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
Child Care Payments Bill 1997
Date Introduced: 26 June 1997
House: House of Representatives
Portfolio: Health and Family Services
Commencement: The day after the Bill receives
Royal Assent
The Bill provides for a system of approved child care services
and simplifies the paperwork associated with child care by using
the Commonwealth Services Delivery Agency to process all
applications and payments.The Bill also increases the threshold for
the assets test, introduces a cap of 20 hours for parents who are
not working, training or studying and seeks to limit the number of
new places so as to distribute child care facilities where they are
most needed.
The involvement of the Commonwealth Government in child care has
grown from very modest beginnings in the early 1970s to being a
substantial area of public policy in the 1990s. Originally
designated as a limited program to help needy women and families it
has become a multi-billion dollar industry formally caring for
almost 600 000 childrenaged under 11 years of age. The paid child
care sector now accounts for 0.5% of GDP with governments providing
approximately 60% of the costs involved with providing this
care(1).
The Commonwealth first became financially involved with child
care in 1972. In that year the Child Care Act 1972
provided funding ($6.5m for the first year) for non-profit
organisations (including local government bodies) to operate centre
based day care facilities for children of working and sick parents.
Funding was provided for capital grants, recurrent grants (to help
pay qualified staff and provide for children in special need) and
grants for research into matters relating to child care. To be
eligible for this funding the centre based long day care centres
had to operate for at least 48 weeks a year and be open for at
least eight hours every working day.
Over time funding for other types of child care primarily Family
Day Care, Occasional Care, Outside School Hours Care and
Pre-Schools, has also been introduced and expanded.
Current Provision
The rate of expansion of the provision of child care can be
judged by the fact that in 1996-97 in excess of $1.5b was provided
for child care by governments throughout Australia- $1.1b by the
Commonwealth and approximately $400m by the States and
Territories.(2)
The main avenues through which the Commonwealth and the States
help provide child careare as follows :
Child Care Assistance (formerly Fee Relief)
This form of assistance is provided by the Commonwealth and is a
means tested payment that allows for fees to be reduced for parents
and guardians that have their children cared for in long day care,
family day care, occasional care and some pre-schools. There is
also Child care Assistance available to low income families that
utilise outside school hours services. The payment is made to the
child care provider. This form of assistance is by far the largest
provided with in excess of $700m being spent in 1996-97.
Child Care Cash Rebate
This rebate, introduced in 1994, is payable directly to the
family and is not means tested. It can be claimed for part of the
costs of work related child care in formal and informal (such as a
paid babysitter) situations. The maximum rebate is $28.80 per week
for one child and $63.30 for two or more children. In 1996-97 in
excess of $120 m was provided via the Child care Cash Rebate.
Capital Grants
The Commonwealth, usually in conjunction with the States and
Territories, provides capital grants and subsidies to non-profit
community based child care services and to assist special needs
groups. The amount of funding is based on assessments made as part
of the national planning process. In 1996-97 the Commonwealth
provided approximately $25m for capital grants.
Operational Subsidies
In excess of $150m was paid out in operational subsidies to
community based long day care during 1996-97. However these
subsidies, excluding those for occasional care, family day care,
multi-functional and multi-functional Aboriginal children's
services, ceased on July 1 1997. It is expected that savings of the
order of $40m per annum will be made as a result of the curtailing
of the eligibility for these subsidies. These subsidies are of the
order of $15 to $22 per week depending on the circumstances at the
various eligible long day centres.
Special Services and Program Support
Expenditure in this area (approximately $90m in 1996-97)
includes programs designed to assist special needs groups, for
example, children with disabilities and Aboriginal and Torres
Strait Islander children. As well, funding is provided for program
research and development and the national accreditation system.
State/Territory Pre-School Funding/Other Support
Approximately $300m per year is provided by the States and
Territories to fund pre-school services. They also provide a range
of other child care programs and contribute to areas such as the
cost of inspecting premises under licensing arrangements.
Local Government Support
Local shires and councils also help offset the costs of
providing child care primarily through the contribution of land and
administrative support.
Rcent Policy Changes
Both the 1996-97 and 1997-98 Federal Budgets contained measures
that have impacted, or will impact on, on the child care sector.
Both budgets have emphasised moves towards a greater reliance on
means tested child care assistance provided directly to parents as
opposed to operational and capital assistance provided to service
providers as well as a greater reliance on private providers of
child care services.
1996-97 Budget
The main child care measures announced in the 1996-97 Budget
were as follows:
Changes to Operational Subsidies
As mentioned earlier, from 1 July 1997 operational subsidies for
community based long day care centres (excluding occasional care,
family day care, multi-functional and multi-functional Aboriginal
children's services) ceased. The main rationale for the withdrawal
of this subsidy was that it 'would encourage community centres to
be more efficient and cost competitive with the private sector'
...(and also)...'to remove inequities in Government assistance for
families using private and community-based centres'(3).Under this
measure the Government also announced that additional funding would
be provided to help community centres restructure and obtain
financial and management advice prior to the subsidies being
withdrawn. It was argued that any expected increase in fees charged
as a result of the cessation of the subsidies could well be partly
offset by community centres becoming more cost efficient. At the
time it was estimated that the removal of the subsidies would save
the Commonwealth $35.1m in 1997-98, $40.5m in 1998-99 and $41.7m in
1999-2000.(4)
Limiting of Child Care Assistance
This measure, implemented on April 1 this year, limits child
care assistance to 50 hours per week per child. However, working
families who can show that they have a genuine need for in excess
of 50 hours of care per child can be exempted from this limit. This
change to child care assistance access is estimated to save
approximately $30m in 1997-98 and approximately $33m in
1998-99.
