WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details
Social Security Legislation
Amendment (Youth Allowance Consequential and Related Measures) Bill
1998
Date
Introduced: 5 March
1998
House: House of Representatives
Portfolio: Social Security
Commencement: Generally, on 1 July 1998. However, certain
provisions commence after the commencement of the Youth Allowance
Act and the Budget Measures Act. A limited number of other
provisions have different commencement dates.
To complete the
package of measures commenced by the introduction of the Social
Security Legislation Amendment (Youth Allowance) Bill 1997.
This Bill largely provides for consequential amendments necessary
upon the enactment of that legislation.
The Youth Allowance Bill is intended to create
the youth allowance, a new social security payment. This payment
will cover unemployed people aged 16 to 20 and students until they
attain the age of 25 years. The rationale is to provide an income
support payment for young people, which will be available
regardless of whether that person is unemployed, sick, in training
or education - if that person meets certain eligibility
criteria.
The Bill contains a large number of measures to
transfer program elements from the Employment, Education and Youth
Affairs portfolio to the Social Security portfolio.
The youth allowance legislation package intends to bring about
the following changes:
- Abolition of AUSTUDY and youth training allowance; sickness
allowance (for those under 21 years), and newstart allowance (for
those under 21 years); and
- Creation of new social security payments to take their place
including youth allowance, austudy payment, pensioner education
supplement, fares allowance, and student financial supplement
scheme.
This Bill must be examined in the context of the
introduction of other legislation to amend the social security
system. Such Bills include the:
- Social Security Legislation Amendment (Youth Allowance) Bill
1997;
- Social Security Legislation Amendment (Parenting and Other
Measures) Act 1997;
- Social Security and Veterans Affairs Legislation Amendment
(Budget and Other Measures) Bill 1997 ['Budget Measures
Bill'];
- Child Care Payments Act 1997; and
- Income Tax Assessment Act 1997.
Mechanism
The Bill is organised so as to enact the contents of thirteen
schedules.
Clause 2 of the Bill provides
that the amending Act will commence on 1 July 1998. However
sub-clauses (2)-(10) provide for different
commencement dates for certain parts of the Bill. These are largely
because the commencement is dependent upon the enactment of the
Youth Allowance Bill (the Social Security Legislation Amendment
(Youth Allowance) Bill 1997(1) and the Budget Measures Bill (the
Social Security Legislation Amendment (Budget and Other Measures)
Bill 1997)(2).
A limited number of other provisions, in sub-clauses (8)-(10)
have different commencement dates.
Schedule 1 - Austudy
payment
In order to create an integrated youth allowance
payment, the statutory basis for the payment of the current AUSTUDY
scheme is to be transferred to enable it to be administered by the
Social Security Department (DSS). This is because the AUSTUDY
scheme (made to certain tertiary and older secondary students) is
presently administered by the Department of Education, Training and
Youth Affairs, under the Student and Youth Assistance Act
1973 ('the Student Assistance Act'). Given that the
proposed youth allowance does not provide for students aged 25
years or more, as does the current AUSTUDY scheme, the austudy
payment presented in this Bill is designed to provide for these
older students.
This Schedule introduces a new Part
2.11A into the Social Security Act 1991 ('the
Social Security Act') to create an austudy payment within that Act.
This payment is intended to replace the AUSTUDY payment currently
provided for within the Student Assistance Act, and
principally, by the Austudy Regulations made under that
Act.
Proposed section 570 indicates
that this payment is to be only for students aged 25 years and
older. The equivalent payment for those students aged less than 25
is contained within the amendments made to the Social Security
Act by the Youth Allowance Bill.
According to the Explanatory Memorandum, the Bill has been
drafted so as to:
Avoid complexity and duplication, the
payment for older students has been brought into the Social
Security Act, and basic rates and conditions have been aligned
with those for youth allowance. Apart from this simplification
measure, the payment will provide income support to this group on
much the same basis as current arrangements.
However, it is important to note that it is
proposed that in a number of respects the rates and conditions
affecting former AUSTUDY students (under the DEETYA administered
scheme) will be altered by this 'alignment' action.
