrections are also being made.
Financial impact statement
In fiscal balance terms, there are no administered costs for this initiative. Departmental costs will be absorbed within existing resources by the responsible departments.
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, as the Social Security and Family Assistance Legislation Amendment (Weekly Payments) Act 2010.
Clause 2 provides that the Act commences on the day on which it receives the Royal Assent.
Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.
This explanatory memorandum uses the following abbreviations:
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- 'Acts Interpretation Act' means the Acts Interpretation Act 1901;
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- 'Family Assistance Administration Act' means the A New Tax System (Family Assistance) (Administration) Act 1999;
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- 'FTB' means family tax benefit;
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- 'Social Security Act' means the Social Security Act 1991; and
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- 'Social Security Administration Act' means the Social Security (Administration) Act 1999.
Schedule 1 - Weekly payments
Summary
This Schedule enables weekly payments for a 'class of persons' who receive a social security periodic payment, FTB or baby bonus and is intended to include people who are assessed as being vulnerable, such as those who are homeless or at risk of homelessness.
Background
The Australian Government's White Paper, The Road Home: a National Approach to Reducing Homelessness, was released in December 2008. As part of the strategy for addressing homelessness, this measure introduces weekly payments of social security periodic payment, FTB and baby bonus for a 'class of persons' intended to include people who are assessed as being vulnerable, such as those who are homeless or at risk of homelessness.
In relation to family assistance, if an individual makes an effective claim for FTB by instalment and is eligible for the payment, the Secretary is required to make an entitlement determination under section 16 of the Family Assistance Administration Act. The rules for paying FTB by instalment are in section 23. The usual rule is that the Secretary must, after each instalment period after the claim is determined, pay an instalment amount to the claimant at such time as the Secretary considers appropriate and into a relevant bank account. An 'instalment amount' is the amount accruing for the days in the instalment period for which a claimant is entitled to be paid FTB, and, prior to these amendments, by definition, an 'instalment period' was 14 days.
Prior to these amendments, there was some capacity in section 23 to change the day on which an instalment period began and to pay an instalment earlier than it would otherwise have been paid (for example, when the usual payday is a public holiday). However, there was no capacity in section 23 to adopt a weekly payment cycle for certain groups of customers under family assistance law. The amendments enable FTB to be paid on a weekly basis to vulnerable individuals, including customers who are homeless.
The payment rules for baby bonus are set out in section 47 of the Family Assistance Administration Act. The usual rule is that the Secretary must, after each of the first 13 instalment periods after the claim is determined, pay to the claimant 13 equal instalments of baby bonus.
Prior to these amendments, there was some capacity in section 47 to change the day on which a baby bonus instalment period began and to determine an alternative payment arrangement in specific circumstances. However, there was no capacity in section 47 to adopt a weekly payment cycle for certain groups of customers. The amendments enable baby bonus to be paid on a weekly basis for 26 weeks to vulnerable individuals.
For social security, section 43 of the Social Security Administration Act provides for social security periodic payments to be paid to social security recipients in arrears and in instalments of not more than 14 days, as determined by the Secretary. Currently, in most cases, social security payments are paid in arrears in respect of a 14-day instalment period. On its face, the legislation is unclear on the extent of the Secretary's discretion to determine that more than one payment can be made in respect of an instalment period. This Schedule clarifies that social security periodic payments may be paid on a weekly basis in respect of a 14-day instalment period to vulnerable individuals, including customers who are homeless or at risk of homelessness.
The Minister has the power to determine, by legislative instrument, the class of persons to whom the weekly payment cycle could apply. It is expected that the instrument would cover vulnerable people, including those who are homeless and those at risk of becoming homeless. Other classes of vulnerable people might also be covered. The Secretary will then determine whether a particular person who is within that class of persons should be paid weekly.
In practice, weekly payments will only be offered after discussion with the person concerned. At that time, the person might also be offered or maintain access to other relevant services aimed at stabilising and improving their financial situation. It may be that weekly payments start as soon as practicable after the person is identified as coming within the class of persons specified by the Minister (for the purposes of family assistance payments, the seven-day instalment period could start from the day after the date paid) or at a later time. There would need to be some flexibility in the timing of when a person is moved to being paid weekly.
The changes will apply to people who claim family assistance and social security payments in future, as well as people who are already receiving family assistance and social security payments.
The amendments made by this Schedule commence on Royal Assent.