Cessation of Indexation of Child Care Assistance Fee Ceiling
and Child Care Cash Rebate Ceilings
This measure has the effect of freezing the levels of child care
assistance and child care cash rebate fee ceilings for two years.
The indexation of these two forms of assistance was due on April 1
1997 and April 1 1998. It is estimated that, as a result of this
measure, there will be savings of $17.5m in 1997-98 and
approximately $31m in 1998-99.
Reduction of Child Care Cash Rebate Benefit to 20% for High
Income Families
Implemented on 1 April this year, this measure reduced the child
care cash rebate from 30% to 20% for families with incomes above
the Family Tax Initiative income cut off ($70,000 per annum for
families with one child). Savings of approximately $10m in 1997-98
and $11m in 1998-99 are expected as a result of this measure.
Abolish Additional Income Allowed for Additional Dependent
Children when Assessing Eligibility for Child Care Assistance
The aim of this measure is to simplify the income testing of
child care assistance and to align it with the income testing for
Family Payment. The measure was introduced on 1 April this year and
means that no longer can families deduct $30 per week from their
incomes for each dependent child under 16 when assessing their
eligibility for Child care Assistance. This change is expected to
save approximately $22m this financial year and $24m in
1998-99.
Reduction in Income Cutoffs for Second and Subsequent Children
for Child Care Assistance
This measure also took effect on 1 April this year and means
that the income cutoffs with respect to eligibility for child care
assistance for families with two or more children have been reduced
as follows - to $74,880 per annum for families with two children
and $91,416 for families with three or more children. Approximately
$4m this financial year and $4.5m next financial year is expected
to be saved as a result of this measure.
Tightening Up of Fringe Benefits Test when Assessing
Eligibility for Child Care Assistance
This measure extends the range of fringe benefits that are
included in the income tests for child care assistance and is due
to come into effect on 1 January 1998. The savings expected from
this measure are $100,000 in 1997-98 and $300,000 in 1998-99.
Changes to New Growth Strategy for Long Day Care Centres
The New Growth Strategy, which came into operation in 1994, is a
Commonwealth initiative aimed at providing funds to local
government and community organisations so as to increase the number
of work related child care places. This measure means that the
Government will not proceed with uncommitted community based and
employer sponsored centre based places in the New Growth Strategy.
Rather it will rely on the private sector to provide additional new
centre based care. Approximately $11m of capital funding over four
years will however be retained to provide additional child care
places in rural areas. Expected savings are $28.8m in 1997-98 and
$25.6m in 1998-99.
New Payment Arrangements for Child Care Assistance and Child
Care Cash Rebate
From 1 January 1998 both Child care Assistance (which will be
paid directly to parents rather than to providers) and the child
care cash rebate will be paid by the new Commonwealth Service
Delivery Agency. Whilst only small savings are expected in the
1997-98 financial year it is estimated that savings of the order of
$20m will result in the two subsequent two financial years.
Funding for Consultation On Reform of the Child Care Assistance
System
A small amount of funding ($500,000 in 1996-97 and $200,000 for
each of the next three financial years) was provided under this
measure to allow consultations to take place with all relevant
players on a range of child care issues, including the National
Planning Framework, access guidelines and charging practices.
1997-98 Budget
The latest Howard Government Budget also includes a number of
important changes to existing child care arrangements. The main
changes announced were :
Reform of School Age Care
The main aim of this measure is to improve the access and
affordability of low and middle income families to Outside School
Hours Care Services. It is due to be implemented on 1 January 1998.
The essence of the change is that school children who utilise
Outside School Hours Services will be provided with the same
subsidies that are currently provided to families who utilise long
day care services. The expected cost of this measure is $5m in
1997-98 and $5.1m in 1998-99.
Tighter Targeting of Child Care Assistance
As from 1 January 1998 there will be a limit of 20 hours per
week on access to child care assistance for each child utilising
child care for non-work purposes. The expected savings from this
measure are $4.4m this financial year, $16m in 1998-99 and $25.4m
in 1999-2000.
Paying Child Care Assistance in Arrears
The change to paying child care assistance fortnightly in
arrears (it currently is paid in advance) from 1 January 1999 will
bring the payment of child care assistance into line with other
assistance that will be paid out by the new Commonwealth Service
Delivery Agency. This measure is expected to save $32.5m in 1998-99
and $3.1m in 1999-2000.
Covering the Cost of Child Care for Participants in the Work
for the Dole Scheme
Under this measure child care costs for the children of
participants in the Work for the Dole Initiative will be met by the
Government. The measure is expected to cost $500,000 in 1997-98 and
$100,000 in 1998-99.
