Senate

Revised Explanatory Memorandum

(Circulated by authority of the Minister for Education, the Honourable Dan Tehan MP)

OUTLINE

The purpose of the Bill is to address feedback from families and the child care sector and findings from ongoing consideration and evaluation of the child care package. The Bill makes policy refinements, addresses unintended consequences resulting from the implementation of the child care package, and makes a number of clarifying and technical amendments.

The Bill comprises two Schedules.

Schedule 1 - Amendments relating to child care subsidies

This Schedule is divided into three Parts, for amendments that commence:

•

at the start of the first Child Care Subsidy (CCS) fortnight (within the meaning of the A New Tax System (Family Assistance) Act 1999) to occur wholly after Royal Assent;

•

on 13 January 2020; and

•

on 13 July 2020.

Amendments to the A New Tax System (Family Assistance) Act 1999 include amending the requirements on child care providers for the issuing of Additional Child Care Subsidy (ACCS) (child wellbeing) certificates, by removing the 50 per cent limit on the number of children that a provider can self-certify for ACCS (child wellbeing). This will reduce barriers to vulnerable children accessing early learning and child care services.

Further amendments include allowing the Minister for Education to prescribe circumstances in which a third party may contribute to meeting the cost of an individual's child care fees without affecting that individual's Commonwealth child care subsidies. This will help ensure the cost of child care is not a barrier to vulnerable and disadvantaged children attending early learning and child care services.

A new rule-making provision will also be included to allow the Minister for Education to prescribe specific circumstances in which Commonwealth child care subsidies can be paid where the child is absent at the start or end of an enrolment. This will ensure families are not unfairly disadvantaged by a rule intended to prevent the inappropriate use of absence provisions by some child care providers.

These amendments also incorporate In Home Care more fully into the Family Assistance Law. In Home Care is a child care type that was revised following the outcome of the Nanny Pilot Programme and the former In Home Care program reviews. These reviews were completed after the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 was passed. The amendments include the In Home Care rate alongside the rates for other care types, and the capacity for the Minister for Education to specify eligibility criteria and care requirements that must be met for access to Commonwealth-subsidised In Home Care places. Eligibility criteria are necessary as In Home Care is a targeted and capped care type.

Amendments to A New Tax System (Family Assistance) (Administration) Act 1999 include increasing the number of weeks at which enrolments automatically cease due to non-attendance from 8 to 14 weeks. This will reduce regulatory burden on both families and child care providers by eliminating the need for children to be re-enrolled following most regular breaks in attendance, such as where a child does not attend care during the school term. This is the only amendment to commence on 13 January 2020, to enable the change to be implemented for the December-January (2019-20) school holiday period.

Amendments to A New Tax System (Family Assistance) (Administration) Act 1999 in this Schedule also clarify that decisions made under section 105 of that Act (Secretary initiated review) must first be subject to internal review before application is made to the Administrative Appeals Tribunal (AAT). These amendments align with existing policies and practices, and will ensure that where a person is dissatisfied with a decision, that person accesses internal review mechanisms prior to applying to the AAT.

Further amendments also include simplifying the process around making claims for CCS. This ensures that the requirements for making an effective claim for CCS are clearer and simpler, while retaining scope for flexibility regarding some of the requirements in limited circumstances.

There are also a number of other refinements, corrections and consequential amendments, the purpose of which is to clarify the policy intent of the Commonwealth and address unintended consequences.

Schedule 2 - Amendments relating to ensuring the integrity of the child care subsidy system

This Schedule brings the requirements for the approval of child care providers and services into closer alignment with related state and territory laws, and enhances the Commonwealth's child care subsidy payment integrity framework.

The amendments include ensuring that where an approved provider or child care service is suspended or cancelled under the Education and Care Services National Law (effectively the state/territory licencing regime for operating child care services), access to Commonwealth child care subsidies will be automatically suspended or cancelled. The amendments also include a capacity for child care providers to request voluntary suspension of their Commonwealth approval in appropriate circumstances.

The Schedule also contains administrative and technical amendments that bring clarity to policy intent and address unintended consequences.

FINANCIAL IMPACT STATEMENT

The measures in this Bill do not have a discernible financial impact.

Note - Minister's Rules made under new powers established by this Bill could have a future financial impact. For example, the capacity to prescribe in the Minister's Rules certain payments (e.g. ABSTUDY) that an individual may be receiving in order to be eligible for ACCS (grandparent). Detailed costings would be developed and agreed at the appropriate time in the process of making any such Rules.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

FAMILY ASSISTANCE LEGISLATION AMENDMENT (BUILDING ON THE CHILD CARE PACKAGE) BILL 2019

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The purpose of the Bill is to address feedback from families and the child care sector and findings from ongoing consideration and evaluation of the child care package. The Bill makes policy refinements, addresses unintended consequences resulting from the implementation of the child care package, and makes a number of clarifying and technical amendments.

The Bill comprises two Schedules.

Schedule 1 - Amendments relating to child care subsidies

This Schedule is divided into three Parts, for amendments that commence:

•

at the start of the first Child Care Subsidy (CCS) fortnight (within the meaning of the A New Tax System (Family Assistance) Act 1999) to occur wholly after Royal Assent;

•

on 13 January 2020; and

•

on 13 July 2020.

Amendments to the A New Tax System (Family Assistance) Act 1999 include amending the requirements on child care providers for the issuing of Additional Child Care Subsidy (ACCS) (child wellbeing) certificates, by removing the 50 per cent limit on the number of children that a provider can self-certify for ACCS (child wellbeing). This will reduce barriers to vulnerable children accessing early learning and child care services.

Further amendments include allowing the Minister for Education to prescribe circumstances in which a third party may contribute to meeting the cost of an individual's child care fees without affecting that individual's Commonwealth child care subsidies. This will help ensure the cost of child care is not a barrier to vulnerable and disadvantaged children attending early learning and child care services.

A new rule-making provision will also be included to allow the Minister for Education to prescribe specific circumstances in which Commonwealth child care subsidies can be paid where the child is absent at the start or end of an enrolment. This will ensure families are not unfairly disadvantaged by a rule intended to prevent the inappropriate use of absence provisions by some child care providers.

These amendments also incorporate In Home Care more fully into the Family Assistance Law. In Home Care is a child care type that was revised following the outcome of the Nanny Pilot Programme and the former In Home Care program reviews. These reviews were completed after the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017 was passed. The amendments include the In Home Care rate alongside the rates for other care types, and the capacity for the Minister for Education to specify eligibility criteria and care requirements that must be met for access to Commonwealth-subsidised In Home Care places. Eligibility criteria are necessary as In Home Care is a targeted and capped care type.

Amendments to A New Tax System (Family Assistance) (Administration) Act 1999 include increasing the number of weeks at which enrolments automatically cease due to non-attendance from 8 to 14 weeks. This will reduce regulatory burden on both families and child care providers by eliminating the need for children to be re-enrolled following most regular breaks in attendance, such as where a child does not attend care during the school term. This is the only amendment to commence on 13 January 2020, to enable the change to be implemented for the December-January (2019-20) school holiday period.

Amendments to A New Tax System (Family Assistance) (Administration) Act 1999 in this Schedule also clarify that decisions made under section 105 of that Act (Secretary initiated review) must first be subject to internal review before application is made to the Administrative Appeals Tribunal (AAT). These amendments align with existing policies and practices, and will ensure that where a person is dissatisfied with a decision, that person accesses internal review mechanisms prior to applying to the AAT.

Further amendments also include simplifying the process around making claims for CCS, while retaining scope for flexibility around some of the requirements in limited circumstances.

There are also a number of other refinements, corrections and consequential amendments, the purpose of which is to clarify the policy intent of the Commonwealth and address unintended consequences.

Schedule 2 - Amendments relating to ensuring the integrity of the child care subsidy system

This Schedule brings the requirements for the approval of child care providers and services into closer alignment with related state and territory laws, and enhances the Commonwealth's child care subsidy payment integrity framework.

The amendments include ensuring that where an approved provider or child care service is suspended or cancelled under the Education and Care Services National Law (effectively the state/territory licencing regime for operating child care services), access to Commonwealth child care subsidies will be automatically suspended or cancelled. The amendments also include a capacity for child care providers to request voluntary suspension of their Commonwealth approval in appropriate circumstances.

The Schedule also contains administrative and technical amendments that bring clarity to policy intent and address unintended consequences.

The Bill specifically engages the following treaties and Articles contained within:

•

International Covenant on Economic, Social and Cultural Rights (ICESCR) - Articles 6 and 9; and

•

Convention of the Rights of the Child (CRC) - Articles 3, 18, 19, and 27.

Analysis of human rights implications

The Bill does not represent a material departure from the overall policy objectives of the measures introduced in the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017.

In building on the child care package, the Bill engages many of the human rights which were analysed for passage of the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017, which are set out below.

The right to work

Article 6 of the ICESCR requires that State Parties recognise the right to work, including through developing policies and techniques to achieve steady economic, social and cultural development, and full and productive employment. This right goes to a primary objective of the child care package and that the Bill is building on to address unintended consequences - to assist parents who want to work, or work more.