Explanation of the changes
Part 1 - Family assistance
Division 1 - Family tax benefit
Amendments to the Family Assistance Administration Act
Item 1 amends subsection 22(1). Section 22 provides that the Secretary must give notice of determination of a claim to the claimant. However, this amendment, which inserts the words 'except subsection 23(3B)', means that the Secretary does not have to give the claimant notice of a determination that the claimant is of a class of persons who have a seven-day instalment period.
Item 2 repeals and substitutes the definition of instalment period to allow that an instalment period may be either 14 days or, for certain classes of persons, seven days.
Item 3 inserts new subsections (3A), (3B), (3C) and (3D) at the end of section 23. The effect of these subsections is to set out the people who will have seven-day instalment periods. Subsection (3A) provides that the Minister may, by legislative instrument, specify a class of persons whom the Secretary may determine to have seven-day instalment periods.
Under subsection (3B), the Secretary then has the discretion to determine whether a particular claimant who is a member of a class of persons specified under a legislative instrument made by the Minister has a seven-day instalment period.
Subsection (3C) provides that the Secretary must revoke a determination under subsection (3B) if the Secretary is satisfied that the person is no longer a member of the class of persons specified in subsection (3A). However, subsection (3D) provides that subsection (3C) does not affect the operation of subsection 33(3) of the Acts Interpretation Act. Subsection 33(3) of the Acts Interpretation Act provides that, where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws), the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument. This means that the Secretary has the discretion to revoke a determination made under subsection (3B) for reasons other than that the claimant is no longer a member of a class of persons specified under subsection (3A).
Item 4 inserts new subsections at the end of section 25. Section 25 obliges a claimant who is entitled to be paid family assistance to notify the Secretary of any change of circumstances that has occurred or is likely to occur which will result in the claimant being eligible for a rate of FTB less than that specified in the determination relating to the claimant. Failure to do so is an offence.
New subsection (3) extends this obligation and requires a claimant who has a 7-day instalment period to notify the Secretary of anything that causes the claimant to cease to be a member of the class of persons specified under subsection 23(3A). However, because the change in circumstances only affects the claimant's instalment period and not the claimant's rate of payment, failure to notify the Secretary is not an offence.
New subsection (4) provides that a claimant may be in the situation where his or her change of circumstances will result in the claimant being eligible for a rate of FTB less than that specified in the determination and result in the claimant not being a member of the class of persons who may be paid in seven-day instalments. In that case, the claimant is obliged under subsection (3) alone to notify of the circumstances which will lead to the claimant being eligible for a lower rate of FTB.
Division 2 - Baby bonus: main amendment
Amendments to the Family Assistance Administration Act
Item 5 repeals and substitutes section 47. Prior to these amendments, section 47 set out how baby bonus and maternity immunisation allowance is paid. However, new section 47 only deals with payment of baby bonus; payment of maternity immunisation allowance is dealt with in new section 47AA. Subsection (1) continues the present arrangement for payment of baby bonus, which is that it is to be paid in 13 fortnightly instalments. Similarly, subsections (4) to (7) and (12) continue existing arrangements relating to payment of baby bonus, such as payment to a bank account.
However, subsection (2) provides that, if the Secretary determines that the claimant has a weekly instalment period and makes that determination before the end of what would be the claimant's first fortnightly instalment period for payment of baby bonus, the Secretary must pay the claimant in 26 weekly instalments.
Subsections (8) and (9) set out persons who may have weekly instalment periods. Subsection (8) provides that the Minister may, by legislative instrument, specify a class of persons whom the Secretary may determine to have weekly instalment periods. Under subsection (9), the Secretary then has the discretion to determine whether a particular claimant who is a member of a class of persons specified in a legislative instrument made by the Minister has weekly instalment periods.
Subsection (10) provides that the Secretary must revoke a determination under subsection (9) if the Secretary is satisfied that the person is no longer a member of the class of persons specified in subsection (8). However, subsection (11) provides that subsection (10) does not affect the operation of subsection 33(3) of the Acts Interpretation Act. Subsection 33(3) of the Acts Interpretation Act provides that, where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws), the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument. This means that the Secretary has the discretion to revoke a determination made under subsection (9) for reasons other than that the claimant is no longer a member of a class of persons specified under subsection (8).
New subsection (3) continues the Secretary's current ability to direct that the whole or a part of an amount is to be paid in a way other than fortnightly instalments. However, it extends this arrangement to weekly instalments and allows the Secretary to determine that a person is to switch from fortnightly instalments to weekly instalments and vice versa.
