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Family and Community Services (2000 Budget and Related Measures) Bill 2000
Date Introduced: 29 June 2000
House: House of Representatives
Portfolio: Family and Community Services
Commencement: All measures commence on 1 January 2001, except three discrete measures whose application dates are dealt with in the Main Provisions section of this Digest.
- the Social Security Act 1991 to provide for changes to ABSTUDY and Youth Allowance
- the A New Tax System (Family Assistance) Act 1999 and related legislation to provide for changes to in-home child care, and
- miscellaneous legislation to increase the reach of data matching and accommodate the termination of the social security agreement with the United Kingdom.
Since 1969 the Commonwealth Government has provided income support for Indigenous students though the Aboriginal Study Grants Scheme (1969), subsequently the Aboriginal Study Assistance Scheme (1988) (ABSTUDY). A more complete outline of the history surrounding ABSTUDY has been provided in Bills Digest No. 16 1999/2000.(1)
Youth Allowance & Review of ABSTUDY
In 1998 the Commonwealth Government introduced the Youth Allowance (YA). The payment covers unemployed people aged 16 to 20 and students under the age of 25 years regardless of whether the recipient is unemployed, sick, in training or education. YA absorbed a number of other social security payments including youth training allowance, sickness allowance (for those under 21 years), newstart allowance (for those under 21 years). It also incorporated payments under the AUSTUDY Scheme which was subsequently pared back to a single payment (Austudy Payment). A detailed background to these changes is provided elsewhere.(2)
In December 1998, following a review of ABSTUDY and the introduction of YA, the Government announced changes to ABSTUDY to commence on 1 January 2000 (largely to align ABSTUDY with YA). The Government intended to 'treat indigenous students in the same way as other students when it came to educational benefits'.(3) The approach generally involved 'aligning of ABSTUDY payment rates and eligibility with the equivalent rates for people receiving the YA or Newstart benefits' [below and above 24 years](4) except where 'special provision needs to be made to cater effectively for the particular disadvantages faced by many indigenous students'.(5) The 'improvements' would 'ensure clarity, simplicity, equity, administrative efficiency and accountability'.(6)
Under the proposed changes, living allowance rates for students 16-20 years would be aligned with YA.(7) Recipients would be subject to YA assets and actual means tests. However, they would gain eligibility for Rent Assistance, Pharmaceutical Allowance, and Remote Area Allowance. At the same time, various special benefits would be retained such as special eligibility criteria related to independence, approval of travel entitlements, academic progress rules and length of time for which the allowance is payable.
Dependent Spouse Allowance
One of the payments attached to ABSTUDY is the Dependent Spouse Allowance (DSA). In order to be eligible, the spouse has to be wholly or substantially dependent on the student and not in receipt of any Commonwealth Government income support. There also needs to be one or more wholly or substantially dependent children or students.(8)
Since 1995 there has been a move toward gender equity in social security payments. Partners of recipients have increasingly been required to claim and qualify for payments in their own right.(9) Thus, in the 1995/96 Budget the then Labor Government announced that it would abolish the DSA component of the AUSTUDY Scheme and migrate DSA beneficiaries to Parenting Allowance (PA).(10) However, the change was not made before the election and, while the Coalition Government introduced a similar change,(11) it was disallowed on the basis that the rate of PA was less than the rate of DSA.(12) (Concern was also expressed that the changes ought to have been made by legislation rather than regulations).(13) Subsequent legislation and regulations in 1998 made the changes to the AUSTUDY Scheme,(14) complementing the changes surrounding the introduction of YA.
Accordingly, as of 1 January 1998, DSA has been available only to ABSTUDY recipients. However, among the changes announced in December 1998, this was to be discontinued from 1 January 2000 'in line with provisions under [YA] and [the Austudy Payment]'.(15)
In 1997, with the introduction of the Parenting Payment (PP), an 'educational schemes exclusion' was placed on applicants covered by DSA. Thus, if a student's allowance included DSA, they were not entitled to PP(16) and, while their spouse may have been eligible for PP, the rate of payment was nil.(17) In 1999, the restriction was reinforced such that spouses for whom DSA was paid were automatically ineligible for PP.(18)
ABSTUDY payments are generally considered income for the purposes of the Social Security Act 1991. As a result, partners of ABSTUDY recipients who receive or apply for an income tested payment may have a reduced entitlement. In the 2000/01 Budget the Government proposed to remove this anomaly to 'achieve equity in the treatment of ABSTUDY recipients with that of other income support recipients by excluding ABSTUDY payments from the social security income test'.(19)
Despite its long history, ABSTUDY has remained essentially an administrative regime. While there are a number of references to ABSTUDY in various Acts and Regulations, there is no specific legislation establishing the scheme. It is largely a non-statutory regime governed by the Audit Act 1901, Financial Management and Accountability Act 1997, etc. As a result, there are few public records documenting the changes to ABSTUDY in 1998.