The rights of parents and children

Article 3 of the CRC recognises that in all actions concerning children, the best interests of the child shall be a primary consideration. Early learning and child care plays a vital role in the development of Australian children. Their preparation for school and access to this care is also one of the most effective early intervention strategies to break the cycle of poverty. The Bill supports another of the primary objectives of the child care package - to support families to access quality child care.

The Bill is supporting this objective by enabling (through subordinate legislation) targeted third party payments (such as those made by state and territory governments) to cover some or all of the co-contribution of the cost of child care for disadvantaged and vulnerable families. Given that even a small co-contribution to child care fees can be a barrier to some families accessing child care, the Bill promotes access to quality early learning and child care for disadvantaged and vulnerable families.

Article 18 of the CRC mandates that States Parties shall use best efforts to ensure recognition of the principle that both parents have common responsibilities for the upbringing and development of the child, and to provide appropriate assistance, in particular to ensure that children of working parents have the right to benefit from child care services and facilities for which they are eligible.

This Bill addresses unintended consequences resulting from the implementation of the child care package that disadvantage families and child care providers, for example increasing the number of weeks at which enrolments automatically cease due to non-attendance from 8 to 14 weeks in order to reduce regulatory burden on both families and child care providers in completing re-enrolment processes.

Article 19 of the CRC requires that appropriate measures are taken to protect the child from all forms of physical or mental violence, injury or abuse, neglect or negligent treatment, maltreatment or exploitation. The Commonwealth's ACCS (child wellbeing) payment, which provides additional financial support to meet the cost of child care, is in particular designed to remove cost as a barrier for families with children in certain vulnerable situations, to ensure they are able to access quality child care. This Bill further reduces barriers to vulnerable children accessing early learning and child care by removing the 50 per cent limit on the number of children a provider can self-certify for ACCS (child wellbeing).

Right to adequate standard of living

Article 27 of the CRC requires that States Parties recognise the right of every child to a standard of living adequate for the child's physical, mental, spiritual, moral and social development. The Bill advances this right through amendments that help ensure children have access to an adequate amount of child care to aid socialisation and development. For example, the amendments relating to the Commonwealth's ACCS (child wellbeing) discussed above, which build on promoting this right by reducing barriers to access early learning and child care.

Right to social security

Article 9 of the ICESCR recognises the right of everyone to social security. Under the child care package, families who meet basic eligibility criteria are eligible for Commonwealth child care subsidies so long as they meet (or are exempt from) an activity test and their combined annual income is less than $352,453. Additionally, children at risk of serious abuse or neglect, families experiencing temporary financial hardship and families transitioning from income support to work are eligible for further support through the Commonwealth's additional child care subsidy that ensures children in these families have access to adequate child care.

Amendments to section 10 of the A New Tax System (Family Assistance) Act 1999 ensure families can access Commonwealth child care subsidies on days prior to the child's first day of care, and after their last day of care, in limited circumstances prescribed by the Minister for Education. This ensures families are not unfairly disadvantaged and can access subsidies in these circumstances.

The Bill also contains amendments to more fully incorporate In Home Care into the Family Assistance Law. In Home Care is a care type available to families where other care options are not available or appropriate. Inserting In Home Care into primary legislation provides more transparent access to this care type and ensures that vulnerable children and families can benefit from appropriately tailored care arrangements.

Conclusion

This Bill is compatible with human rights. The amendments in this Bill improve on the child care package through minor policy refinements and clarifications, with no material departures from the overarching policy objectives of the measures introduced in the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017. The child care package advanced human rights under the CRC and ICESCR by providing families with greater access to workforce participation, and access to a flexible and quality child care system. The measures in this Bill continue to advance these rights by making this scheme more transparent for families, and more efficient for the Commonwealth to administer.

Notes on Clauses

Clause 1 - Short title

This clause provides for the Act to be the Family Assistance Legislation Amendment (Building on the Child Care Package) Act 2019.

Clause 2 - Commencement

The table in subclause 2(1) sets out when the Act's provisions will commence. The table provides that:

•

Schedule 1, Part 1 commences at the start of the first CCS fortnight after Royal Assent;

•

Schedule 1, Part 2 commences on 13 January 2020;

•

Schedule 1, Part 3 commences on 13 July 2020; and

•

Schedule 2 commences the day after Royal Assent.

Subclause 2(2) provides that information in column 3 of the table at subclause 2(1) is not part of the Act and information may be inserted into column 3 or information in it may be edited in any published version of the Act.

Clause 3 - Schedules

This clause provides that any legislation that is specified in a schedule is amended or repealed as set out in the applicable items in the schedule and that any other item in a schedule has effect according to its terms.

ABBREVIATIONS USED IN THIS EXPLANATORY MEMORANDUM

•

AAT means the Administrative Appeals Tribunal;

•

ACCS means Additional Child Care Subsidy;

•

ATI means adjusted taxable income;

•

CCS means Child Care Subsidy;

•

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

•

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

•

Family Assistance Law means the Family Assistance Act and the Family Assistance Administration Act and relevant subordinate legislation;

•

IHC means In Home Care;

•

JFF Act means the Family Assistance Legislation Amendment (Jobs for Families Child Care Package) Act 2017;

•

Minister's Rules means the Child Care Subsidy Minister's Rules 2017 (being the rules made by the Minister under subsection 85GB(1) of the Family Assistance Act);

•

National Law means the Education and Care Services National Law Act 2010 (VIC) (and equivalent legislation in other state and territory jurisdictions);

•

Regulatory Powers Act means the Regulatory Powers (Standard Provisions) Act 2014;

•

Secretary's Rules means the Child Care Subsidy Secretary's Rules 2017 (being the rules made by the Secretary under subsection 85GB(2) of the Family Assistance Act); and

•

TFN means Tax File Number.

Schedule 1 - Amendments relating to child care subsidies

OVERVIEW

This Schedule is divided into three Parts, for amendments that commence:

•

at the start of the first CCS fortnight (within the meaning of the Family Assistance Act) to occur wholly after Royal Assent;

•

on 13 January 2020; and

•

on 13 July 2020.

Amendments to the Family Assistance Act amending the requirements on child care providers for the issuing of ACCS (child wellbeing) certificates, by removing the 50 per cent limit on the number of children that a provider can self-certify for ACCS (child wellbeing). This will reduce barriers to vulnerable children accessing early learning and child care services.

Further amendments include allowing the Minister to prescribe circumstances in which a third party may contribute to meeting the cost of an individual's child care fees without affecting that individual's Commonwealth child care subsidies. This will help ensure the cost of child care is not a barrier to vulnerable and disadvantaged children attending early learning and child care services.

A new rule-making provision will also be included to allow the Minister to prescribe specific circumstances in which Commonwealth child care subsidies can be paid where the child is absent at the start or end of an enrolment. This will ensure families are not unfairly disadvantaged by a rule intended to prevent unscrupulous behaviour by some child care providers.

The amendments also incorporate In Home Care more fully into the Family Assistance Law. In Home Care is a child care service type that was revised following the outcome of the Nanny Pilot Programme and the former In Home Care program reviews. These reviews were completed after the JFF Act was passed. The amendments include the In Home Care rate alongside the rates for other care types, and the capacity for the Minister to specify eligibility criteria and care requirements that must be met for access to Commonwealth-subsidised In Home Care places. Eligibility criteria are necessary as In Home Care is a targeted and capped care type.

Amendments to the Family Assistance Administration Act include increasing the number of weeks at which enrolments automatically cease due to non-attendance from 8 to 14 weeks. This will reduce regulatory burden on both families and child care providers by eliminating the need for children to be re-enrolled following most regular breaks in attendance, such as where a child does not attend care during the school term. This is the only amendment to commence on 13 January 2020, to enable the change to be implemented for the December-January (2019-20) school holiday period.

Amendments to Family Assistance Administration Act in this Schedule also clarify that decisions made under section 105 of that Act (Secretary initiated review) must first be subject to internal review before application is made to the AAT. These amendments align with existing policies and practices, and will ensure that where a person is dissatisfied with a decision, that person accesses internal review mechanisms prior to applying to the AAT.

Further amendments also include simplifying the process around making claims for CCS, while retaining scope for flexibility around some of the requirements in limited circumstances.

There are also a number of other refinements, corrections and consequential amendments, the purpose of which is to clarify the policy intent of the Commonwealth and address unintended consequences.

DETAILED EXPLANATION

Part 1 - Amendments commencing at the start of the first CCS fortnight after Royal Assent

CCS related amendments

Refining absence provisions

Section 10 of the Family Assistance Act sets out a basic rule about when a 'session of care' is provided, noting that CCS may only be paid in respect of sessions of care where an individual is eligible. The basic rule is that a child care service provides a session of care to a child if:

•

the child is enrolled for care by the service and the child attends the session of care or any part of it (paragraph 10(1)(a)); or

•

if the child does not attend any part of the session of care - the service is taken to have provided the session of care to the child under subsections 2 or 3 of section 10 (an absence) (paragraph 10(1)(b)).

