House of Representatives

A New Tax System (Family Assistance and Related Measures) Bill 2000

Explanatory Memorandum

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

This memorandum takes account of a correction made to the memorandum as tabled in the House of Representatives.

Outline and Financial Impact Statement

Assistance for families

As part of the Government's plan for a new tax system, the structure and administration of family assistance is being recast and simplified with effect from 1 July 2000.

Twelve forms of assistance, currently available through the tax and social security systems are reduced to three new family assistance payments: family tax benefit Part A, family tax benefit (Part B) and child care benefit. The A New Tax System (Family Assistance) Act 1999 outlines the eligibility conditions for, and rates of payment of, the new family assistance payments. The A New Tax System (Family Assistance) (Administration) Act 1999 sets out the administrative, procedural and technical rules that will apply in relation to the administration of these new payments.

In broad terms, this Bill amends this legislation establishing the new family assistance regime to:

provide the administrative infrastructure to support the payment of child care benefit;
clarify the operation of various aspects of the family assistance law;
replace regulation making powers with substantive provisions;
insert relevant savings and transitional provisions; and
make miscellaneous technical amendments.

Consequential and technical amendments are also made to the Social Security Act 1991, the Social Security (Administration) Act 1999, the Social Security (International Agreements) Act 1999, the Child Support (Assessment) Act 1989, the Health Insurance Act 1973, the Income Tax Assessment Act 1936 and the Medicare Levy Act 1986.

The financial implications of these amendments are part of the overall financial implications for the Government's family assistance package.

Additional matters relating to family assistance

This Bill also addresses anomalies in the existing family payment system in the social security law that would otherwise be carried over into the family assistance law.

Amendments are made to enable special benefit recipients who would otherwise not be eligible for family tax benefit or child care benefit because of the residence rules to access those payments.

The estimated program costs of this measure are $0.18m in each year for family tax benefit and negligible for child care benefit.

The debt provisions as they relate to FTB advances are amended to:

ensure that any unrepaid FTB advance is a debt under the family assistance law where the advance recipient ceases to be entitled to FTB Part A before the advance is repaid or the recipient's Part A rate drops to a level which is insufficient to recover the advance in the advance period; and
prevent entitlement to an FTB advance arising where a person has an existing debt;

The estimated program savings from these changes are $0.14m in each year.

Amendments are made to ensure that a person who only has shared care of a child(ren) is assessed for rent assistance at both the "with child" and "without child" rates and paid at the higher rate.

The estimated program costs of this measure are $0.16m in 2000-2001, $0.17 in 2001-2002 and $0.17m in 2002-2003.

Changes are made to child care benefit to taper out the 10% part-time loading in long day care centres so that families using less than 34 hours of care continue to get the 10% loading but families using 34 to 37 hours get a lesser loading so that they do not get less CCB in total than those using 33 hours.

There are no additional program costs from this measure as the costs are absorbed within the base funding for CCB.

Changes are also made to child care benefit so that:

the minimum rate for informal care for school children will be reduced to below the corresponding rate for younger children;
a limit may be imposed on approved child care services' discretion to approved special circumstances CCB on the grounds of the individual being in hardship if a pattern has been demonstrated of inappropriate use of the discretion;
approval of child care services may be made by the Secretary from a specified day in the past;
the application of penalties for approved child care services already set up in the legislation will be expanded, consequential on the extension in the legislation of obligation provisions; and
penalties will be applied to approved child care services, as well as to individuals, for failure to comply with notification obligations, in line with the rest of family assistance.

The estimated program savings from these measures are negligible.

Other amendments relating to the Government's new tax system

Amendments are made in this Bill to increase the rates of CDEP Participant Supplement, pensioner education supplement and carer allowance by 4%. This increase will compensate recipients for the effects of the goods and services tax.

The financial implications of these amendments are part of the overall financial implications for the compensation package provided for in the A New Tax System (Compensation Measures Legislation Amendment) Act 1999 .

The Bill also make minor technical changes to the A New Tax System (Bonuses for Older Australians) Act 1999 to take account of the subsequent enactment of the Social Security (Administration) Act 1999 .

These technical changes have no financial implications.

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