Subsection (13) defines the terms 'fortnightly instalment period', 'instalment period' and 'weekly instalment period'.
Item 5 also inserts new sections 47AA and 47AB. New section 47AA sets out how maternity immunisation allowance is paid and continues existing arrangements relating to payment of maternity immunisation allowance.
New section 47AB sets out other rules about payment of baby bonus and maternity immunisation allowance dealing with rounding of payments (subsection (1)) and the relationship of sections 47 and 47AA with other provisions (subsection (2)). These subsections continue existing arrangements.
Division 3 - Baby bonus: related provisions
Amendments to the Family Assistance Act
Item 6 changes a reference in subparagraph 38(c)(ii) from subsection 47(1AA) of the Family Assistance Administration Act to subsection 47(1), (2) or (3). This change is consequential on the changes set out in item 5 above.
Item 7 sets out application arrangements. It provides that people who have already been determined to be eligible for baby bonus or maternity immunisation allowance may be subject to the new payment arrangements set out in these amendments.
Item 8 sets out transitional arrangements. Subitem (1) provides that the Secretary may give a direction under new subsection 47(3) in relation to a claimant who has been determined before the commencement of these amendments to be entitled to be paid baby bonus, and who has been determined to have weekly instalment periods. This means that the Secretary may determine that payment of baby bonus to a person is to switch from fortnightly instalments to weekly instalments.
Subitem (2) provides that subparagraph 38(c)(ii) of the Family Assistance Act applies from the commencement of these amendments as if a reference to subsection 47(1)(2) or (3) of the Family Assistance Administration Act included a reference to:
- (a)
- subsections 47(1AA) or (4A) of that Act as in force immediately before commencement; and
- (b)
- subsections 47(1A), (2), (3) or (5) of that Act as in force immediately before 1 January 2009.
Paragraph (a) is to ensure that eligibility for unpaid amounts of baby bonus if a carer dies continues if the amount paid before death was paid under the payment provisions in force before the commencement of these amendments.
Paragraph (b) is similar to paragraph (a), but relates to the situation where the amounts paid before death were paid under the payments provisions in force before 1 January 2009.
Subitem (3) provides that a direction made under certain subsections of section 47 which were in force immediately prior to the commencement of these amendments has effect as if it were a direction made under certain subsections of section 47 as in force from the commencement of these amendments. This recognises that many subsections of section 47 have remained the same but have been renumbered.
Part 2 - Social security
Division 1 - Main amendment
Amendments to the Social Security Administration Act
Item 9 inserts new subsections 43(3A) to 43(3F) after subsection 43(3) of the Social Security Administration Act. These new subsections provide for weekly payments of a person's social security periodic payment to be paid in respect of a 14-day instalment period.
Subsection 43(3A) provides that the Secretary may determine that the total amount of a person's social security periodic payment, in respect of a 14-day instalment period (determined under subsection 43(1)), is to be paid to the person in two payments (the part payments). Part payments made under this subsection may only be made to a person who is a member of a class specified under new subsection 43(3B).
Subsection 43(3B) provides that the Minister may specify, by legislative instrument, a class of persons, for the purposes of subsection 43(3A). It is intended that, where a class has been specified by the Minister, the discretion to pay a person's social security periodic payment in weekly payments should not be exercised more broadly than the class that has been specified.
Subsection 43(3C) provides a number of requirements in relation to the first of the part payments made to a person in respect of a 14-day instalment period. The amount of the first part payment is not to exceed the total of the amounts of the social security periodic payment that is expected to be payable to the person for those days on which the social security periodic payment was payable to the person that fall within the first seven days of the 14-day instalment period.
The Secretary has the discretion to pay the first part payment at any time after the first seven days of the instalment period. That is, the first part payment may be paid at any time from day 8 of the instalment period.
The amount of the social security period payment is calculated according to the daily rate of payment expected to be applicable to each day, subject to subsections 43(4) and 43(5A).
Section 43(3D) provides for the second part payment in respect of a 14-day instalment period. The amount of the second part payment is the total amount of the person's social security periodic payment that is payable for the instalment period (as determined under subsection 43(3)) less the amount of the first part payment that the person has already received in respect of the 14-day instalment period.
The amount of the second part payment is to be paid at a time which is determined by the Secretary that is after the end of the 14-day instalment period. That is, the second part payment may be paid at any time from day 15 in relation to the 14-day instalment period.