Youth Allowance and Family Business Assets
The YA assets test contains a 50 per cent exemption for certain business assets. If an applicant for YA is partnered and/or is not independent, the value of his or her assets includes the value of his or her partner's assets and/or the assets of each family member.(20) However, there is a 50 per cent exemption for 'business assets', provided the person or their partner is wholly or mainly engaged in the business and the business is owned by the person either wholly or partially through a partnership, company or trust arrangement.(21) (A 'business' includes business which involves the carrying on of primary production and the provision of professional services. Broadly, 'business assets' are those capital assets which are used for business rather than private or domestic purposes.)
This test was introduced with YA in 1998(22) and is consistent with assets tests applying to other social security payments and allowances.(23)
In-Home Child Care
On 16 April 2000, the Prime Minister announced the introduction of the Stronger Families and Communities Strategy. The strategy encompassed nine new measures intended to commence in 2000-01. It would involve a commitment of $240 million over four years.
In announcing the strategy, the Prime Minister commented that 'it is not the role of the Government to say whether mum or dad should stay at home when the children are young with the other partner going out to work'. He said that the Government needed to provide parents with more choices and indicated that it would provide funding 'to allow the child carers to go to the home rather than insisting on every occasion that the children to be cared should be taken to an institution'.(24)
Thus, one of the nine new measures was the Greater Flexibility and Choice in Child Care Initiative. According to the Minister for Family and Community Services, the package of measures, totalling $65.4 million over four years,(25) would 'improve families' ability to access and choose child care that meets their needs'. One of the changes was that '[f]or the first time subsidies currently available only to community based providers will be available to private providers'. Along with the establishment of child care centres in rural areas, this initiative would, among other things, 'create a positive effect for rural and regional economies, in employment and social contact'.(26) It would also assist shift workers, families working non-standard hours and those that have a sick child.
Specifically, the initiative involved:(27)
- extending access to the means tested Child Care Benefit for in-home care for non standard hours and caring for sick children (7,700 new places over four years)
- allowing private operators to manage Family Day Care Schemes and Outside School Hours Care Schemes within existing planning frameworks
- providing incentives to private operators to set up centres in rural and regional Australia by offering establishment, set-up and equipment funding along with guaranteed child care benefit funding for the first two years of operation, and
- setting common standards of quality.
The initiative springs largely from a report of the Reference Group on Welfare Reform.(28) In line with the focus on increasing workforce participation, the Welfare Reform Report identified child care costs as one of the 'costs of participation'. In order to reduce these costs, the Reference Group highlighted the need to increase child care support across the board(29) and to provide greater flexibility to account for 'diverse patterns of working'.(30)
Clearly, one of the issues behind the initiative was concern that rural communities do not have sufficient incomes to support institutional child care. Equally, rural communities have been concerned that the Government has ceased to provide capital funding for child care centres. One criticism was that the provision of private in-home child care, while avoiding some of the capital costs, may face the same difficulties if these providers are unable to pass on establishment costs and make a profit themselves.(31) Another criticism was that rural communities might have limited access to or awareness of the new child care arrangements given the fact that there are very few regional Centrelink offices.(32)
One of the major themes in the 1999-2000 Budget for the Family and Community Services Portfolio was the need for greater data matching between relevant agencies. The Government announced improvements to data matching using tax file numbers (TFNs).(33) Data matching involves the exchange of personal information (including TFNs) between relevant agencies that may otherwise have constituted a breach of the Privacy Act 1988.
The data matching process is regulated by the Data-matching Program (Assistance and Tax) Act 1990. This Act prescribes six steps in the process involving:(34)
- extraction of TFN data by the 'matching agency' (Centrelink)(35)
- transfer of this data to the 'taxing agency' (Australian Tax Office)
- recovery of declared income, spouse rebate, etc. by the taxing agency
- identity matching by matching agency
- payment matching by matching agency, and
- provision of information to tax agency or other 'assistance agency'(36)
In step 3, the tax agency may use tax data from the previous 2 financial years. This provision is a recent addition. The original Act referred to the recovery of 'available and current data' leaving doubt as to whether data from previous financial years could be used if data from the current financial year was available.(37) In 1997 the Act was amended to permit recovery of data 'from not more than the 2 financial years immediately before the current financial year'.(38) This restriction may be significant given that when the amendment was made, tax data would have been available for at least 4 financial years.