Activity test for qualification for
Austudy payment
The general rule proposed within subdivision B
of Division 1 ('Qualification for austudy payment') is that the
activity test is satisfied if a person is "undertaking qualifying
study".
Within proposed section 569A,
subsections 569A(ii) and (iii) are of interest in
providing the requirements to be met for intention to continue
study.
These parts will probably be used to continue
payment during the holidays where student intends to continue
studying in the next year.
Under the current AUSTUDY arrangements, payments
stops on 31 December and is resumed only where the student can
prove re-enrolment, leaving a gap in the delivery of payments where
studies are being continued.
Under the proposed regime, a person must be
undertaking an approved course of education or study in order to
meet the activity test. Proposed section 569B
provides a definition of 'approved course of education or study'.
Courses will continue to be those determined in writing by the
Minister under Student Assistance Act - so the nature of
courses should be the same as that applied for AUSTUDY.
Proposed section 569G relates
to progress rules for secondary students. The legislation will
require 'satisfactory progress'. Currently, the AUSTUDY Regulations
only require the student to be enrolled full-time and their school
to be satisfied they were doing sufficient work to satisfy the test
of being 'full-time'. However, this amendment shifts this judgement
away from the school to the DSS Secretary's policy description of
'satisfactory progress'
Situations in which austudy payment is
not payable
Division 2 of proposed new Part
2.11A, providing for the Austudy payment, sets out the
situations in which austudy payment will not be payable. This
division is divided into seven different subdivisions, A to G.
Subdivision D sets out the rules relating to
waiting periods. Proposed section 575, 'waiting
periods', contains a new development, in that it applies the liquid
assets test waiting period. Waiting periods have not been used or
applied under the current AUSTUDY scheme. The same applies to the
proposed Income Maintenance Period also provided for in this
Bill.
Proposed section 575D applies
the 2 year newly arrived migrant waiting period to the new austudy
payment under the Social Security Act. This waiting period
currently applies to AUSTUDY scheme under the Student
Assistance Act.(3)
Subdivision E, relating to 'Activity test
non-payment periods' is noteworthy. Proposed section
576 relates to third and subsequent activity test
breaches.
At present it appears possible for a newstart
allowance recipient, subject to a rate reduction or non-payment
period, to subsequently apply for Austudy, and then receive that
payment in full, free of the rate reduction or non-payment
provisions. However, it appears that the effect of the proposed
sections is to make the newstart allowance work search activity
test penalty provisions carry over to subsequent Austudy
applications. This will preclude the making of payments under the
austudy payment segment of the youth allowance, during the
remainder of that existing penalty period.
Rate of austudy payment
Proposed Division 5 of Schedule
1 concerns the rate of Austudy payment, and contains
subdivisions relating to activity test and administrative test
breach reductions in the rate of austudy payment
Activity test breach reductions in the rate of austudy
payment
Proposed section 582 is
noteworthy in that activity test breaches and rate reduction
periods never previously applied to the AUSTUDY scheme. Currently,
the most common breaches are probably those where the person no
longer is undertaking a form of study that qualifies, and AUSTUDY
has been paid for the period. Where this occurs, the only action
taken is the recovery of the AUSTUDY payment for the period. Under
the proposed arrangements, recovery will still happen, as the
person is not qualified, but with the proposed amendments there
will be the possibility of an additional penalty of breach or rate
reduction periods.
Administrative breach reductions in the rate of austudy
payment
Proposed section 583 ('Administrative
breach rate reduction period') is similar to
proposed section 582, in that the application of
administrative breach rate reduction periods is new. In the past,
either the claim was rejected or payment suspended or cancelled. On
reactivating where qualification was subsequently met, the normal
full rate otherwise payable was resumed. Now it is proposed that
where payment is re-activated, a rate reduction period may also
apply.
Austudy Payment Rate Calculator
Item 7 of Schedule 1 inserts
Proposed Part 3.5A into the Social Security
Act. It contains the Austudy Payment Rate Calculator, within
proposed section 1067L, headed 'Rate of Austudy
Payment'. This calculator comprises six modules, Modules A
to F.
Maximum basic rate
The following comments are made about Module B,
headed 'Maximum basic rate'.