The effect of paragraph 10(1)(b) is that even if a child does not physically attend a session of care, individuals may remain eligible to receive CCS if the child is enrolled for that session of care, the individual is liable to pay for that session of care, and the other requirements in subsection 10(2) or 10(3) are met.

Subsections 10(2) and 10(3) provide, amongst other things, that the absence must be:

•

after the day the child first physically attended a session of care provided by the service (at subparagraphs 10(2)(b)(ii) and 10(3)(c)(ii)), or

•

before the day the child last physically attended a session of care provided by the service. This concept is currently expressed as being before the day the service 'permanently ceased providing care to the child', the effect of which is set out at subsection 10(5) (at subparagraphs 10(2)(b)(iii) and 10(3)(c)(iii)).

Subsection 10(2) of the Family Assistance Act provides that an individual may access up to 42 absences for a child in an income year. Subsections 10(3) and (4) set out the limited circumstances in which an individual may access more than 42 absences for a child in an income year.

The amendments in this Bill relating to these absence provisions will provide greater flexibility and clarity to the application of these provisions, and avoid unintended impacts on families.

Items 6 and 9 insert subsections 10(2A) and 10(3A) to enable the capacity for the Minister to prescribe circumstances where subparagraphs 10(2)(b)(ii) and (iii) and subparagraphs 10(3)(c)(ii) and (iii), as discussed above, respectively do not apply.

This means that the Minister will be able to prescribe limited circumstances where an individual can still access CCS for an absence that occurs before the first, or after the last, day their child physically attends a session of care provided by a child care service.

This is intended to provide greater flexibility, in order to appropriately deal with circumstances including where a new enrolment for a child is required despite there being continuity of care, and the child is absent at the end of the original enrolment or start of the new enrolment. This may occur, for example, where the ownership of a child care service transfers from one provider to another, and the child continues attending the service.

Items 4 and 7 amend subparagraphs 10(2)(b)(iii) and 10(3)(c)(iii) to also incorporate the operation of subsection 10(5), and to remove the need to refer to the term 'permanently ceased' for the purposes of those subparagraphs. Item 10 repeals subsection 10(5).

These amendments clarify the default position that an absence does not attract CCS where it occurs after the last day the child physically attended care provided by the child care service, prior to the child's current enrolment ceasing at that service. These amendments further remove any doubt that may have previously arisen with respect to these provisions, by removing the concept of "permanently ceased", whilst retaining the original policy intent.

These amendments clarify the operation of section 10 by aligning it further with the enrolment requirements in section 200B of the Family Assistance Administration Act. In effect, the amendments make clear that the default position is that an absence must occur between the child's first and last physical attendance in an enrolment (unless a circumstance prescribed in Minister's Rules under subsection 10(2A) or 10(3A) exists). Items 5 and 8 insert a note at the end of subsections 10(2) and 10(3) respectively, to highlight that the term 'ceases to be enrolled' is defined in section 200B.

Treatment of third party payments in calculating CCS

Part 1 of Schedule 2 of the Family Assistance Act sets out the method for how CCS is to be calculated. Step 4 of this calculation involves working out what the 'hourly rate of CCS' is for an individual for the relevant sessions of care. The method for working this out is set out at clause 2 of Schedule 2. Currently, where third parties, such as state or territory governments, make payments to providers to assist families with the cost of child care, providers are required to report a fee that is reduced by the amount paid by the third party (which the individual is not actually liable to pay). This reduction happens prior to the calculation of subsidy to ensure all CCS recipients make a co-contribution to the cost of care.

For example: Charlotte has a child, Sam, attending a 10 hour session of care for which she is charged $100. She also receives a third party payment of $20 for this session that is paid directly to her child care provider. Charlotte's child care provider must subtract this $20 third party payment from the fee charged, before the CCS can be calculated. Therefore, the calculation of Charlotte's CCS entitlement will be based on an $80 fee, instead of $100. The calculation occurs as follows (for the purpose of illustrating this provision the example excludes withholding amounts):

•

($100 fee - $20 third party payment)/10 hours = $8 hourly session fee

•

Assuming Charlotte's applicable percentage is 85 per cent, CCS entitlement for the session would be:

o

$8 hourly session fee x 85 per cent x 10 hours = $68.

•

This means Charlotte has a co-contribution of $12 to pay her child care service for that session

o

$80 child care fee - $68 CCS = $12.

•

The sum of CCS ($68), third party payment ($20) and parent co-contribution ($12) is equal to the $100 fee charged.

Allowing certain third party payments to be excluded from calculation of CCS

One consequence of requiring third party payments to be subtracted from child care fees before calculating the amount of CCS an individual may receive, is that the resulting co-contribution may present a barrier to some vulnerable and disadvantaged families accessing affordable child care.

Items 22 and 23 amend clause 2 of Schedule 2 to enable the capacity of the Minister under subclause 2(2A) to prescribe that certain third party payments (prescribed payments) are not required to be taken into account for the purpose of working out the 'hourly rate of CCS'. That is, CCS may be calculated on the full fee that the provider charged for that session of care, without adjustment.

This amendment is designed to further assist individuals who are also receiving a prescribed payment (for example, from a state or territory government), to help ensure that cost is not a barrier to these individuals accessing early learning and child care. This is achieved by enabling a prescribed payment to partially or wholly cover the co-contribution amount for such families.

For example: Charlotte has a child, Sam, attending a 10 hour session of care for which she is charged $100. She also benefits from a state government payment of $15 per session, paid directly to her child care provider to reduce her out-of-pocket costs.

If the state government payment is a prescribed payment, the method for calculating Charlotte's CCS entitlement for this session would be (for the purpose of illustrating this provision the example excludes withholding amounts):

•

($100 fee/10 hours) = $10 hourly session fee

•

Assuming Charlotte's applicable percentage is 85 per cent, her CCS entitlement for the session would be:

o

$10 hourly session fee x 85 per cent x 10 hours = $85.

•

Taking into account the prescribed payment, Charlotte's co-contribution to the session is $0

o

$100 child care fee - $85 CCS - $15 third party payment = $0.

Introducing an 'adjusted activity-tested amount' of CCS

In some circumstances, the sum of the individual's CCS and a prescribed payment could be greater than the fee they were originally charged and liable to pay for the session of care. In this scenario, and in the absence of any further adjustment, the method outlined above would result in the provider or individual receiving a windfall (excess amount), which is an unintended outcome.

Items 20 and 21 amend the method statement for calculating the amount of CCS to address this scenario by introducing an 'adjusted activity-tested amount of CCS'. Item 25 inserts clause 4A which sets out the method for calculating this adjusted amount of CCS.

Subclause 4A(1) sets out that clause 4A applies in relation to a session of care where the actual fee charged by a provider is less than the sum of:

•

the amount of CCS or ACCS the individual would otherwise be entitled to; and

•

the amount of the prescribed payment the individual benefits from for that session of care.

Subclause 4A(2) sets out how to calculate an individual's 'adjusted amount of CCS' for a week in which subclause 4A(1) applies to at least one session of care (i.e. where the fee charged is less than the sum of CCS and the prescribed payment).

In this scenario, the individual's adjusted amount of CCS is the sum of:

•

for sessions of care that subclause 4A(1) applies to - the activity-tested amount of CCS minus the 'excess amount' for each session (see subclause 4A(3) below); and

•

for sessions of care that subclause 4A(1) does not apply to - the amount of CCS for each session.

Subclause 4A(3) defines the 'excess amount' as the difference between the sum of the amount of CCS and the prescribed payments the individual benefits from; and the actual fee charged for that session of care (or another method if prescribed in the Minister's Rules).

For example: Charlotte has a child, Sam, attending a 10 hour session of care for which she is charged $100. She also benefits from a state government payment of $20 per session, paid directly to her child care provider to reduce her out-of-pocket costs.

If the state government payment is a prescribed payment, the method for calculating Charlotte's CCS entitlement for the session would be (for the purpose of illustrating this provision the example excludes withholding amounts):

•

The total amount Charlotte is liable to pay for the session of care, divided by the total number of hours in that session

o

$100 fee/10 hours = $10 hourly session fee.

•

Assuming Charlotte's applicable percentage is 85 per cent, her CCS entitlement for the session would be:

o

$10 hourly session fee x 85 per cent x 10 hours = $85.

•

The amount of CCS that Charlotte would ordinarily receive for the session is $85. This means that after the $20 third party payment is applied, Charlotte would receive $105 in total payments despite only being charged a $100 fee for the session, leading to a 'windfall' of $5:

o

$100 child care fee - ($85 CCS - $20 third party payment) = -$5.

•

Therefore, Charlotte's CCS entitlement is adjusted to remove the windfall:

o

$85 CCS - $5 windfall = $80.

•

This leaves Charlotte with no co-contribution:

o

$100 child care fee - $80 adjusted CCS - $20 third party payment = $0.

The amendments in items 20 and 21 ensure that the method statement reflects the above concepts, including the capacity for an adjusted CCS.