Increase In Number of Family Day Care Places
This important initiative is aimed at providing a further 500
additional Day Care places in 1997-98 and 1998-99 and an additional
750 places in 1999-2000 and 2000-2001. The main aim of the measure
is to increase the number of Day Care places in rural and remote
areas where the supply of private child care places is limited. The
expected cost of the measure is $700,000 this financial year, $1.7m
in 1998-99 and $3.3m in 1999-2000.
Limiting via the Planning System the Number of New Private
Child Care Places
Under this measure there will be a limit placed on the number of
new private sector places in long day care centres in 1998 and
1999. In effect it means that in 1998 and 1999 the number of new
private child care places eligible for child care assistance will
be restricted to 7 000 per annum. It is estimated that savings of
$212m over four years will be achieved as a result of this
measure.
Possible Effects of the Reforms
There has been much comment from the various players involved
with child care in Australia about the effects of the changes (or
the proposed changes) introduced by the Howard Government. For
example, commenting on the changes in the 1997 Budget, the National
Children's Services Forum, a body representing many child care
bodies, welcomed the moves to limit the number of new private child
care places to 7 000 per year in 1998 and 1999 and the 20 hour a
week cap on subsidised non-work related child care. However, it did
criticise what it termed the Government's failure to support the
community based long day care sector and to tackle the issue of
rising fees. The Forum was also of the view that that the loss of
the operational subsidy could push child care fees up and force
some centres to close.(5)
Other changes such as the plan to pay both Child care Assistance
and the Child care Cash Rebate from the one agency (the
Commonwealth Service Delivery Agency), the reforms to School Aged
Care and the increase in the number of Family Day Care places have
also been generally welcomed by the various players in the child
care industry. As well, the move towards greater means testing of
child care assistance can perhaps be viewed as a move towards
providing the available funds in a more targeted and equitable
manner. However, given that the Commonwealth has, or will be,
taking several hundred million dollars from the child care system
over a four year period it is likely that there will be some 'pain'
associated with the changes to child care arrangements.
One of the key concerns with the changes announced is that the
tighter targeting and the overall reduction in Commonwealth funding
(and in particular, the withdrawal of operational subsidies for
community based long day care centres) may be forcing women out of
the work force or into part time work and/or forcing them into
child care options (such as informal care or 'backyard' care) that
are not seen as in the best interests of the children concerned.
The President of the ACTU, Ms Jennie George, has claimed that women
are being forced out of the workforce because of the increasing
cost of child care or they were moving their children to inferior,
unregulated care.(6) A survey, conducted by the Australian Services
Union in May and June 1997, found that 71% of 21 councils surveyed
in Melbourne had increased child care fees or planned to do so by 1
July this year. The survey found that fee increases ranged from $7
to $30 per week for each child.(7) It is difficult to ascertain
just what effects such changes are having on women in the
workforce. According to Australian Bureau of Statistics data
(seasonally adjusted), the number of women in full time employment
fell by 23 000 in June this year whilst the number of women in part
time work went up by 20 000. For the equivalent period full time
work for men went up by 5 500 and part time work by 9 000.(8)
However, given that there are a range of factors that influence the
labour market at any one time it is not possible to say that such
figures are related to funding cuts for child care. Some of the
fall in women's employment for that month may be due to changes in
child care arrangements, and there is anecdotal evidence to suggest
this, but additional time and data is needed for a conclusive link
to be established.
Chapter 2 - Child Care Assistance
Proposed section 20 sets out who will qualify
for child care assistance.The requirements are that:
- they have a dependent child (or a dependent child of their
partner);
- that the child is in the care of an approved child care
service;
- that either the person or their partner incurs or has incurred
a liability to pay for the session of child care (irrespective of
whether or not they have actually paid);
- that the child has been immunised (or exempted by a medical
practitioner on certain grounds);
- that the person or their partner is an 'inhabitant of
Australia' during the relevant session;
- that the person has provided their tax file number;
- that the person satisfies the work/training/study test and does
not exceed the assets test.
The Bill provides definitions for a number of the above
terms.For example, 'partner' is defined in proposed section
11 to include married and de facto partners who
are not living separately and apart on a permanent or indefinite
basis and who are not in a prohibited relationship (ie blood
relations specified in section 23B of the Marriage Act
1961).Same-sex partners are excluded from the definition but
otherwise the test for de facto partners is similar to
other legislative formulations (ie length of relationship, joint
ownership of assets, emotional support etc).
The Immunisation Requirement
Proposed sections 8, 22, 23, 43, 70, 80, 81, 96,
122 all deal with the immunisation requirement but they
are all covered, for the purposes of the digest, in this
section.
The Bill is consistent with the current National Campaign to
improve Australia's immunisation rates of children.Immunisation is
defined in terms of what a child of a certain age should have
received according to the latest edition of the Standard
Vaccination Schedule published by the National Health and Medical
Research Council.The general requirement is that children attending
child care be fully immunised before any child care assistance is
payable.The Bill will allow the Secretary to give a person applying
for child care assistance notice requiring that person to provide
within 28 days either:
1) evidence to satisfy the Secretary that the child is
fully immunised; or
2) a written certificate from a 'recognised immunisation
provider' that they have
discussed the benefits and risks of immunising the child;
and
3) a written declaration to the effect that they have a
conscientious objection
to immunising the child; or
4) a medical certificate is provided that indicates that
the immunisation of the
child would be 'medically contraindicated' under the
specifications set
out in the Australian Immunisation Handbook.