The rate structure introduces a new, lower rate regime for
short-term students. This does not currently apply under the
AUSTUDY scheme.
The rate structure maintains the current AUSTUDY
arrangements in terms of paying a lesser rate for students who are
living at home with parents. However, this is inconsistent with the
current rate regime for newstart allowance for person aged 21 or
more, where the rate regime ignores living at home with parents for
those who are unemployed aged 21 or more. It is consistent with the
proposed youth allowance dependency arrangements for students aged
up to 24 living at home with parents.
Student Income Test
In relation to Module D, the
'Income Test', certain comments are relevant. At present, the
student income test under AUSTUDY is included in Part 4 of the
Austudy Regulations.(4)
The income test considers the effect of income
of the applicant and their partner (if any) upon the maximum
payment rate. The Bill then proceeds to consider the effect of
other payments such as termination payments, lump sum leave
payments, and other leave payments. In proposed section
1067L-D6 et seq, the Bill sets out provisions to apply the
'income maintenance period' to austudy recipients. As with waiting
periods previously commented on, income maintenance periods are not
currently applied under the AUSTUDY scheme.
Remaining on the topic of student income tests,
several other sections are also worthy of examination.
Proposed sub-sections 1067L-D28 to 1067L-D32, deal
with the so-called 'ordinary income free area'. The proposed free
area of $230 per fortnight is the same as the current AUSTUDY free
area. At present, students can earn up to $6000 in taxable income
in a financial year without affecting their entitlement to the
maximum rate of AUSTUDY living allowance. This amounts to an
'income free area' of $230 per fortnight.
At present, AUSTUDY is reduced by $1 for every
$2 of taxable income over the threshold. Put another way, the
current income test has a 50 cents in the dollar taper for income
over the free area.
Under the proposed Bill, a different, and
tighter taper is to be applied being a 50 cent in the dollar taper
for income up to $80 in excess of the $230 free area, then 70 cents
in the dollar for income that exceeds the free area by more than
$80. This is a tougher taper for higher income amounts.
The proposed youth allowance adopts the current
newstart allowance income test arrangements. This test has a free
area is $60 per fortnight, then a reduction rate of 50 cents in the
dollar for income from $60 to $140, then a 70 cents in the dollar
reduction rate for income above this level.
The comparatively higher AUSTUDY income test
free area of $230 per fortnight has its origins as an income test
to facilitate part-time work, but to discourage full-time work,
being a payment for full-time students.
Contrasting with this, the unemployment type payments income
test arrangements have their origins in encouraging unemployed
persons to take up any work opportunities and to provide a
progressive payment reduction as work earnings increase.
Schedule 2 - Amendment of
Social Security Act 1991 relating to youth
allowance
This Schedule proposes a number of changes to
the youth allowance provisions, which are to be inserted in the
Social Security Act by the Youth Allowance Bill. These
proposed changes arise from the operation of several factors. These
include attending to certain matters omitted from the original
Youth Allowance Bill 1997.
Other issues have arisen from the fact that the
creation of the youth allowance is necessarily a technical and
complex task because it represents a merger of five previously
disparate income support payments, being payments with differing
origins, purposes, policy histories and evolutions.
It can be argued that it is the intention of the
government not just to rationalise and streamline Australia's
system of income support payments, but to re-engineer the payments,
altering in some respects the purposes and approach with which they
have previously been targeted.
Assets test
Proposed section 547D is worthy
of further consideration. Division 2 of
Schedule 1 of the Youth Allowance Bill sets out
the situations in which youth allowance is not payable.
Subdivision A sets out the basic rules.
Item 14 of this Bill proposes the insertion of an
additional subdivision, being Subdivision AB, 'the
Assets test', immediately after that subdivision.
Proposed section 547D sets out
the general rule that the value of a person's assets is to include
the value of the assets of their partner or family members in
certain circumstances. The current assets test for youth training
allowance and newstart allowance does not factor in the assets of
all the family members for dependent rate recipients. The AUSTUDY
assets test does factor in all family member assets, so this change
to the proposed youth allowance picks up the wider encompassing
AUSTUDY test for dependent rate recipients.