The above amendments equally apply to the calculation of ACCS where an individual is eligible for a session of care and benefits from a prescribed payment. The amendments help to continue to ensure that calculations of ACCS for individuals are prefaced on ensuring an outcome that reduces as much as possible any remaining gap fee, and assists vulnerable families in accessing child care. Items 26 and 27 contain consequential amendments to clauses 5 and 7 in Schedule 2 of the Family Assistance Act to give effect to this application. Item 28 is a consequential amendment to replace the word 'subsidy' with the word 'payment' in clause 9 of Schedule 2.

Item 71 amends section 201B of the Family Assistance Administration Act so that a provider is responsible for ensuring that an individual pays the provider the 'gap fee' between the child care fees charged for the week and CCS/ACCS paid. Amended paragraph 201B(1)(b) now specifies that the 'gap fee' is the difference between the child care fees for the week; and the sum of the CCS/ACCS paid and any prescribed payments set out in the Minister's Rules. This amendment expands the existing scope of section 201B, to recognise prescribed payments.

Item 72 inserts subsection 201C(1A) into the Family Assistance Administration Act, to provide that an approved provider must not charge an individual who benefits from a prescribed payment in respect of a session of care more than they would ordinarily charge an individual who does not benefit from a prescribed payment. This amendment will ensure that providers are not able to artificially inflate fees based on prescribed payments that benefit individuals.

Item 73 amends the offence and civil penalty provisions under section 201C of the Family Assistance Administration Act to cover contraventions of subsection 201C(1A).

Late attendance reports and late enrolment notices

Under section 204B of the Family Assistance Administration Act, an approved provider must provide a report (an attendance report) for a week for a child, if that provider has provided an enrolment notice for that child and also provided a session of care to that child. Subsection 204B(2) sets out the requirements for the giving of an attendance report to the Secretary, including required timeframes.

Section 200A of the Family Assistance Administration Act sets out the requirements for when an enrolment notice must be given to the Secretary by an approved provider, including required timeframes for the giving of such notice (see subsection 200A(4)).

Under subsections 67CD(1), 67CF(1) and 67CH(1) of the Family Assistance Administration Act, a pre-condition to being able to make a determination with respect to an individual's entitlement for CCS or ACCS, is that an attendance report under section 204B has been provided.

However, if an enrolment notice is submitted outside of the allowable timeframes in section 200A, then under the current construction of the Family Assistance Administration Act, that notice is taken to never have been given. This then has a flow-on effect that the requirement in section 204B is never enlivened (meaning the individual is not entitled to be paid CCS/ACCS where an enrolment notice is submitted outside of the allowable timeframes).

Similarly, if an attendance report is submitted outside of the allowable timeframes in subsection 204B(2), then that attendance report is taken never to have been given, meaning that the pre-conditions for CCS and ACCS as discussed above are never met and the relevant individual is not able to be entitled to any CCS or ACCS.

Consequently, where the approved provider submits either the enrolment notice or the attendance report late (a circumstance beyond the individual's control), the individual cannot access CCS or ACCS.

Sections 200A and 204B are offence provisions, and form part of the conditions for continued approval of providers. This enables compliance activity to be taken against the relevant provider where they have breached these obligations. However, such compliance action does not fix the adverse impact on the individual.

To ensure that individuals can still have access to CCS and ACCS where the provider has not complied with the required timeframes for submission of enrolment notices and attendance reports, items 39, 40, 43 to 46 and 68 amend subsections 67CD(1), 67CF(1), 67CH(1) and section 200A, to ensure that where an approved provider provides an enrolment notice or attendance report outside the required timeframes, an individual will still be entitled to CCS and ACCS. Importantly, these amendments do not detract from the application of the offence provisions in section 200A and 204B, for the late submission by the provider.

Item 76 amends subsection 204B(2) to ensure that the capacity of an approved provider to vary, substitute or withdraw an attendance report extends to such reports even if given late.

Items 77 and 80 contain consequential amendments to sections 204C and 204H in order to clarify the operation of those sections where an enrolment notice or attendance report is provided outside of the required timeframes. Item 70 amends section 200D to replicate the amendment to section 200A, ensuring the validity of a notice given under that section even if it is provided outside of the required timeframes.

Item 69 replaces the heading in section 200D of the Family Assistance Administration Act with "Notice of change in circumstances: providers", which better reflects the operation of section 200D.

Clarifying the apportioning of partner income in calculating CCS

Item 29 amends clause 3AA in Schedule 3 of the Family Assistance Act. Clause 3AA prescribes a method for apportioning the ATI of a partner of an individual, to that individual's ATI, for the purposes of calculating the amount of CCS that the individual is entitled for each week in an income year. This apportioning is to ensure that calculations of CCS reflect the financial capacity of the individual and their partner to meet the costs of child care.

Broadly, clause 3AA currently provides that if the individual and the individual's partner are a member of a couple for the whole income year, then the entire ATI of the partner is apportioned. However, if the individual is a member of one or more couples over the income year, then each partner's ATI is apportioned based on the number of CCS fortnights in the income year for which that partner was a member of a couple with the individual.

This has an unintended consequence, in that the ATI of the partner is apportioned irrespective of whether for all, or only some, of the CCS fortnights in question, the individual was not accessing CCS.

For example: Quentin is partnered to Violet for 13 CCS fortnights (of the 26 CCS fortnights) during the income year. During almost all of this time, Quentin does not claim CCS because he is caring for their children full-time. Quentin and Violet separate, but for one week before the couple separate, Quentin claims CCS and the children begin attending child care two days a week. When Quentin claims CCS, he only estimates his own income at $23,000, meaning his CCS applicable percentage is 85 per cent.

At the end of the year when Quentin's ATI is determined, as Violet and Quentin were partnered for at least one CCS fortnight in which Quentin received CCS, Violet's ATI will count for 13 fortnights of the year (even though the couple did not use child care for almost all of this time):

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Quentin's ATI for the income year was $23,000.

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Violet's ATI for the income year was $239,000.

As a result, Quentin's combined total ATI for the 2019-20 income year is $142,500, meaning that his CCS applicable percentage is 60.22 per cent.

This may lead to adverse outcomes for an individual, and does not meet the original policy intent of clause 3AA in relation to where an individual may be a member of multiple couples over an income year. This policy intent is to apportion partner ATI in relation to just those CCS fortnights during the income year where the individual is accessing CCS, thereby reflecting those CCS fortnights for which the financial capacity of the individual and their partner to meeting the costs of child care should be taken into account.

This amendment ensures that where an individual is a member of more than one couple over an income year, each partner's ATI is apportioned based on the number of CCS fortnights for which each partner was both a member of the couple and for which the individual accessed CCS.

For example: Per the example above, Quentin is partnered to Violet for 13 CCS fortnights during the year. For one week while partnered with Violet, Quentin claims CCS and the children begin attending child care. Quentin estimates his own income at $23,000, meaning his CCS applicable percentage is 85 per cent.

The amendment ensures that at the end of the year when Quentin's ATI is determined for the purposes of reconciling CCS, Violet's income will only be taken into account for the period in which she was partnered with Quentin and Quentin (the claimant) accessed CCS. Therefore, Violet's ATI will count for 1 fortnight of the year:

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Quentin's ATI for the income year was $23,000.

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Violet's ATI for the income year was $239,000.

As a result, Quentin's combined total ATI for the 2019-20 income year will be $32,192.31 meaning that his CCS applicable percentage is 85 per cent. This calculation more accurately reflects Quentin's capacity to pay for child care during the income year.

Items 47 to 49 amend various provisions in the Family Assistance Administration Act which cross-references clause 3 of the Family Assistance Act. The correct cross-reference should be to clause 3AA of the Family Assistance Act.

Item 86 contains an application provision that ensures that the amendment to clause 3AA of Schedule 2 of the Family Assistance Act in item 29 applies for the entirety of the 2019-20 income year and each income year after that. In effect, this will cause clause 3AA to operate retrospectively. However, the impact of this is only beneficial to individuals receiving CCS during the 2019-20 income year, as it will lower the ATI that would otherwise apply if the amendment did not occur. The application provision is further required so that individuals do not have differing ATI results for the 2019-20 income year.

Clarifying attendance reporting requirements

Under section 204B of the Family Assistance Administration Act, an approved provider must provide a report (an attendance report) for a week if a session of care was provided to a child.

However, section 204B does not fully reflect the policy intent for attendance reporting, which is to require approved providers to report all care provided to children in a week. This policy and practice is longstanding in the child care sector, and therefore a clarification to this provision will not impact the sector.

Under existing statutory definitions in the Family Assistance Law, for care provided by a service to constitute a session of care, the child must be enrolled under a complying written arrangement (an arrangement that can attract subsidy). However, where children are enrolled under a relevant arrangement (an arrangement that cannot attract subsidy) and attend care, they are not provided sessions of care.

Attendance reporting is fundamentally important to ensure that an accurate and complete snapshot of care being provided at approved child care services can be received by the Commonwealth, to amongst other things, ensure that requirements under the National Law relating to child safety, such as ratios, are being met and to help identify any risk or compliance concerns with the provision of care by approved providers.

Item 75 amends section 204B to reflect the original policy intent, and to ensure that the attendance reporting requirement extends to all care provided.