Proposed section 8 deals with the issue of
persons who are 'conscientious objectors' to immunisation.There is
a reasonably strict test for determining a conscientious objector,
as they must have a 'fundamental conviction that immunisation
should not take place' and that conviction must be 'so compelling
that the person has to refuse to allow the child to be
immunised.'
Whilst few doubt the benefits of widespread immunisation, (for
further general information on immunisation, refer to the Bills
Digest No. 13 1997-98 Social Security and Veterans' Legislation
Amendment (Family and Other Measures) Bill 1997) for the measures
in the Bill are not without their critics.For example, the linking
of child care rebates with a requirement for immunisation has been
criticised by academic Eva Cox on the basis that adding what is
essentially a health measure on to the 'already complicated'
arrangement for claiming child care was likely to deter families in
the lower socio-economic groups who were less capable of dealing
with bureaucracy.Cox argued:
...in the lowest income bracket, only 42 per cent actually
claimed the child care cash rebate out of those eligible, as
opposed to 70 per cent from the highest family income
bracket....People who have low literacy rates, who are scared of
authority, who are not very good at filling in forms...are the ones
that are going to miss out....It is exactly the same groups that
don't get immunised now who don't pick up the child care rebate and
won't claim the second half of the baby bonus, and so I just think
that, as a strategy, this is not going to work.It is just going to
mean that these families actually end up poorer but are still
unimmunised.(9)
Also there is the issue of availability of the vaccine.For
example, in July 1997 there was a chronic shortage of the triple
antigen vaccine (Diptheria, Tetanus and Whooping Cough) and doctors
were forced to turn away children for about 10 days.(10) While this
may have been a 'one-off' event, there is no provision in the Bill
to cover such a situation and parents of unimmunised children would
not be eligible for the benefits.
The Tax File Number Requirement
Proposed sections 6, 7, 44, 45, 71, 72, 97, 98, 123,
124 all discuss the provision of a tax file number.If the
claimant is within Australia then the Secretary can request them to
provide a tax file number but may not compel them to do so.As is
the usual case, compliance with a request to provide a tax file
number means either:providing it; or signing an authorisation for
the Commissioner of Taxation to tell the Secretary the tax file
number.
Absenteeism From Child Care
Proposed section 25 sets out the circumstances
when a child may be absent from child care without forfeiting the
entitlement to a child care payment.Absences of less than 30 days
(proposed subsection 25(5)), or absences caused by
illness (either of the child or either partner provided that a
medical certificate exists) are not counted for the purposes of a
child care payment for the whole period.(Longer absences will
disqualify a person from being entitled to child care payments
[proposed section
30]).Proposed section 82
has similar provisions relating to absenteeism and how it affects
payment of the child care rebate.
The Assets Test
Proposed section 27 introduces an assets test
such that child care assistance is not available if the person's
assets exceed $406,000 (indexed) unless otherwise specified in the
regulations.The Bill provides that the Minister may determine a
higher amount than this but such a determination is a disallowable
instrument and therefore can be rejected by either House of
Parliament.The method of valuing the assets is outlined in
proposed section 28 and the detail will be
provided in any regulations subsequently made.
How Claims Will be Made
Proposed section 37 of the Bill allows both
prospective (ie on an ongoing basis) and retrospective claims for
child care assistance within certain limits.The maximum prospective
claim is for a 12 month period (unless extended by the Secretary by
4-52 weekson certain limited grounds).The criteria for extending
the period are not set out in the Bill explicitly(see
proposed subsection 33(2)).
Claims for child care assistance must be:
- in writing in the form approved (proposed section
40(a));
- accompanied by the requisite information (proposed
section 40(b)); and
- lodged at an office of the Department or other approved office
(proposed section 41).
As is the case with other applications for benefits, the claim
may be withdrawn either orally or in writing (proposed
section 42).
The Secretary may require other information to be provided, such
as the tax file numbers of the claimant and their partner
(proposed sections 44 and 45). Similarly the
Secretary can require that the child be immunised subject to the
alternatives set out above.
Part 5 - Determination of Claims
Part 5 of the Bill deals with the determination of child care
payment claims, Division 1 being for 'prospective claims' and
Division 2 covering 'retrospective claims'.
Proposed section 47 allows payment to be made
for a prospective period up to four weeks ahead of the date that
the claim is submitted.An additional period is also payable if the
Secretary is satisfied with the information provided by the
claimant.Provided that the claim meets all the requirements, the
Secretary must grant payment.
The maximum prospective claim is for a period of 12 months
(proposed section 48).This provision is similar to
proposed sections 37 and 33(2) discussed
above.There is also a maximum assistance period (generally 12
months unless otherwise determined by the Secretary under
proposed section 33 on the basis of information
provided by the claimant) set in proposed section
48.Retrospective claims for child care assistance can be
made under proposed sections 49-51 and once again
the Secretary can determine the maximum assistance period.
Part 6 simply provides that the rate of child
care assistance will be calculated according to the formula in
Schedule 1
Part 7 - Payment of child Care Assistance
Proposed sections 54-59 allow payments of child
care to be made either in instalments or in a lump-sum.The latter
being for retrospective claims.Payments by instalments are made in
advance and paid on the usual 'family payment payday' as with other
Social Security benefits.