The Social Security Agreement with the United Kingdom
Since 1973 there have been reciprocal social security arrangements between Australia and overseas countries. In the 1990's these arrangements were formalised in agreements between Australia and a number of overseas countries, including the United Kingdom (UK). They are incorporated into the Social Security (International Agreements) Act 1999.
The Agreement with the UK,(39) signed in 1990 and amended in 1992, contained special arrangements for portability and qualifying residence across a range of benefits. The UK effectively took responsibility for providing income support for its ex-residents while they were in Australia. In addition, Australian residents, newly arrived from the UK, could offset waiting periods under the Social Security Act 1991 with periods during which they made contributions under the compulsory National Insurance System in the UK.
Unfortunately, under the Agreement the UK, unlike Australia, was not required to index social security payments to overseas recipients. Despite numerous approaches by Australia, the UK refused to introduce indexation. As a result, Australia was 'effectively subsidising the UK National Insurance System' to the tune of around $100m per annum.(40)
The Agreement was terminated on 1 March 2000.
In commenting on the proposed termination, the Joint Committee on Treaties recommended that the Minister for Family and Community Services take appropriate steps to ensure that former UK residents, 'who migrated to Australia with the expectation that their prior contributory service ... would be counted as qualifying residence' would not be disadvantaged by the termination of the Agreement with the United Kingdom.(41)
In response to the Joint Committee, the Government announced in the 2000-2001 Budget that UK migrants who came to Australia before the Agreement was terminated would continue to get early access to the Age Pension as if the Agreement continued.(42)
Schedule 1 amends the Social Security Act 1991.
Item 1 ensures that ABSTUDY payments are not income for the purposes of the Act.
Item 2 creates an exception whereby ABSTUDY payments are income for the purpose of determining whether a child is a 'student child' or 'dependent child'. (In the definitions of these terms a child's income in a financial year must not exceed $6,403).
Items 3 to 8 and item 12 establish new 'educational and other schemes exclusions' in respect of:
- age pension
- disability support pension
- wife pension
- carer payment
- bereavement allowance
- widow B pension
- pension PP (single)
The exclusion prevents full-time students from receiving these payments while they receive or are qualified for a living allowance (ie the basic payment) under ABSTUDY.
Items 13 to 19 amend references to the 'ABSTUDY Tertiary Scheme' so that they refer only to the 'ABSTUDY scheme'.
Item 20 repeals the YA parental income test in its application to persons whose partners receive ABSTUDY. Similarly, item 21 removes a provision which applies a reduced parenting payment(43) to persons whose partners receive an ABSTUDY payment which includes a dependent spouse allowance. These items commence on Royal Assent.
Item 22 contains a saving provision for applicants currently receiving a pension and a payment under the ABSTUDY scheme.
In-Home Child Care
Schedule 2 amends the A New Tax System (Family Assistance) Act 1999 and A New Tax System (Family Assistance) (Administration) Act 1999 and the Fringe Benefits Tax Assessment Act 1986.
Items 1 to 3 define standard hours, non-standard hours and part-time in-home care. The standard hours and non-standard hours of an in-home child care service are identified in its conditions of approval. The expression part-time in-home care relates to weekly service which consists of less than 50 hours of standard hours care.
Items 4 to 6 amend the child care benefit rate calculator in the A New Tax System (Family Assistance) Act 1999.(44) The standard hourly rates for the different kinds of in-home child care will be equal to the rates for the corresponding kinds of part-time family day care.
Items 7 to 10 define and incorporate approved in-home care service in the A New Tax System (Family Assistance) (Administration) Act 1999. A person may apply to the Secretary to have an in-home care service approved for family assistance purposes (item 9). A person may not apply to be a registered carer if he or she provides child care under a contract with an approved in-home care service (item 10).
Items 11 and 12 include approved in-home care services within the list of exempt residual benefits under the Fringe Benefits Tax Assessment Act 1986. Where an employer makes a contribution in order to obtain priority of access for children of employees to an in-home care service, the benefit to the employee (ie the priority of access) is an exempt benefit for the purposes of fringe benefits tax.