Simplifying CCS claims

Items 35 to 37, 38, 41, 42, 50 and 51 amend and repeal various provisions in the Family Assistance Administration Act, to simplify the process around making claims for CCS.

Currently, an individual is able to make an effective CCS claim without providing their (or their partner's) bank account details or TFN details, and the Act includes several complex provisions specifying how and when this information must be provided, and implications if these requirements are not met.

These items simplify the requirements for making an effective claim for CCS, by requiring bank account details and TFN details to be provided at the time the claim is made. However, these items also ensure that the Secretary has the power to exempt an individual from providing their and/or their partner's TFN when making a CCS claim, in exceptional circumstances.

These amendments ensure that the requirements for making an effective claim for CCS are made clearer and simpler for individuals, while retaining scope for flexibility around some of the requirements in exceptional circumstances.

These items repeal or replace relevant subsections and paragraphs in sections 67BE, 67BF, 67CD, and 67CF; and repeal sections 67BG, 67BH, 67BI, and 67FF, to give effect to the above policy intention.

Notably, item 35A amends section 67BE of the Family Assistance Administration Act by inserting new subsections (2) and (3) to give the Secretary power to determine that a claim is effective despite it not containing the individual's or their partner's TFN at the time the claim is made, where the Secretary considers it appropriate to do so in the circumstances.

Under new subsection 67BE(2), the Secretary may, by determination, exempt an individual from the requirement to include their and/or their partner's TFN for a period of 28 days.

Under new subsection 67BE(3), the Secretary may, by determination, exempt an individual from the requirement for the individual to provide their partner's TFN indefinitely in exceptional circumstances. An example of the circumstances in which a determination of this kind may be appropriate includes where an individual is in a violent or abusive relationship and cannot reasonably obtain their partner's TFN.

Additionally, item 36 amends subsection 67BF(2) of the Family Assistance Administration Act. Under new subsection 67BF(2), if the Secretary has made a determination under new subsection 67BE(2), and the individual does not provide their TFN and/or their partner's TFN within 28 days of that determination being made, their CCS claim is taken never to have been made. The obligation for an individual to provide their partner's TFN in order to make an effective claim is further subject to the Secretary granting an exemption under new subsection 67BE(3). New subsection 67BF(3) provides that the Secretary's rules may prescribe other circumstances in which a claim is taken not to have been made.

Item 41 amends subsection 67CD(10) of the Family Assistance Administration Act so that, among other things, an individual meets the information requirements for the purposes of making a CCS entitlement determination where the Secretary made a determination under subsection 67BE(2) or (3) no more than 28 days ago. The effect of this amendment is that an individual's claim may be effective and the individual may receive CCS or ACCS payments in circumstances where they have not provided their (or their partner's) TFN in accordance with a determination by the Secretary under subsection 67BE(2) or (3).

Furthermore, item 41 introduces new subparagraph 67CD(10)(b)(iv) to provide that the information requirements for the purposes of making a claim for CCS are met where an individual has provided their own TFN, and the Secretary is satisfied that it is unreasonable in the circumstances for the individual to provide the TFN of the individual's current partner. This may include where the Secretary has made a determination under new subsection 67BE(3) due to exceptional circumstances and those exceptional circumstances persist.

Item 51 replaces section 67FG to simplify the operation of this section, to enable the Secretary to request that an individual provides TFN details, for example where an individual becomes a member of a couple for the first time. This builds on existing section 67FE, that provides the same capacity to the Secretary in relation to bank account details.

Item 57 is a consequential amendment arising from the repeal of section 67FF.

Item 87 is an application provision and ensures that the amendments contained in the items above relating to simplifying CCS claims apply to any claims for CCS that have been made prior to the commencement of the amendments, but which have not had a determination made under section 67CC of the Family Assistance Administration Act, and any claims for CCS that occur after commencement.

Clarifying indexation in calculating CCS

Items 30 to 32 amend subclause 3(1) of Schedule 4 of the Family Assistance Act, to provide that indexation of the CCS hourly rate caps, CCS lower income threshold, and CCS annual cap will occur on the first day of the first CCS fortnight of the relevant income year.

This amendment addresses the fact that the final CCS fortnight of an income year may traverse two different income years (that is, a CCS fortnight may begin in one income year and end during the next income year). To ensure consistency in CCS payments across a single fortnight, the indexation will occur for payments in the first CCS fortnight which occurs wholly in a new income year. This amendment further ensures that the annual cap for individuals for CCS, and the CCS lower income threshold, does not fluctuate for all CCS fortnights in an income year.

Clarifying applications for AAT first review

Items 54, 58 and 59 amend section 111 of the Family Assistance Administration Act. The amendments to section 111 provide clarity, and for the avoidance of doubt, that decisions made under section 105 of the Family Assistance Administration Act (Secretary initiated review) must first be subject to internal review before application can be made to the AAT. These amendments align with existing policies and practices; and ensure that where a person is dissatisfied with a decision, that person must seek internal review prior to applying to the AAT. These amendments are also beneficial to persons impacted by decisions under the Family Assistance Law, as the amendments ensure they can access internal review prior to needing to commence proceedings in the AAT. The amendments to section 111 also require minor consequential amendments to sections 110 and 128 of the Administration Act (items 53 and 61).

ACCS related amendments

Including ABSTUDY as an eligible payment for ACCS (grandparent)

Under section 85CJ of the Family Assistance Act, an individual is eligible for ACCS (grandparent) for a session of care if they meet the criteria set out under that section. Among those criteria is the requirement that the individual is receiving a type of social security payment set out at paragraph 85CJ(1)(d). The list of payments currently does not include individuals receiving ABSTUDY payments. This creates barriers for a particular class of individuals receiving such payments from being able to access ACCS (grandparent), especially where they otherwise meet all the other eligibility criteria for ACCS (grandparent).

Items 16 and 17 amend section 85CJ include enable the capacity of the Minister to prescribe other payments in the Minister's Rules that an individual may be receiving in order to be eligible for ACCS (grandparent). This will enable the Minister's Rules to prescribe ABSTUDY as a payment for the purposes of determining eligibility for ACCS (grandparent). This amendment will also ensure that other kinds of government payments, as they arise from time to time, are able to be considered and prescribed in the Minister's Rules on an as needs basis.

Reference to State/Territory body in relation to ACCS (child wellbeing)

If an approved provider gives a certificate in relation to a child at risk of abuse or neglect under section 85CB of the Family Assistance Act or applies to the Secretary for a determination that a child is at risk of abuse or neglect under section 85CE, the approved provider is also required to give notice to an 'appropriate State or Territory body' in accordance with section 204K of the Family Assistance Administration Act.

The term 'appropriate State/Territory body' is ambiguous, and some providers in the child care sector have read it as only referring to a state or territory department or agency dealing with matters of child protection. As such, this requirement has been conflated with mandatory reporting schemes administered by state and territory governments in relation to child abuse and neglect.

In order to clarify this notification requirement, items 14, 15, 33, 34, 74 and 81 amend references to 'appropriate State/Territory body' to 'appropriate State/Territory support agency' in the Family Assistance and Family Assistance Administration Acts. The meaning of 'appropriate State/Territory support agency' will remain the same under subsection 204K(7) of the Family Assistance Administration Act.

This amendment does not introduce the reporting requirement, as section 204K already applies to approved providers. This amendment is merely designed to address ambiguity in the term "appropriate State/Territory body".

Circumstances where a provider is eligible for ACCS (child wellbeing)

Subsection 85CA(2) specifies when an approved provider is eligible for ACCS (child wellbeing) for a session of care. Paragraph 85CA(2)(a) requires that a certificate or determination that a child is at risk of abuse or neglect to be in place for a provider to be eligible for ACCS (child wellbeing). Subparagraph 85CA(2)(b)(i) requires that the provider is unable to identify an individual who is eligible for ACCS (child wellbeing) for that session of care. Fundamentally, however, an individual's eligibility for ACCS (child wellbeing) requires a certificate or determination that a child being cared for is at risk of abuse or neglect to be in effect. As such, the requirement in subparagraph 85CA(2)(b)(i) is unnecessary and does not follow logically from subsection 85CA(2)(a), which, as outlined above, already requires such a certificate or determination to be in effect.

Item 13 amends subparagraph 85CA(2)(b)(i) so that a provider is eligible for ACCS (child wellbeing) in relation to a session of care provided to a child where they are not able to identify an individual who is eligible for CCS (rather than ACCS (child wellbeing)). This amendment corrects the inconsistency outlined above and aligns the provision with its policy intent.

In Home Care related amendments

Items 11, 12, 18, 24 and 66 amend the Family Assistance Act and Family Assistance Administration Act to incorporate concepts into the Family Assistance Law relating to In Home Care. These concepts relate to the structure and context of In Home Care, being care for which CCS and ACCS is only available in certain limited circumstances, and is capped overall in relation to the number of subsidised child care places available. This reflects the nature and intent of In Home Care, being care that is designed to assist families where there are no other suitable child care options available, and where one or more of the following circumstances applies:

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the family faces complex or extensive additional needs;

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parents or carers are working non-standard or variable hours, outside normal child care service hours;

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parents or carers are geographically isolated from other types of approved child care, particularly in rural or remote locations.