Proposed section 60 makes the payments of child
care payable to the child care operator rather than the parent or
other person responsible for the childThe exception being where the
operator has already been paid by the parent and therefore the
payment is in the nature of a reimbursement to the parent etc
(proposed section 61).
The method of payment (proposed section 62) is
the standard direct credit payment into the child care operator's
nominated bank or other account unless otherwise nominated by the
Secretary.
Division 3 provides for the lump sum payment of retrospective
claims into the bank (or other) account of the claimant
(proposed sections 65-67).
Proposed sections 64, 68, 116 all deal with the
situation where one of the recipients of the benefit has
died.Applications for payment (which has not already been paid to
the deceased person) by 'another person' are permitted and the
payment will be made so long as the application is lodged within 26
weeks of the death of the first person.
The Obligations On Child Care Assistance Recipients
Part 8 sets out the obligations on recipients
of child care payments.As well as the immunisation and tax file
issues which have been discussed above, Part 8 sets out a number of
other events that will trigger a duty to notify the
department.There are criminal sanctions for non-compliance:
- Proposed section 73 makes it a criminal
offence punishable by up to 6 months imprisonment to fail to notify
the Department of the happening of certain events or changes in
circumstances;
- Proposed section 74 makes it a criminal
offence punishable by up to 6 months imprisonment to fail to
provide certain requested information to the Department; and
- Proposed section 75 makes it a criminal
offence punishable by up to 6 months imprisonment to fail to
provide the Department with information required that relates to
child care assistance in a specified past period.
Whilst the Bill does not specify precisely what information may
be sought (other than a change of address), it allows the Secretary
to require the person to supply a 'statement about a specified
matter' and this may relate to an entitlement to child care
assistance in a past period.The requirements to produce information
are similar to those relating social security (proposed
sections 74-75).
Chapter 3 - Child Care Rebate
Chapter 3 deals with the entitlement to child care
rebates.Proposed section 78 requires that:
- the child be a dependent of the person or their partner during
the session of child care;
- the child care be provided in Australia by one of the specified
categories of child care agencies (eg. occasional care, family day
care, long day care etc.);
- the child is not a dependent of the operator of the child care
or the partner of the operator (including business partnerships
[but not the more exclusive associate as used in areas such as tax
legislation]);
- the person (or their partner) has incurred a liability to pay
for the child care session (irrespective of whether it has been
paid);
- the person (or their partner) meets the tests set out for work,
training or study (and the assets test); and
- there is no reason under the immunisation requirements for
refusing the rebate.
The expression 'dependent child' is defined in proposed
section 79 and includes all children under 13 and children
between 13 and 17 who, by reason of a physical, intellectual or
psychiatric disability, require special daily care and attention
over and above what is normally required by the child of that age
who is not so afflicted.
Part 4 - Claims for Child Care Rebate
These provisions, (proposed section 90-98)
dealing with claims for child care rebate,are similar to the
provisions described above governing child care assistance.Both
prospective and retrospective claims can be made and the formal
requirements are as outlined above (proposed sections 37-45).
Part 5 - Determination of Claims
This part, dealing with claims for child care rebate, is
substantially the same as the provisions relating to the
determination of child care assistance in proposed sections 46-52
above.
Part 6 simply specifies that the rate of child
care rebate will be worked out in accordance with Schedule 2.
Part 7 - Payment of Child Care Rebate
This part, dealing with claims for child care rebate, is
substantially the same as the provisions relating to the payment of
child care assistance in proposed sections 54-68 above.
Part 8 - Recipient Obligations
This part, dealing with claims for child care rebate, is
substantially the same as the provisions relating to the recipient
obligations for obtaining child care assistance contained in
proposed sections 69-76 above.
Chapter 4 - Overpayments and Debt Recovery
Chapter 4 concerns overpayments and debt recovery other than
emergency child care assistance (which is covered in Chapter 5 -
see below).Child care overpayments will be recoverable as if they
were debts due to the Commonwealth (proposed section
132).
Proposed section 133 deals with the situations
where:
- a person was either not entitled to the child care payment
(which may have to be repaid either by the person or the child care
assistance service, depending on who received the initial
funding);
- a person (or a child care service operator) received a
duplicate amount (or two instalments covering the same period).In
this case, the person (or the operator as the case may be) would be
liable to the Commonwealth for the amount of the overpayment;
- a person receives an overpayment because the amount payable was
incorrectly calculated (in which case the person is responsible for
repaying the amount over and above what they were entitled
to);
- While this could appear to mean that although a miscalculation
of the benefit payable is made by the payment agency, the
recipient, even if ignorant of the mistake will be required to
repay the excess amount, proposed section 157
provides that such overpayments debts must bewaived ).
The regulations determining the date of payments under
proposed subsections 52(1) and 105(1) are relevant
for the above purposes.
Proposed section 134 covers debts arising as a
result of an Administrative Appeals Tribunal (the AAT) order
reducing the amount payable to a person.The difference between what
was actually paid and what the AAT determined as the amount that
should have been paid, is recoverable as a debt due to the
Commonwealth.
Proposed section 135 deals with overpayments
resulting from a false statement or representation either by the
recipient or another person.In such case the overpayment is
recoverable as a debt due to the Commonwealth.