Schedule 3 amends the Social Security Act 1991 to increase an existing exclusion for business assets for persons who are not independent. Where such a person is wholly or mainly engaged in a business in which they have a legal interest, 75 per cent of that interest is excluded from the YA assets test.
Data Matching and International Agreements
Schedule 4, item 1 amends the Data-matching Program (Assistance and Tax) Act 1990. It amends step 3 of the data-matching process to allow recovery of data from the previous 4 financial years rather than the existing limit of 2 financial years.
Item 2 amends the Social Security (International Agreements) Act 1999 to introduce a savings provision allowing former UK residents, who became Australian residents before 1 March 2000, to continue to get early access to pensions and benefits under the (terminated) Social Security Agreement between Australia and the UK. Item 2 commences on 1 March 2001.
- http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD016.htm [3/7/00].
- See Bills Digests no. 156 1997/98 at http://www.aph.gov.au/library/pubs/bd/1997-98/98bd156.htm [3/7/00] and Bills Digests no. 76 1997/98 at http://www.aph.gov.au/library/pubs/bd/1997-98/98bd076.htm [3/7/00].
- Brendan Nicholson, 'Cabinet agrees to tax ABSTUDY', The Melbourne Age, 16 December 1998, p. 4.
- Higher Education Division, Department of Education, Training and Youth Affairs, Higher Education Indigenous Education Strategies 1999-2001, June 1999, Foreword, at http://www.detya.gov.au/highered/pubs/indigenous/indigenous_strategies_1999.htm [3/7/00].
- The Hon Dr David Kemp MP, New ABSTUDY: Improved Education for Indigenous Students, Media Release, 17 December 1998.
- Rates for students aged 21 years and over would be aligned with Newstart.
- Centrelink, ABSTUDY Policy Guidelines Manual 1998, Chapter 8, pp. 7-65 to 7-73.
- For example, Newstart allowance, parenting payment (partnered), partner allowance.
- 'In keeping with Government moves to remove the concept of dependency from income support arrangements, AUSTUDY will no longer pay a student a Dependent Spouse Allowance for the upkeep of the student's spouse (where there is a child). Rather the spouse will receive income support in his or her own right' Department of Education, Employment and Training, Portfolio Budget Statements 1995-96 - Employment, Education and Training Portfolio, Budget Related Paper No 4.4, p. 94
- AUSTUDY Regulations (Amendment) (SR 1995 No. 393). The philosophy and general approach was the same as that proposed by the Labor Government. Thus, the abolition of DSA from AUSTUDY 'was part of a package of measures to rationalise largely identical spouse benefits and payments with a similar purpose and to reduce financial dependency between partners by providing financial entitlements directly to the spouse rather than to the student as the notional breadwinner'. It was consistent with the position that spouses ought to qualify for social security assistance 'in their own right': Senator Kim Carr, Speech: Austudy Regulations, Senate, Debates, 10 September 1995, p. 3159 quoting from Mary Lovett, First Assistant Secretary, Student and Youth Division, Department of Employment, Education and Training in an undated letter to students at Most of the DSA beneficiaries were transferred to the Parenting Allowance: Senator Amanda Vanstone, Answers to Questions on Notice, Senate, Debates, 9 September 1996, p. 3099.
- Senator Kim Carr, Speech: Austudy Regulations, Senate, Debates, 10 September 1995,
[3/7/00]. In a departmental review of the new YA regime, the loss of DSA was reported as 'causing hardship to those affected', particularly given the timing of the change coming in the middle of the academic year: Youth & Student Programs, Department of Family and Community Services, 'Youth Allowance Evaluation: Report on the Outcome of Consultations Undertaken in November-December 1998', March 1999 (PDF format), para 62, at
- Senator Kim Carr, op cit.
- All references to AUSTUDY in the context of DSA were removed and replaced with ABSTUDY: Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998, items 237, 238 and 239; AUSTUDY/ABSTUDY Supplement Regulations (Amendment) (SR 1998 No 179).
- Department of Education Employment and Training, 'Proposed Changes to ABSTUDY from 1 January 2000, Information Sheet, 17 December 1998.
- Social Security Act 1991, s 500V inserted by Social Security Legislation Amendment (Parenting and Other Measures) Act 1997.
- Social Security Act 1991, s 508B inserted by Social Security Legislation Amendment (Parenting and Other Measures) Act 1997. Social Security Act 1991.