The above circumstances are intended to be reflected in the Minister's Rules pursuant to paragraph 85BA(1)(e) discussed below.

When the JFF Act was passed, In Home Care was not included in the amendments contained in that Act. This was because consideration and review of In Home Care was not completed until after the JFF Act was passed. As such, the amendments to the Family Assistance Act now incorporate some of the key concepts relating to In Home Care.

Item 11 amends section 85BA of the Family Assistance Act, to incorporate the capacity for the Minister's Rules to specify additional eligibility criteria for CCS for a prescribed child care service type. In addition to this, item 11 also provides that the Secretary will need to determine whether any such additional eligibility criteria have been met. This is achieved by the inclusion of a new paragraph 85BA(1)(e).

The primary purpose of this amendment is to enable targeted eligibility criteria for CCS for In Home Care to be prescribed and clarified in the Minister's Rules, and to enable an assessment of whether individuals meet that eligibility criteria to occur, generally prior to such individuals accessing In Home Care. These eligibility criteria will broadly encompass the availability and suitability of access to other forms of appropriate care, geographic location, non-standard or variable working hours of parents, and whether families seeking to access In Home Care have complex and or extensive additional needs. Item 12 clarifies that any determination by the Secretary under paragraph 85BA(1)(e) is not a legislative instrument. This provision has been included to assist readers of the legislative provision, as the determination is not a legislative instrument within the meaning of section 8 of the Legislation Act 2003.

Item 18 inserts section 85ECA into the Family Assistance Act. The purpose of section 85ECA is to enable the Minister's Rules to prescribe requirements that must be met with respect to the provision of care by In Home Care services, in order for such care to attract CCS subsidies. This amendment ensures that the Minister's Rules are able to clearly prescribe care requirements of In Home Care services, which is particularly important given that In Home Care services are generally exempt from the requirements in the National Law. Accordingly, this amendment ensures that In Home Care services are only able to provide CCS subsidised care in circumstances where important and essential requirements relating to that care are met as prescribed in the Minister's Rules. This includes requirements relating to ratios of in home educators and number of children.

Item 24 replaces the table in subclause 2(3) of Schedule 2 to the Family Assistance Act, for the dual purpose of updating the CCS hourly rate caps for service types already specified in that table to reflect indexation that was applied on 1 July 2019, and to also prescribe the CCS hourly rate cap for In Home Care. Whilst this hourly rate cap had already been prescribed in section 15B of the Minister's Rules, it has now been included in the primary legislation along with all other currently recognised child care service types. The hourly rate cap for In Home Care varies from the hourly rate cap of other service types, as for In Home Care generally only one or two children are eligible for CCS in accordance with section 15B of the Minister's Rules, and therefore the hourly rate cap listed represents an overall contribution to the cost of providing In Home Care.

Item 66 inserts additional capacity under the Family Assistance Administration Act for the Minister's Rules to prescribe what constitutes a child care place, for the purposes of the allocation of CCS subsidised child care places. Paragraph 198A(ba) enables the Minister's Rules to clearly prescribe what the concept of 'child care place' means for the purposes of the Family Assistance Law, and fills an interpretative and legislative gap that currently exists. Currently, only In Home Care has child care places allocated, and therefore the Minister's Rules are intended to prescribe what constitutes a child care place for this service type.

Other technical / miscellaneous amendments

Items 1 to 3 amend sections 3 and 9 of the Family Assistance Act, to enable the prescription of what constitutes a 'session of care' to be incorporated into the Minister's Rules. Currently, the prescription of what constitutes a 'session of care' is contained in a separate, stand-alone, legislative instrument. The Minister's Rules is a central reference point for child care providers with respect to requirements under the Family Assistance Law. The prescription of what constitutes a session of care in the Minister's Rules will enable child care providers to have this concept included in this central reference point. It should be noted that this amendment does not change the existing power of the Minister to prescribe what constitutes a 'session of care'. Item 85 is a savings provision that ensures that the existing legislative instrument setting-out what constitutes a "session of care" is saved, until such time as the Minister's Rules are amended.

Item 19 inserts subsection 85GB(2A) in section 85GB of the Family Assistance Act - this section provides powers for Minister's and Secretary's Rules to be made. Subsection (2A) enables documents to be incorporated into the Minister's or Secretary's Rules by reference, as in force or existing from time to time. This amendment will primarily ensure that documents already incorporated by reference into the Minister's and Secretary's Rules will refer to the most recent version at all times. Examples of this include the currently referenced In Home Care National Guidelines, which are guidelines established through consultation with the In Home Care sector, and which establish additional requirements for In Home Care services, and the currently referenced Fair Work Act 2009 (the Skill Shortage List) for the purposes of ACCS (transition to work) eligibility. All documents incorporated by reference in the Minister's Rules are publicly available and available online, and are incorporated in order to provide additional context to existing requirements of approved child care providers, as well as concepts used in the Minister's Rules.

Items 52, 55, 56, 61, 62, and 83 amend a series of cross-referencing errors in the Family Assistance Administration Act, to provisions that have either been repealed, replaced or renumbered previously.

Items 63 and 64 amend section 162 of the Family Assistance Administration Act to remove redundant paragraphs from that section.

Items 65, 78, 79, and 82 amend sections 195A, 204E and 219UB of the Family Assistance Administration Act to correct a cross referencing error to section 67FH from "information about children enrolled in care" to "information about care provided".

Item 67 amends section 200A of the Family Assistance Administration Act to clarify that a relevant arrangement in relation to child care, may be between a child care provider and an individual or another person (for example, a third party such as a government agency). A relevant arrangement is distinct from a complying written arrangement, which must be between a child care provider and an individual (and which is one of the eligibility criteria under section 85BA of the Family Assistance Act for CCS and ACCS).

Item 84 expands and clarifies the operation of subsection 224(2) of the Family Assistance Administration Act, to provide that notices relating to the approval of child care providers can be sent electronically (for example, by way of electronic interface, or via third party software providers). This expands on the current operation of subsection 224(2), which limited electronic notification of such notices to only being able to be provided by email.

Part 2 - Amendments commencing 13 January 2020

Increasing the timeframe before enrolments cease

Under the current Family Assistance Administration Act, a child ceases to be enrolled for care by a service in circumstances set out at paragraph 200B(1)(b). An enrolment will cease when the earlier of the following occurs:

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a complying written arrangement which formally establishes child care arrangements between a parent and a child care service provider is terminated (usually by the parent informing the provider that they have left the service); or

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care ceases to be provided in circumstances set out in subparagraph 200B(1)(a)(ii); or

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8 weeks have passed since the child last attended any of the service's sessions of care.

Subparagraph 200B(1)(b)(iii) is intended to ensure children do not continue to be enrolled indefinitely and that providers and individuals update the terms under which care is provided after a long absence.

Importantly, if an enrolment lapses after 8 weeks, providers and individuals are required to take a number of steps to "re-enrol" the child when the child returns to care so that an eligible individual may continue to access CCS:

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the provider must re-establish a complying written agreement with the individual in accordance with subparagraph 200B(1)(a)(i);

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the provider must submit a new enrolment notice for a child in accordance with section 200A; and

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the individual must confirm the enrolment in accordance with subsection 67CD(11).

Based on feedback from families and child care providers, this period of time for an enrolment to lapse is too short and creates an additional regulatory burden on both providers and families. In particular, it has had unintended consequences where children only attend outside school hours care (either before/after school care or vacation care), as their enrolments cease due to regular breaks in their pattern of attendance.

As such, item 88 will amend subparagraph 200B(1)(b)(iii) to extend the period of time required to have lapsed before a child's enrolment ceases from 8 to 14 weeks. This measure will decrease unnecessary regulatory burdens on providers and families by ensuring that a child may continue to be enrolled with a service if they attend at least one session of care during each school holiday period throughout the year.

Part 3 - Amendments commencing 13 July 2020

Removing the prescribed 50 per cent limit in relation to ACCS (child wellbeing)

Under section 85CA of the Family Assistance Act, an individual is eligible for ACCS (child wellbeing) for a session of care if:

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they are eligible for CCS for that session of care; and

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either a certificate given under section 85CB, or a determination made by the Secretary under section 85CE, is in effect; and

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none of the limitations to eligibility for ACCS (child wellbeing) under Division 5 of Part 4A applies to the individual.

An approved provider may give a certificate under subsection 85CB(1) of the Family Assistance Act if it considers that a child is or was at risk of serious abuse or neglect. Such a certificate is subject to other conditions in section 85CB.

In particular, current subsection 85CB(4) provides that a certificate given under section 85CB does not take effect if it means that during the first week that certificate applies, the total number of children accessing ACCS (child wellbeing) and who are also being provided care by the child care service is more than 50 per cent of the children for whom the service is providing care (known as the 50 per cent rule).