Parental income test
Items 33 to 36 of Schedule 2 of
the Bill also deserve close attention. These items are proposed
amendments to the 'parental income test' set out in Schedule 2 of
the Youth Allowance Bill. They relate to the operation of the
'Youth Allowance Rate Calculator', to be inserted in the Social
Security Act at Part 3.5. In particular, the amendments affect
Module F of the Calculator, which contains the parental income
test. This module is divided into six submodules. The submodule
affected is submodule 4 - that relates to
'combined parental income'.
The change in the use of terms from 'rental
property' to 'passive business' significantly broadens the scope of
income earning situations, which will be caught by this income
exclusion, eg. silent or passive business partners. This has some
parallels with the Family Payment income test, which also excludes
net rental property losses as an income deduction, but the proposed
'passive business' definitions casts a significantly wider net.
Family actual means test
Proposed Items 39 to 46
inclusive relate to amendments to proposed Module G of the Youth
Allowance Rate Calculator in the Youth Allowance Bill, which
contains a family actual means test. These appear to be minor
clarification amendments to the Family Actual Means Test - see
Bills Digest for the Youth Allowance Bill 1997, for comment on the
Family Actual Means Test.
Income test provisions
Proposed Items 47 and 48 are
clarification amendments to the Income Maintenance Period (IMP)
provisions. These provisions are contained in Module H - the
'Income test' module of the Youth Allowance Rate Calculator in the
Youth Allowance Bill. The IMP provisions were introduced for a
range of social security income support payments in September
1997.
These provisions are not a waiting period,
rather the IMP provisions apportion leave type payments paid on
employment termination over a period and treat them as income under
the income test for that period. There is no end limit to an IMP
and where the rate of leave payment is low enough, part-rate Youth
Allowance may be payable during the IMP.
Proposed item 50 further amends
aspects of Module H - the 'Income test' module of the Youth
Allowance Rate Calculator. These amendments mirror proposed
legislative amendments for the treatment of lump sum income
payments contained in the Social Security and Veterans' Affairs
Legislation Amendment (Budget and Other Measures) Bill 1997. Refer
to Bills Digest No. 138 1997-98 for that Bill.
Proposed Item 51 amends the approach originally
adopted in the Youth Allowance Bill dealing with the 'partner
income free area'. The proposed item provides differing income test
free areas for partner income for the following partner
situations:
- partner is aged less than 21 and NOT receiving an income
support payment
- partner is aged 21 or more and NOT receiving an income support
payment
- partner is receiving an income support payment
The original Bill had no age 21 distinctions, only
distinguishing between those on, or not on, an income support
payment.
Schedule 3 - Amendment of
Social Security Act 1991 relating to youth allowance and
austudy payment
These proposed sections are to ensure that
amendments made in the Budget Measures Bill, which could not be
reflected in the Youth Allowance Bill at the time of its
introduction, "flow through consistently to encompass the new
payment structure."(5)
This Schedule is divided into four
Parts in order to provide for a range of different
commencement dates and rules principally arising from the fact that
these amendments affect a range of statutes. According to the
Explanatory Memorandum: "The significance of these is merely to
ensure that the various amendments flow through correctly and on
dates consistent with the original measures."
Part 4 - Hardship provisions - Amendments commencing on
1 July 1999
Proposed Items 25 to 28 "are to
reflect correctly in the relevant interpretation provisions
relating to the consistent hardship rules as they will apply after
1 July 1999 (Schedule 5 of the Budget Measures Bill) the inclusion
of the new payments, youth allowance and austudy payment."(6)
The effect of the items is that the 'Income
Maintenance Period' introduced from September 1997 is to also apply
to Youth Allowance. Presently AUSTUDY is not subject to any such
waiting periods.
Schedule 4 - Amendment of
Social Security Act 1991 relating to pensioner education
supplement
As the government has decided to transfer
portfolio responsibility for AUSTUDY to the Minister for Social
Security, it is necessary to ensure that all elements of the
AUSTUDY scheme necessary to be retained are incorporated into the
Social Security Act.