Proposed section 136 provides that when a
person, who was not the intended recipient, receives and cashes a
cheque, that amount is recoverable as a debt due to the
Commonwealth.
Proposed section 137 covers the situation where
two or more people may have given a false statement or
representation.The provision will ensure that the recipient and the
person(s) making the statement (where there has been a conviction
for aiding and abetting, conspiring to defraud or inciting another
to defraud) are jointly and severally liable for the debt due to
the Commonwealth.
Proposed section 138 deals with overpayments
detected under the data-matching program.The Data-matching
Program (Assistance and Tax) Act 1990 provides (in section 11)
that if an assistance agency (defined to include the Department of
Social Security) decides, on the basis of information received from
the data-matching system, that a person's entitlement should be
reduced, cancelled, suspended or rejected, the agency must first
give notice to the person.The person then has an opportunity to
respond to the notice.In other words, if under the data-matching
program an overpayment is discovered, notice is given and not
responded to, that amount is recoverable as a debt due to the
Commonwealth.
According to the Second Reading Speech, this will require
consequential amendments to the Data-matching Program
(Assistance and Tax) Act 1990.
Proposed sections 139 and 140 provide that
interest is payable on any debts owing to the Commonwealth unless
the debtor enters into an agreement (within 14 days of receiving
notice) with the Secretary to repay the debt by 'reasonable
instalments' or repays the debt in full.
Proposed section 141 prescribes a penalty
interest rate of 20% (unless a lower rate is determined by the
Minister) for debts remaining outstanding and where the debtor has
failed to enter into an agreement to repay the debt (or has failed
to keep to that agreement).(Given current interest rates, the 20%
penalty rate may be considered excessive).
If the Commonwealth choses to use garnishee provisions to
recover the debt, then any associated costs (eg of obtaining the
order and enforcing it) are also recoverable.
The methods of recovering overpaid child care assistance are
contained in proposed sections 145 to 153.They
range from the administrative type methods of deductions (and
off-setting) against other child care payments to a range of legal
proceedings for debt recovery.Proposed section 148
sets a time limit of 6 years within which recovery proceedings can
be taken, although if the debt arises as a result of the claimant's
false statement then the six year limit only starts to run on the
day that an officer of the department became aware or 'could
reasonably be expected to have become aware' of the
circumstances.
Proposed section 149 allows the Commonwealth to
sue in a court of competent jurisdiction for debt recovery.This
would include Magistrate's Courts and Supreme Courts, depending
upon the amount involved.
Garnisheeing of wages or bank accounts is also permitted under
proposed section 150 even if such action would
ordinarily not be permitted by a law of the relevant State or
Territory.
Proposed section 153 allows the debt to be
deducted from another person's child care payment with their
consent.Presumably it is intended that the 'consenting person' will
have some other connection with the debtor that would result in
their consenting to the deduction. This is not spelled out in
proposed section 153 nor is it mentioned in the Explanatory
Memorandum p50.There is no requirement that any effect of a
reduction in assistance in respect of another child may have on
that child be taken into account when determining wether such a
deduction is to be made.
Part 4 - Non-Recovery of Debts
Proposed sections 155 and 156 allow the
Secretary to either write off the debt or waive all or part of it
in certain circumstances.Where the debt has occurred as a result of
an administrative error by the Commonwealth, the Secretary must
waive the portion of the debt that arose solely as a result of the
error (proposed section 157).There are also
provisions allowing the debt to be waived if it is under $200 and
it is not cost effective to pursue it, or if the debtor has been
convicted of an offence in relation to the debt and is serving a
longer custodial sentence because of an unwillingness or inability
to pay the debt, or if the claim has been settled in a court or in
the AAT by way of a consent order.There are other types of waivers
permitted in proposed sections 161-163.
Chapter 5 - Emergency Child Care Assistance
Chapter 5 deals with emergency child care
assistance (ECA).This allows a payment to be made to the operator
of a child care assistance service for providing care to a child
that they assess to be a 'child at risk' (ie at risk of physical,
emotional or psychological abuse).Payments can not be made for
children who are wards of the State or Territory (however
described) - proposed section 170.Under
proposed section 172 payments of ECA are limited
to one continuous period of up to four weeks in a twelve month
period (unless the Secretary determines that the child is a child
at risk).
Proposed section 167 allows the Minister to
make guidelines that are required, necessary or convenient for
implementing the provisions regarding ECA.The guidelines will be
made by determination in writing.Such written determinations are
disallowable instruments and therefore either House of Parliament
may move a motion disallowing them within 15 sitting days of them
being tabled.
Proposed section 168 allows the operator of a
child care assistance service to apply for payment in respect of
the ECA provided.The Secretary will have the power under
proposed section 169 to require further
information of the operator.The operator has 28 days unless a
shorter period is specified by the Secretary, within which to
provide the information.If the operator fails to provide the
requested information then the Secretary may stop further payments
and may recover amounts already paid.
Chapter 6 - Approval and Registration of Child Care
Services
Child care assistance services must be approved for the purposes
of the Bill before a child care payment can be made in respect of a
child attending the service.Chapter 6 deals with the obtaining of
approval and the conditions that may be set on approval.