Once a provider has reached the 50 per cent limit, additional certificates given do not take effect. While there is a separate approval process for a provider to seek an increased limit if that provider has reached the 50 per cent limit, that process is unnecessarily burdensome and may cause delays for at-risk children having access to supported child care.

If a provider has reached the 50 per cent limit, there is a separate approval process to enable a provider to seek an increased limit. The default 50 per cent limit, based on the calculation built into the CCS System, is also causing unintended consequences for approved providers and child care services. In addition, reaching or exceeding the 50 per cent limit can be compounded, in cases where a provider experiences a temporary peak in the number of children at risk commencing at the child care service. For example, services located in areas where other specialist services regularly care for a large proportion of children at risk.

Item 89 amends subsection 85CB(4) to remove the 50 per cent limit. This amendment will generally improve access to ACCS (child wellbeing) and helps ensure that vulnerable families in particular can be provided with quality child care services appropriate to their circumstances. It also reduces regulatory burden on providers and helps ensure that children who are at risk of abuse and neglect can access appropriate care.

The Secretary will retain the capacity to impose, on an as-needs basis, a percentage limit on particular services which the Secretary has identified as a compliance risk or in other appropriate circumstances to preserve the integrity of the child care subsidy payment framework. To this end, item 89 also confers a power for the Secretary to determine a percentage limit based on the individual circumstances of a service under subsection 85CB(4A). Item 90 contains a consequential amendment to subsection 85CB(6) as a result of the amendment in item 89.

Schedule 2 - Amendments relating to ensuring the integrity of the child care subsidy system

Summary

This Schedule brings the requirements for the approval of child care providers and services into closer alignment with related state and territory laws, and enhances the Commonwealth's child care subsidy payment integrity framework.

The amendments include ensuring that where an approved provider or child care service is suspended or cancelled under the National Law, access to Commonwealth child care subsidies will be automatically suspended or cancelled. The amendments also include a capacity for child care providers to request voluntary suspension of their Commonwealth approval in appropriate circumstances.

The Schedule also contains administrative and technical amendments that bring clarity to policy intent and address unintended consequences.

Detailed explanation

Provider or service approval may be voluntarily suspended

Under the National Law, approved providers may, upon request, have their provider or service approvals voluntarily suspended for a defined period of time. This suspension of approval allows the provider to cease operating one or more of its child care services for a period of time without being in breach of the requirements for approval under the National Law. These types of voluntary suspensions are commonly granted so that providers may carry out building improvements or other capital works on their premises.

However, the Family Assistance Administration Act does not contain equivalent provisions to allow approvals under the Family Assistance Law to be voluntarily suspended.

Item 17 addresses this and ensures consistency between the Family Assistance Law and the National Law. This is achieved by introducing section 197AA into the Family Assistance Administration Act to allow a provider's approval to also be voluntarily suspended under the Family Assistance Law (primarily in situations where they are also voluntarily suspended under the National Law). This also applies to providers that are approved under the Family Assistance Law but are not required to be approved under the National Law.

Section 197AA introduces a power that the Secretary may suspend a provider's approval, or a provider's approval in respect of one or more of its services, if the provider makes the request in writing.

Subsection 197AA(2) specifies that the written request must:

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be given in a form and manner approved by the Secretary;

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specify a proposed start day for the suspension to take effect;

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specify a proposed end day for the suspension to cease to have effect (which must not be longer than 12 months from the start day); and

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contain any other information prescribed by the Secretary's rules.

Subsection 197AA(3) provides that the Secretary may suspend the approval if the Secretary agrees with the proposed start and end days set out in the application, and is satisfied that the suspension is reasonable in the circumstances.

Subsection 197AA(4) provides that if the Secretary suspends the approval, the Secretary must give a notice to the provider specifying the day the suspension takes effect, and the day the suspension ceases to have effect.

Importantly, the Secretary has the power to specify a start day that is earlier than the day the notice is given, to ensure that the date of effect of a suspension granted under this section may be aligned with any voluntary suspensions already granted under the National Law.

Subsection 197AA(5) provides that the Secretary may revoke the suspension if the Secretary is satisfied it is reasonable in the circumstances to do so. If the suspension is revoked, the Secretary must give notice to the provider of the day the revocation takes effect (which must not be earlier than the day the notice was given).

Items 19 and 20 are consequential amendments to sections 197F and 197G to ensure that the cancellation powers under these sections are not inadvertently triggered where the Secretary has approved a voluntary suspension under section 197AA.

Date of effect of approval

Current subsections 194B(5) and 196B(3) of the Family Assistance Administration Act provide that the date of effect of a provider's approval must be:

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a Monday (or another day the Secretary deems appropriate); and

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not earlier than the date the application for approval was given.

Items 13 and 15 amend subsections 194B(5) and 196(3) to remove the default requirement that the date of effect of approval must be a Monday. Instead, the only requirement will be that the date of effect must not be earlier than the date the application for approval was submitted.

The default requirement for the date of effect of approval to be a Monday is not necessary and imposes unnecessary inflexibility in the Family Assistance Law. This amendment will also allow families to more easily and quickly access CCS or ACCS through newly approved child care providers.

Working with children checks

Section 195D of the Family Assistance Administration Act provides that it is a condition for continued approval of a provider that, for each individual required to hold a working with children card (under a law of the state or territory the service is located in) in relation to care provided by a child care service of the provider, the provider gives the Secretary details of the card issued to the individual.

The provision, as it is currently drafted, has resulted in some ambiguities in its interpretation. The requirement that individuals hold a working with children "card" is unable to be applied consistently across different states and territories. Some states and territories issue physical working with children cards, while others electronically register individuals required to have working with children checks.

Further to this, current section 195D actually only requires approved providers to give the Secretary details of working with children cards, but doesn't impose the far more important requirement of approved providers ensuring that care is only ever provided in a safe setting, by individuals who hold current working with children checks.

The safety of children is of paramount importance, and the amendments to section 195D ensure that this principle is clearly and unambiguously expressed in the Family Assistance Law, by requiring approved providers to ensure that individuals who are providing care on behalf of the provider hold current working with children checks.

Accordingly, item 14 amends section 195D, so that approved providers must ensure that each individual who is required to hold a working with children check in relation to care provided by a child care service of the provider, has a current working with children check. This clarifies the policy intent behind section 195D and also removes the ambiguous requirement that a working with children card must be provided in order to comply with this condition for continued approval.

In addition to this, section 204F of the Family Assistance Administration Act also enables the Minister's Rules to require approved providers to notify the Secretary of certain matters, which extends to notification about the working with children check status of individuals engaged by the provider to provide care to children.

Suspension, cancellation or variation for multiple infringement notices

Section 197B of the Family Assistance Administration Act provides that the Secretary may suspend a provider's approval or a provider's approval in respect of one or more of its services if, within 12 months, the provider has been given 10 infringement notices or 5 unpaid infringement notices (which are issued under Part 5 of the Regulatory Powers Act). Under section 197B, the Secretary does not have the power to cancel or otherwise vary a provider's approval where the provider has been issued with multiple infringement notices.

Item 18 amends section 197B to expand and simplify its operation, and provide that where an approved provider has been given 10 infringement notices within a 12 month period (whether paid or unpaid), the Secretary may do one or more of the following:

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suspend the approval of the provider;

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suspend the provider's approval in respect of one or more services;

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cancel the approval of the provider;

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vary the provider's approval so that it is no longer approved in respect of one or more of its services.

Under amended section 197B, a provider will no longer be subject to suspension under the section if it has been given 5 infringement notices in the previous 12 months which go unpaid.

If the Secretary suspends approval under section 197B, the Secretary must give the provider notice of the day the suspension takes effect (which must not be earlier than the day the notice is given). The Secretary may also revoke the suspension by giving notice to the provider of the date the revocation takes effect (which may be earlier than the day the revocation is done).

If the Secretary cancels the provider's approval under section 197B, the Secretary must give the provider notice of the day the cancellation takes effect (which must not be earlier than the day the notice is given).

Importantly, and prior to any decision being able to be made under amended section 197B, the Secretary must follow the show cause requirements in section 199A, thereby affording the provider procedural fairness. This is given effect at item 24.

The effect of this amendment is that the Secretary will have the unambiguous power to respond to providers who are consistently non-compliant with the Family Assistance Law, as demonstrated through the accumulation of infringement notices issued against them in a period of 12 months. The amendments also strengthen the capacity of the Commonwealth to effectively respond to providers who demonstrate persistent non-compliance, thereby helping to ensure the integrity of the CCS payment framework.

Items 25 and 26 amend section 199B of the Family Assistance Administration Act to enable certain details about suspension or cancellation decisions made under section 197B to be published by the Secretary. This amendment ensures section 199B operates consistently across compliance type decisions under the Family Assistance Law.

Suspension, cancellation or variation if approval suspended / cancelled under National Law

Approval under the National Law relates to the capacity of a child care provider to be able to operate a child care service, and provide care to children. Where approval under the National Law is suspended or cancelled, it follows that the child care provider is not able to operate a child care service or provide care to children.

Given the safety of children is of paramount importance, it therefore follows that where a child care provider no longer holds approval under the National Law (either through suspension or cancellation of that approval), the capacity of that provider to be able to administer CCS automatically ceases.