This Schedule proposes amendments to the
Social Security Act to create a payment known as
'pensioner education supplement'. This payment presently exists
under the AUSTUDY scheme created by the Student Assistance
Act. The payment is presently made, in addition to the
pension, to students who are not eligible for AUSTUDY because they
receive social security or veterans affairs payments, being sole
parents, disabled, or carers.
This payment will not be subject to the income
or assets tests. It is proposed to be subject to most of the rules
that presently prevail under the AUSTUDY scheme. However some
'simplifications' are proposed in order to align the payment with
other payments made under the Social Security Act.
'Qualification for pensioner education
supplement'
Division 1 of the
proposed new Part 2.24A sets out the rules for
'Qualification for pensioner education supplement' (PES).
Subdivision B sets out the eligibility
requirements relating to 'undertaking qualifying study'.
Definition of 'full time' study
Proposed section 1061PF defines
the 'normal amount of full-time study'. The minimum hours of study
a week requirements to constitute 'full-time' study, appear to
represent an attempt to modify the test currently applied under the
AUSTUDY scheme. Subsection (2) appears to introduce a test not
previously applied to AUSTUDY, being that of a minimum of 20 hours
contact a week. Currently, some full-time courses would not have 20
hours contact a week.
Progress rules
Proposed section 1061PH sets
out progress rules for secondary students. The legislation as
proposed will require 'satisfactory progress', 'in the Secretary's
opinion'. The old AUSTUDY Regulations only required the applicant
to be enrolled full-time and their school to be satisfied that they
were doing sufficient work to satisfy the test of 'full-time'
study. This amendment shifts this judgement away from the school to
the DSS Secretary's policy description of 'satisfactory
progress'.
Payments attracting pensioner education
supplement
Proposed section 1061PJ sets
out which income support payments can attract payment of the PES.
These appear to be the same range of payments as currently applies
under the AUSTUDY arrangements, to qualify for the PES.
Schedule 5 - Amendments relating
to Austudy supplement
As the government has decided to transfer
portfolio responsibility for AUSTUDY to the Minister for Social
Security, it is necessary to ensure that all elements of the
Austudy scheme are incorporated into the Social Security
Act. Therefore, the amendments in Schedule 5 have been
proposed, to transfer the Austudy loan scheme, known as the Austudy
Supplement, into the Social Security Act. The loan scheme
is now to be called the 'Student Financial Supplement Scheme'.
Note that the former loan scheme will continue to operate for
ABSTUDY recipients.
Schedule 6- Amendment of
Social Security Act 1991 relating to fares
allowance
This Schedule relates to the transfer of an
additional element of the Austudy scheme, the fares allowance, from
the Austudy Regulations, to come within the ambit of the
Social Security Act. However, this time, as compared to
the approach taken in Schedule 5, the proposed amendments to the
Act are merely to enable the making of disallowable instruments to
contain the rules relating to the fares allowance.
Schedule 7- Amendment of
Social Security Act 1991 relating to
indexation
In order that the introduction of the youth
allowance and the austudy payment into the Social Security
Act is in line with other social security payments, it is
considered necessary to allow for increases in these payments in
accordance with movements of the Consumer Price Index.
This Schedule therefore proposes the insertion
of indexation provisions into the proposed new Parts
2.11 and 2.11A of the Social Security
Act.
Schedule 8 - Amendment of
Social Security Act 1991 relating to rate
calculators
The introduction of the youth allowance and the repeal of the
Youth Training Allowance, Benefit Rate Calculator A, and the
Sickness Allowance Rate Calculator all necessitated proposed
amendments to various rate calculator provisions of the Social
Security Act. These are contained in Schedule 8.
Schedule 9 - Consequential
amendments of the Social Security Act 1991
This Schedule, which makes numerous
consequential amendments to the Social Security Act, is
divided into 23 Parts.
These amendments are necessary to take account
of the creation of new payments (such as the youth allowance,
austudy payment, and pensioner education supplement). Other
consequential amendments are required because of the proposed
repeal of provisions in the Student Assistance Act
relating to AUSTUDY, and the proposed repeal of provisions in the
Social Security Act relating to Youth Training Allowance,
Benefit Rate Calculator A, and the Sickness Allowance Rate
Calculator.