The child care service must make an application if it wants
approval and must provide a statement to the effect that it has a
tax file number (although the Secretary is not authorised to demand
or even to record the tax file number) proposed section
176.
If the child care service meets the eligibility rules (those
matters determined by the Minister under proposed sections
185-190 and contained in a disallowable instrument) then
the Secretary must approve the application but may impose
conditions on that approval or exempt the service from complying
with some of the rules.Child care assistance services must hold an
allocation of 'child care assistance hours' and must not exceed
their allowance (proposed subsections 177(2) and
(3)).It is also a requirement under proposed
subsection 177 (5) that the service comply with all
Commonwealth, State and Territory laws relating to child care.
The penalties for breaching any conditions of approval are
contained in proposed section 179 and include the
Secretary varying the conditions, imposing additional conditions,
reducing the centre's allocation of hours or suspending or
cancelling the service's approval as a child care assistance
service.However, before doing any of these things, the Secretary
must give written notice to the operator of the service which
contains a summary of the proposed sanction and the evidence relied
upon and which invites the operator to provide a written response
within 28 days, which the Secretary must then take into account
before making the final decision (Proposed section
180).
Proposed section 184 makes it an offence for an
operator not to notify in writing the Secretary of any changes
which would have affected the decision to grant approval or which
would justify the loss of approval.The penalty is 20 penalty units
(currently equivalent to $2,000).
The eligibility rules for different types of child care services
may be determined by the Minister in writing (proposed
sections 185-188) and there will be provision for the
Secretary to exempt a specified child care service from certain
eligibility rules or classes of rules (proposed section
189).
Division 2 of Part 1 deals with the mechanism
for allocating the number of child care assistance hours to the
various child care services.Proposed section 199
sets a limit for both 1998 and 1999 of 1,008,000 hours per
fortnight for centre based long day care services.The allocation of
hours will be phased out for centre based long day care services
after 31 December 1999 (proposed section 178).
The allocation of hours will vary from region to region to 'best
meet child care assistance needs' and the Secretary is required to
take certain factors into account to ensure that child care hours
are allocated based on need and any other matters specified in the
guidelines.
This part is substantially the same as Part 1 of Chapter 6
above, except that it covers child care rebate and not child care
assistance.Also proposed section 207 provides for
the registration of child care services (as opposed to proposed
section 175 which provided for the 'approval' of child care
services for childcare assistance) for child care rebate.
Part 3 - Review of Decisions
Proposed sections 219-220 cover the decisions
which are reviewable internally or by the Administrative Appeals
Tribunal (the AAT).These include decisions regarding the approval
of a particular child care service, decisions regarding conditions
to be imposed and decisions regarding exemptions or cancellations
of approval.
Regulations may be made providing for the initial review to be
done internally and then made subject to a review by the AAT, also
refer to Chapter 9, below, for further information relating to
informal review.
Chapter 7 - Information Management
Proposed section 221 gives the Secretary a
general power to obtain information from a person and makes it an
offence punishable by up to 12 months imprisonment for failing to
comply with a notice requiring the provision of such
information.
Where a debt (from the debtor), is owed to the Commonwealth,
proposed section 222 allows the Secretary to
demand information relevant to the debtor's financial situation and
to the address of the debtor (again with an offence punishable by
up to 12 months imprisonment for failing to
comply).Proposed section 223 allows the Secretary
to obtain relevant documents from someone else that the Secretary
believes might have 'information or a document'.Failure to comply
with such a request for information will be an offence, with a
maximum penalty of imprisonment for 12 months.
Proposed section 225 allows the Secretary to
obtain information (including information relating to a class of
persons) that might verify claims for child care
payments.Information obtained in this manner must be destroyed
after 3 months if it is not relevant or is unlikely to be
relevant.
Proposed section 228 makes it clear that the
Bill will override any conflicting State or Territory law regarding
the provision of information under it and, again, it will be an
offence not to comply with such a requirement.
Part 2 imposes confidentiality requirements on
the information and makes unauthorised access to or use of the
protected information an offence punishable by imprisonment of up
to 2 years. Proposed section 233 prevents courts
or tribunals subpoenaing the protected information unless it is one
of a limited category of circumstances. Proposed sections
236-238 contain other offences relating to the disclosure
of the protected information.
Chapter 8 - General Provisions About Offences and
Penalties
Proposed section 243 deals with the situation
where a person has been convicted of one of the offence of fraud,
making an untrue statement, making a false representation or
obtaining a benefit under false pretences in respect of a child
care payment.The section outlines what penalties the Court may
impose but prevents the person being imprisoned for receiving a
child care payment because of an 'act, failure or omission' of
theirs.
Chapter 9 - General Provisions About Review of Decisions
Certain decisions made under the Act are reviewable by the
Social Security Appeals Tribunal (the SSAT) and others by the
AAT.Part 1 of Chapter 9 permits internal review and even when an
application has been made to one of those tribunals for review,
proposed section 248 allows the Secretary to
undertake a review of the decision and affirm, vary or set aside
the previous decision as appropriate.Proposed section
250 allows payments to continue where a review is underway
and there has been an adverse decision against a claimant but that
decision depends upon the exercise of a discretion or the holding
of an opinion.