Item 17 inserts section 197AB into the Family Assistance Administration Act. Section 197AB has the effect that if an approved provider is suspended (or the approval of a child care service of the provider is suspended) under the National Law, the approval of the provider (or a child care service of the provider) under the Family Assistance Law is also taken to be suspended for the matching period under the National Law. If approval is suspended under section 197AB, the Secretary must give the provider notice of the suspension. The operation of section 197AB is by law, and therefore does not require a decision to be made to give effect to its operation.

Section 197AB does not apply where a provider or service approval has been voluntarily suspended under sections 37 or 85 of the National Law. This is addressed by section 197AA of the Family Assistance Administration Act enabling voluntary suspension of approval on request.

Item 16 contains a consequential amendment to the heading of section 197A to clarify that a suspension under section 197A may only occur after the Secretary makes a decision to that effect, and which may be distinguished from a suspension under section 197AB, which occurs by operation of law.

Item 23 inserts section 197L into the Family Assistance Administration Act. Section 197L has the effect that if an approved provider's approval (or the approval of a child care service of the provider) is cancelled under the National Law, the approval of the provider (or child care service of the provider) under the Family Assistance Law is also taken to be cancelled (or varied in respect of the child care service of the provider) on the same day the National Law cancellation takes effect. If approval is cancelled or varied under section 197L, the Secretary must give the provider notice of the cancellation or variation. The operation of section 197AB is by law, and therefore does not require a decision to be made to give effect to its operation.

Section 197L includes a note that provider and service cancellations under the National Law may occur for a number of reasons, including where provider or service approval is surrendered. It is intended that section 197L will also apply to cases where approvals are surrendered.

Items 25 and 26 amend section 199B of the Family Assistance Administration Act to enable information about a suspension or cancellation under sections 197AB and 197L to be published.

Item 2 contains a consequential amendment by inserting subsection 71G(1) into the Family Assistance Administration Act. This amendment ensures that if any payments are made to a provider after sections 197AB and 197L apply by operation of law to that provider, then those payments can be fully and directly recovered from that provider by the Commonwealth. This is because after sections 197AB or 197L apply to a provider, no payments should have been made in respect to the provider for the period after section 197AB or 197L applies. For clarity, the intention of this amendment is that all such payments are fully and directly recovered from the provider, and not from any individual accessing care from that provider.

For example: Provider A's provider approval is cancelled under the National Law on 1 November 2019. However, the Commonwealth is not notified of this until 15 November 2019. In the intervening period, Provider A submits attendance reports for care purported to have occurred between 4 November to 15 November 2019. Because the Commonwealth had not been notified of Provider A's cancellation under the National Law, payments of CCS are inadvertently made with respect to those attendance reports. Subsection 71G(1) makes clear that such payments are a debt due to the Commonwealth by the provider because those payments should not have been made from the day Provider A's provider approval was cancelled under the National Law.

Cancellation for ceasing to operate a child care service

Section 197H of the Family Assistance Administration Act provides that the Secretary must cancel the approval of an approved provider if the provider ceases to operate all of the approved child care services of the provider. Likewise, section 197J provides that the Secretary must vary the approval of an approved provider so that it is not approved in respect of one or more of its services, if the provider ceases to operate those services. These are effectively mandatory decisions which the Secretary must make once the "cease to operate" requirement is met. That is, once a provider "ceases to operate" one or more, or all, of its child care services.

However, the term "ceases to operate" is currently not defined in the Family Assistance Law. As a consequence, there is some ambiguity about its meaning and therefore when the mandatory decision-making requirement under sections 197H and 197J is triggered.

Items 21 and 22 amend sections 197H and 197J to clarify this ambiguity, by providing that "ceases to operate" has the meaning given to it in the Minister's Rules.

Items 9 and 10 amend section 138 of the Family Assistance Administration Act, so that a provider whose approval has been cancelled or varied under sections 197H or 197J, is not able to apply to the AAT for single review of that decision.

Under the Family Assistance Administration Act, as it existed prior to the Jobs for Families Package amendments which came into effect on 2 July 2018, a decision made under subsection 202(4A) (which was the equivalent provision under the old law to current sections 197H and 197J), was not reviewable by the AAT through operation of section 138 as it existed at the time. It was not intended for these kinds of decisions to be reviewable by the AAT, noting also that these decisions are not discretionary, and therefore these amendments correct this oversight. As such, these amendments correct this omission and bring them into line with the legislation as it existed before 2 July 2018. It is important to note that these amendments do not, in any way, impact any decisions made under sections 197H or 197J and which are already on review at the AAT on commencement of these amendments, which is given effect by item 29.

52 week limit for review of provider debt decisions

Items 5 to 8 amend sections 109DA and 111A of the Family Assistance Administration Act, in order to impose a 52 week time-limit for child care providers to seek internal review and review by the AAT of decisions relating to the raising of a debt.

These amendments ensure that where a child care provider wishes to apply for a review of a debt raised against it, the Family Assistance Law provides a clearly defined time-limit for that application. The amendments will facilitate access to accurate and relevant information to inform reviews and subsequent avenues of appeal.

Item 4 inserts a note at the end of subsection 109D(6) to provide that applications by providers for review of decisions made under Division 2 of Part 4 (i.e., debt decisions) relating to CCS or ACCS are subject to the time limits set out in section 109DA.

Item 28 inserts an application provision to provide that the 52 week time-limit only extends to child care provider debts that are raised after the commencement of the amendments to sections 109DA and 111A.

Simplifying recovery of public funding where provider at fault

Item 2 replaces section 71F so that if:

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an individual is paid an amount of CCS or ACCS; and

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all or part of that amount (attributable amount) is paid because a provider made a false or misleading statement, or otherwise failed to comply with the Family Assistance Law; and

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the individual incurs a debt under section 71B or 71C which is wholly or partly comprised of the attributable amount;

then the individual is taken not to have incurred a debt equal to the attributable amount, and the attributable amount is instead a debt due to the Commonwealth by the provider.

The effect of this amendment is to simplify the recovery of overpayments of public funding, where the reason for that overpayment is the fault of a child care provider. Importantly, this amendment does not expand the existing operation of section 71F with respect to the grounds for which a child care provider is considered at fault, but rather enables recovery of overpayments of public funding from child care providers without first needing to have a separate determination by the Secretary in place.

This amendment also ensures that individuals do not, inadvertently or otherwise, have debts incurred and raised against them for overpayments that are the fault of a child care provider. In such circumstances, section 71F will by default ensure that such debts are debts due by the provider instead of those individuals.

This amendment also further assists in the timely recovery of small overpayments of public funding each CCS fortnight, which are often primarily based on inaccurate attendance reporting by child care providers under section 204B of the Family Assistance Administration Act.

Recovery of public funding arising from certain reviews of decisions

Current section 73 of the Family Assistance Administration Act provides that if a person applies to the AAT for second review of a decision, and the AAT orders that decision to be stayed, then any amounts paid to the person under the Family Assistance Law during the stay period and which ultimately should not have been paid (for instance, because the AAT affirms the decision) is a debt due to the Commonwealth.

Item 3 amends section 73 so that it also applies to decisions on AAT single review. This amendment enhances the operation of section 73, by extending its scope to include decisions impacting the approval of child care providers and which are subject to AAT review. The amendment ensures that where the AAT grants a stay of a decision impacting the approval of a child care provider, but later the AAT affirms that decision, payments of public funding made to the provider in the intervening period are able to be fully and directly recovered by the Commonwealth. This is an important integrity measure, ensuring that where public funding has been expended in circumstances where, ultimately, it should not have been expended, that public funding can be recovered.

For clarity, the intention of this amendment is that all such payments are fully and directly recovered from the provider, and not from any individual accessing care from that provider.

It is important to note that, in relation to the recovery of any amounts of public funding under the Family Assistance Law, there are a range of write-off and waiver provisions which may apply in certain circumstances. These provisions are contained in Division 4 of Part 4 of the Family Assistance Administration Act. This includes, but is not limited to, the waiver power of the Secretary under section 101 of the Family Assistance Administration Act, which could apply to amounts due under section 73 in special circumstances.

Item 27 is an application provision to ensure that the amendment to section 73 will only apply where the AAT grants a stay order with respect to a decision under AAT single review on or after commencement of the amendment. This application provision does not, in any way, interfere with the continued operation of section 73 with respect to any decisions on AAT first review. This also ensures that all interested parties are given an opportunity to be made fully aware of the operation of amended section 73 prior to any stay order being made by the AAT.

Technical amendments

Item 11 repeals subsection 161(1B) of the Family Assistance Administration Act, which defines the Education and Care Services National Law. Item 1 will instead insert the definition of the Education and Care Services National Law as it existed under subsection 161(1B) into the definitions section of the Act (at subsection 3(1)).

Item 12 amends paragraph 162(2)(dae), which sets out the specific purposes for which protected information may be disclosed, to include the words "for the purposes of" in front of "the Education and Care Services National Law". This amendment corrects a drafting error which initially omitted those words.