House of Representatives

Social Services and Other Legislation Amendment Bill 2013

Second Reading Speech

Mr Andrews (Minister for Social Services)

This Bill will implement the first stage of the Government's commitment, foreshadowed during the 2013 election campaign, to adopt a different approach to addressing problem gambling.

The Bill will also implement several measures affecting family and parental payments, the closed pension bonus scheme , the rules for receiving certain payments overseas , and certain student entitlements.

Encouraging responsible gambling

This Government believes in meaningful and measurable support for problem gamblers. Although most people who gamble do so responsibly , gambling is a major problem for some Australians, and effective measures are needed to help these people.

The amendments in this Bill represent the Government 's first step in reducing bureaucracy and the duplication of functions between the Australian Government and State and Territory Governments in this important area.

The Bill will repeal the position and functions of the National Gambling Regulator, along with those provisions relating to the supervisory and gaming machine regulation levies, the automatic teller machine withdrawal limit, dynamic warnings, the trial on mandatory pre-commitment. and matters for Productivity Commission review.

The Bill will also amend the pre-commitment and gaming machine capability provisions to express clearly the Government's commitment to the development and implementation of these measures in the near future. informed fully by consultations with industry, State and Territory Governments , and other stakeholders.

Continuing income management as part of Cape York Welfare Reform

Cape York Welfare Reform is a partnership between the Australian Government , the Queensland Government and the Cape York Institute for Policy and Leadership. It aims to restore local Indigenous authority, rebuild social norms, encourage positive behaviours. and improve economic and living conditions in the participating communities of Aurukun ,Coen, Hope Vale and Mossman Gorge.

Since Cape York Welfare Reform began in July 2008, the participating communities have seen improvements in school attendance, parental responsibility restoration of local Indigenous authority.

This Bill will continue income management as a key element of Cape York Welfare

Reform, as part of a two-year continuation of the initiative until 31 December 2015.

Family Tax Benefit and eligibility rules

From 1 January 2014, family tax benefit Part A will be paid to families only up to the end of the calendar year in which their teenager is completing school.

Youth allowance , with its 'learn or earn' provisions that require young people to participate in work, job search, study or training, will continue to be available as the more appropriate payment to help young people transition from school into work or post-secondary study. Exemptions will continue to apply for young people who cannot work or study due to physical, psychiatric, intellectual or incorning disability.

Period of Australian working life residence

A further measure in the Bill will require age pensioners , and other pensioners with unlimited portability, to have been Australian residents for 35 years during their working life (in place of the current 25-year requirement) to receive their full means-tested pension if they choose to retire overseas or travel overseas for longer than 26 weeks. Pensioners will also be paid on their own individual working life residence rather than that of their partner or former partner.

The 25-year requirement has been significantly more generous than the pension rules of other OECD countries, which generally require 35 to 45 years of pension contributions to receive a full pension. Australia 's social security system differs markedly from the contributory systems that operate overseas in that payments are made from general tax revenue and are based on the concepts of residence and need. Pensioners with less than 35 years' Australian working life residence will be paid at a proportionally reduced rate. This amendment will apply to pensioners who leave Australia on or after 1 January 2014 and to pensions granted under most social security agreements from that date.

Pensioners who are living overseas immediately before 1 January 2014 will continue to be paid under the previous rules unless they return to Australia for longer than 26 weeks and leave again,after which the new rules will apply.

Interest charge

The Bill will allow for an interest charge to be applied to certain debts incurred by recipients of austudy payment, fares allowance , youth allowance for full-time students and apprentices, and ABSTUDY living allowance. The interest charge will only be applied where the debtor does not have or is not honouring an acceptable repayment arrangement. Debtors who are already making repayments, or who come to a repayment agreement with the Department of Human Services following implementation of the measure,will not be charged interest.

The rate of the interest charge will be based upon on the 90-day Bank Accepted Bill rate, plus an additional seven per cent, as is currently applied by the Australian Taxation Office for tax debts under the Taxation Administration Act 1953. Over the last four years, this rate has averaged 11.07 per cent , and currently stands at 9.6 per cent.

Student start-up loans

From 1 January 2014, the Bill replaces the current student start-up scholarship with an income-contingent loan, the student start-up loan. There will be a limit of two loans a year of $1,025 each (indexed from 2017). The loans will be available on a voluntary basis, and will be repayable under similar arrangements to Higher Education Loan Program debts. Students will only be required to begin repaying their start-up loan after their Higher Education Loan Program debt has been repaid.

Paid parental leave

To ease administrative burdens on business, the Paid Parental Leave legislation will be amended to remove the requirement for employers to provide Government-funded parental leave pay to their eligible long-term employees.

From 1 March 2014, employees will be paid directly by the Department of Human Services, unless an employer opts in to provide parental leave pay to its employees and an employee agrees for their employer to pay them.

Pension bonus scheme

From 1 March 2014, the Bill will end late registrations for the closed pension bonus scheme. The pension bonus scheme provides a lump sum payment to people who are registered in the scheme and qualified for the age pension, or the equivalent Veterans ' Affairs service pension or income support supplement , but who choose to defer their pension and remain in the workforce.

The scheme was closed in 2009,although eligible people who were not registered in the scheme at the time of its closure have still been able to backdate their registration in the scheme if they qualified for the relevant pension before 20 September 2009, but have deferred its receipt and kept working . The work bonus was introduced in 2009 as a different approach to encouraging older Australians to continue working.

Ending late registrations for the pension bonus scheme will simplify and support the flexibility of our substantial system of seniors support. Eligible people have had four years to backdate their registration, and will still have until 1 March 2014 to register in the scheme.


This Bill will extend the indexation pauses on certain higher income limits for a further three years until 30 June 2017. This means that:

the family tax benefit Part B primary earner income limit and the parental leave pay and dad and partner pay individual income limits will each remain at $150,000; and
the current higher income free area for family tax benefit Part A also remains at the current level set depending on the number and ages of the family's children - for example, the income cut-out for a family with two children aged under 13 will remain at around $113,000.

In addition, the annual end-of-year family tax benefit supplements will remain at current levels for the next three years - $726 a child for Part A and $354 a family for Part B.

The Bill will also set the annual child care rebate limit at $7,500 for three income years starting from 1 July 2014, with the first indexation of this amount occurring on 1 July 2017. A s a result, an individual will be able to receive up to the maximum amount of $7,500 per child per financial year for out-of-pocket child care costs for those three income years.

Changes to the rules for receiving payments overseas

From 1 July 2014, the length of time that families can be temporarily overseas and continue to receive family and parental payments will reduce from three years to 56 weeks.

In some circumstances, (such as where certain Australian Defence Force and Australian Federal Police personnel are deployed overseas) a person will continue to be eligible for family and parental leave payments for up to three years while temporarily absent from Australia.

Extending the deeming rules to account-based income streams

The Bill will align the income test treatment of account-based superannuation income streams, for products assessed from 1 January 2015, with the deemed income rules applying to other financial assets. Account-based income streams held by income support recipients immediately before 1 January 2015 will continue to be assessed under the previous rules unless recipients choose to change to a product that is assessed under the new rules.

Other amendments

Other minor amendments in the Bill include improving the administration of debt recovery under the Student Financial Supplement Scheme , clarifying the provisions relating to the time period for lodging tax returns for family assistance purposes, and ensuring that funding under the National Disability Insurance Scheme paid into a person's account , which is set up for the purpose of managing the funding for supports for a participant's plan, cannot be garnisheed for debt recovery purposes.