Part 2 sets out which decisions are reviewable
by the SSAT and obliges the SSAT to provide a mechanism of review
that is 'fair, just, economical, informal and quick'.Payments can
continue whilst a decision is being reviewed.
Part 3 sets out which decisions are reviewable
by the AAT and includes decisions that have already been reviewed
by the SSAT.Part 4 modifies the application of the
Administrative Appeals Tribunal Act 1975 to facilitate the
review by the AAT of decisions made by the SSAT.
Chapter 10 - Administration
This chapter sets out procedural issues such as the Secretary's
power to delegate decision making to certain officers in the
department and the fact that all 'decisions' are to be in
writing.Proposed section 279 allows notices under
the Bill to be left at or posted to the last known residential or
business address of the person.
Chapter 11 - Miscellaneous
Proposed section 282 obliges unincorporated
associations (and partnerships under 283) to be treated as though
they were a person and each member can be personally have committed
an offence if they 'knowingly aided, abetted, counselled or
procured the relevant act'.
Schedule 1
This Schedule contain the formula for calculating the rate of
child care assistance.The formula is based on the number of hours
of child care, the percentage for which child assistance is
available and the rate of payments, which is contained in
Module E, and ranges from $1.95 to $3.05 per
hour.
Schedule 1 - Module D introduces the limit of
20 hours child care if the parent (or if a couple if both are) is
not working, training or studying within the definition of the
Bill.In other cases there is a weekly 50 hour limit of eligible
care.
A number of commentators on the amendments to the child care
system have stated that the amendments will result in increased
fees and are likely to result in fewer child care places being
available.(11) Given women's predominant role in child care, these
measures will particularly affect women.Increasing child care costs
will have the effect of raising the level of what economists refer
to as the 'reservation wage', ie the net wage take necessary to
induce a household member to enter paid employment.A rise in the
cost of going to work will have a strong effect on part-time
workers whose net disposable income is generally not high.However,
the actual impact of the proposed changes is difficult to
judge.This is because a rise in the 'reservation wage' produces two
(contradictory) effects.Some workers may reduce their hours of paid
employment or opt out altogether, whilst others may seek additional
paid work in order to cover the fixed costs of going to work.In a
labour market where there is already serious unemployment and
underemployment, the net effect of raising the cost of childcare is
likely to be in the direction of reduced hours and opting
out.Any increase in fees is also likely to affect single
parents and families that are less well off.A fee rise of between
$5 and $20 per week(12) has been estimated and this is likely to
impact more on poorer families.Another possible result, raised by
some commentators, could be an increase in the number of
unregulated child-carers.This would in turn raise issues as to the
ongoing quality of child-care.
An article in The Financial Review quotes Prue
Warrilow, a director of child-care consultancy Families at Work as
saying that the withdrawal of the subsidy for community-based long
day care centres and the increased fees are 'causing families to
rethink their usage of formal child care...parents who use
community-based child care are already cutting back on their hours
in anticipation of fee rises likely to be between $5 and $15 a
week.This will cause some of the centres to close their doors in
time...Meanwhile, families are turning to informal care or reducing
their working hours to cope'.(13)
Family Services Minister Judi Moylan has argued that the Budget
measures affecting child-care 'delivered firm support for families
and ensured services were evenly distributed'.(14)
The Minister's second reading speech states:
The Bill embodies the Government's commitment to assist families
with dependant children to participate in the workforce and to
assist the community by ensuring that child care is affordable for
low and middle income families and by improving access to quality
child care.
- Economic Planning Advisory Commission, Future Child Care
Provision in Australia, Final Report, November 1996: 12
- ibid :15
- Department of Health and Family Services, Portfolio Budget
Statements 1996-97: 180 181
- ibid :180
- As reported in The Age, 15 May 1997
- ibid, 2 July 1997
- ibid
- As reported in The Weekend Australian, July 12 13
1997
- Interview with Eva Cox on PM 25 February 1997, Reporters Monica
Attard and Sharon O'Neill, Academic advocates administrative
changes to the Government's proposed immunisation scheme
- Story on AAP 25 July 1997 Vaccine Shortage Puts Doubt On
Govt Immunisation Plan
- Eg Press clippings Hele, M Courier Mail 4 June 1997
After-school concerns at p12, AAP story 1 July
1997 Child-care Cuts Make Service Costs Too High: NSW
Govt; Gunn, M article in The Australian 23 June 1997
Child care fees to Rise, Staff Face Axe p3.
- Estimate quoted in Loane, S Cost of Child Care Rivalling
School Fees article in The Sydney Morning Herald 14
June 1997: 9
- Bagwell, S Bean counters set child-care agenda article
in The Financial Review 21 May 1997: 21
- Franklin, M Delay in Child care Changes Attacked,
article in The Courier Mail24 May 1997: 15
Greg McIntosh (Background)
Susan Downing (Main Provisions)
29 August 1997
Bills Digest Service
Information and Research Services
This Digest does not have any official legal status. Other
sources should be consulted to determine whether the Bill has been
enacted and, if so, whether the subsequent Act reflects further
amendments.
IRS staff are available to discuss the paper's contents
with Senators and Members and their staff but not with members of
the public.
ISSN 1328-8091
© Commonwealth of Australia 1997
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Published by the Department of the Parliamentary Library,
1997.
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Last updated: 1 September 1997
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