The amount of the social security period payment is calculated according to the daily rate of payment applicable to each day, subject to subsections 43(4) and 43(5A).
The amounts of the payments calculated in respect of a 14-day instalment period under subsections 43(3C) and (3D) may be calculated on the basis of information in Centrelink's possession at the time of the calculation. It may subsequently need to be adjusted if Centrelink receives further information that could alter the amount of the social security periodic payment, for example, that the social security recipient earned income during the instalment period. If this is the case, this 'new' information should not invalidate the payment that was made to the person. Adjustments will be made at the time of the second part payment in respect of the 14-day instalment period.
Subsection 43(3E) deems that, if the person is, or is to be, paid the total amount of the social security periodic payment in part payments in respect of a 14-day instalment period, then it is taken for the purposes of the social security law that:
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- a single instalment of the social security periodic payment is, or is to be, paid in respect of the instalment period; and
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- that instalment is, or is to be, paid when the final of the part payments is, or is to be, made; and
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- that instalment is equal to the total of the part payments.
This subsection ensures that those provisions under the social security law which do not support the concept of weekly payments being made for an instalment period or assume that there will only be one single payment in respect of an instalment period continue to apply as originally intended. That is, if a person receives two weekly payments in respect of a 14-day instalment period, these payments are taken to be one instalment of the person's social security payment and are both taken to be made (as one combined payment) on the day the final instalment in relation to that particular instalment period is made.
The note to subsection 43(3E) clarifies that the total of the part payments should equal the amount of a person's social security periodic payment as worked out under subsection 43(3) (as affected by subsection 43(4), if relevant), which is the amount that is paid to the person as an instalment of the social security periodic payments in respect of the instalment period.
Subsection 43(3F) is also a deeming provision, which provides that each part payment, made in respect of an instalment period, is taken to be a separate instalment for the purposes of section 61, Division 5 of Part 3B and subsection 238(2) of the Social Security Administration Act (which relate to deductions from instalments).
This subsection ensures that deductions may be made from weekly payments that are made in respect of an instalment period. For example, if weekly payments are taken to be made on the day the final instalment is made in respect of an instalment period (which is the intention of new subsection 43(3D) above), there may be some doubt that deductions could be made from payments that are, in practice, made prior to that final instalment. This type of narrow interpretation could result in the total amount of the deduction that is made from a person's social security periodic payment being deducted from the final instalment, rather than from each part payment made in respect of an instalment period.
Notes 1 to 5 insert headings to subsections 43(1), 43(2), 43(3), 43(5A) and 43(6) respectively.
Division 2 - Consequential amendments
Amendments to the Social Security Act
Item 10 adds a note at the end of the definition of 'payday' in subsection 23(1) of the Social Security Act. The note signposts to the reader that subsection 43(3E) affects the application of when an instalment is, or would normally be, paid to a person if the Secretary has made a determination under subsection 43(3A) that the person's social security period payment is to be paid in two part payments in respect of a 14-day instalment period. Under subsection 43(3E), the total amount of the social security periodic payment in respect of an instalment period is taken to be paid when the final part payment is made.
Amendments to the Social Security Administration Act
Item 11 adds a note at the end of the definition of 'instalment' in subsection 54(1) of the Social Security Administration Act. The note signposts to the reader that subsection 43(3E) affects the meaning of an instalment of social security period payment if the Secretary has made a determination under subsection 43(3A) that the person's social security period payment is to be paid in two part payments in respect of a 14-day instalment period. Under subsection 43(3E), the total amount of the social security periodic payment in respect of an instalment period is taken to be paid when the final part payment is made.
Schedule 2 - Technical corrections
Summary
This Schedule makes minor technical corrections which are unrelated to the main part of the bill.
Background
This measure makes minor technical amendments to section 43 of the Social Security Administration Act, which correct cross-references to provisions in the Social Security Act.
The amendments made by this Schedule commence on Royal Assent.
Explanation of the changes
Amendments to the Social Security Administration Act
Item 1 makes a minor technical correction to paragraphs 43(4)(c) and (5A)(a) of the Social Security Administration Act by inserting 'of the 1991 Act' after the reference to 'subsection 1061VA(1)' of the Social Security Act.
Item 2 makes a minor technical correction to subsection 43(5A) of the Social Security Administration Act by inserting 'of the 1991 Act' after the reference to 'subsection 1210(3)' of the Social Security Act.