These proposed amendments are necessary to
removal of redundant references to payments, which are intended to
be repealed, such as youth training allowance, and sickness
allowance.
Part 20 of the Schedule
9 contains provisions relating to debt recovery under the
new payment structure. The effect of the proposed amendments is to
transfer existing debts under the Student Assistance Act
so that they to become subject to the debt recovery provisions
contained in Part 5.2 of the Social Security Act. This Part also
contains some provisions relating to waiver of debts.
Schedule 10 - Amendment of
Social Security Act 1991 relating to savings and
transitional provisions
The introduction of the youth allowance and the
portfolio shifting of AUSTUDY involves the abolition of a number of
presently existing payments. There is a need to ensure that
recipients of these benefits are smoothly transferred to the
categories of 'youth allowance recipient' or 'austudy recipient'
without the need for lodgement of additional claims, and the need
for separate official determinations to be made.
The benefits that are to be superseded include youth training
allowance, sickness allowance (under 21 years), newstart allowance
(under 21 years), as well as AUSTUDY.
This schedule also contains proposed provisions to ensure
that:
- pensioner education supplement recipients under AUSTUDY are
smoothly transferred to similar payments under the Social
Security Act;
- persons under 21 receiving either sickness allowance or
newstart allowance on 17 June 1997 will not be adversely affected
by the introduction of the youth allowance scheme, in line with a
government promise;
- that certain persons receiving bereavement payments, and
recipients of double orphan payments under the AUSTUDY regulations
are not disadvantaged by the introduction of the youth allowance
scheme; and
- that family allowance recipients are not disadvantaged by
introduction of the youth allowance scheme, by ensuring that
families of YA recipients do not miss out on partial payments of
family allowance.
Schedule 11- Amendment of
the Student and Youth Assistance Act 1993
This Schedule is divided into two Parts. The
first part proposes consequential amendments to the Student
Assistance Act, mainly relating to the repeal of the AUSTUDY
scheme and of the Youth Training Allowance. The second part
proposes a number of transitional provisions, which relate to
persons who have lodged claims for AUSTUDY prior to the
commencement date applicable to the relevant provisions of this
Bill. It also relates to the transitional arrangements for the
treatment of debts and debt recovery due to the Commonwealth. Part
two also deals with persons who are seeking a review of decisions
about payment of AUSTUDY or Youth Training Allowance prior to the
commencement date applicable to the relevant provisions of this
Bill.
Schedule 12 - Amendment of
taxation legislation
The abolition of a number of income support
payments and the creation of others, which is involved in the Youth
Allowance legislation, necessitates the amendment of taxation
legislation in order that the same taxation treatment of payments
can continue to apply to the new payments and associated
supplementary payments.
The legislation amended includes the:
- Income Tax Assessment Act 1936;
- Income Tax Assessment Act 1997; and
- Taxation (Interest on Overpayments and Early Payments) Act
1983.
Schedule 13 - Amendment of other
legislation
The final schedule of the Bill makes
consequential amendments to legislation which contain references to
youth training allowance or the AUSTUDY payment under the Student
Assistance Act. These amendments are necessary because of the
proposed repeal of those payments.
The Acts amended are the:
- Aged Care Act 1997
- Bankruptcy Act 1966
- Child Care Payments Act 1997
- Data-matching Program (Assistance and Tax) Act
1990
- Disability Services Act 1986
- Farm Household Support Act 1992
- Health Insurance Act 1973
- National Health Act 1953
- Registration of Deaths Abroad Act 1984
- Telecommunications Act 1997
- Veterans' Entitlements Act 1986
- The Youth Allowance Bill is discussed in Bills Digest No. 76
1997-98.
- The Budget Measures Bill is discussed in Bills Digest No.138
1997-98.
- DEETYA (1998), Centrelink 1998 Austudy Policy Guidelines
Manual, Part 3.2.4 at, .3-10 to
3-17.
- Austudy Regulations, r 82; see also DEETYA (1998),
Centrelink 1998 Austudy Policy Guidelines Manual, Part 7,
Chapter 2, 7-6 et seq.
- Explanatory Memorandum, 63.
- Explanatory Memorandum, 67.
James Prest
Peter Yeend
12 March 1998
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1997
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