- Social Security Act 1991, s 500V(3) inserted by Schedule 9, item 29 of the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 1) 1999.
- Department of Family and Community Services, Portfolio Budget Statements 2000-01 - Family and Community Service, Budget Related Paper No 1.8, p 169 at 3/7/00].
- Social Security Act 1991, section 547D.
- ibid., section 547G.
- Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Act 1998 No 45 of 1998.
- For example, the existing assets test in relation to Newstart Allowance: Social Security Legislation Amendment (Youth Allowance Consequential and Related Measures) Bill 1998, Second Reading Speech, p 57.
- Prime Minister, Address at the Liberal National Convention Melbourne, 16 April 2000, http://www.pm.gov.au/media/pressrel/2000/convention1504.htm
- The commitment was $4.0m in 2000-01, $12.0m in 2001-02, $20.1m in 2002-03 and $29.3m in 2003-04: 'Setting Common Standards of Quality', Budget Paper No. 2, Part II: Expense Measures, at http://www.budget.gov.au/papers/bp2/html/part4.htmhttp://www.budget.gov.au/papers/bp2/html/part4.htm [30/6/00].
- Strengthening our Commitment to Women, Statement by Senator The Honourable Jocelyn Newman Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women 9 May 2000 at http://www.budget.gov.au/minst/download/commitment.rtf [30/6/00]. The initiative was also advertised in Regional Australia: Making a Difference - Equity of Services (Family services) http://www.budget.gov.au/minst/html/transp-02.htm [30/6/00].
- 'Setting Common Standards of Quality', Budget Paper No. 2, Part II: Expense Measures, at http://www.budget.gov.au/papers/bp2/html/part4.htmhttp://www.budget.gov.au/papers/bp2/html/part4.htm [30/6/00].
- Reference Group on Welfare Reform, 'Participation Support for a More Equitable Society', Interim Report, 28 March 2000 at http://www.facs.gov.au/internet/facsinternet.nsf/whatsnew/29_9_99speech.htm# [30/6/00].
- The Reference Group noted that over the past 5 years increased government subsidies had not kept pace with increases in child care fees. Under the Child Care Benefit 'the percentage of disposable income required to meet child care costs will be restored to 1996 levels or lower across all income levels': Reference Group on Welfare Reform, op cit, p 41.
- The Report identified the same groups identified above (shift workers, workers in rural areas and people with variable patterns of working) and noted a number of pilot programs being run by the department to 'improve access to child care for families with sick children' and to support 'in-home care for remote farm families': Reference Group on Welfare Reform, op cit, p 41.
- Lynne Wannan, 'Selling Our Kids Short', The Courier Mail, Wednesday 19 April 2000.
- Marie Coleman, 'Budget 2000: Some eerie echoes of the past in plans for families, bush', The Canberra Times, Wednesday 10 May 2000.
- Information and Research Services, Budget Features 1999-2000, May 1999.
- A description of data-matching is given in Merrin Mason, 'Data Matching in Commonwealth administration', Issues Briefs (Law and Government Group), No. 8/1993 at [18/7/00].
- From social security payment applications, other agencies, etc.
- For example, Department of Education, Training and Youth Affairs and the Department of Veterans, Department of Family and Community Services.
- Social Security Legislation Amendment (Newly Arrived Resident's Waiting Periods And Other Measures) Act 1997, Explanatory Memorandum, p 20.
- Social Security Legislation Amendment (Newly Arrived Resident's Waiting Periods And Other Measures) Act 1997 (No. 5 Of 1997) - Schedule 3 (emphasis added).
- Under the Agreement on Social Security between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland, Social Security (International Agreements) Act 1999, Schedule 1.
- Joint Standing Committee on Treaties, 'Termination of Social Security Agreement with the United Kingdom and International Plant Protection Convention', Report no. 27, Canberra, December 1999, paragraph 2.20 at http://www.aph.gov.au/house/committee/JSCT/Reports/report27/rept27.pdf [18/7/00].
- Joint Standing Committee on Treaties, Termination of Social Security Agreement with the United Kingdom and International Plant Protection Convention, Report No. 27, Canberra, December 1999, paragraph 2.112.
- Government Response to the 27th Report of the Joint Standing Committee on Treaties Concerning Termination of the Social Security Agreement with the United Kingdom, Tabled on 6 December 1999.
- That is, non-benefit PP (partnered).
- Schedule 2.
15 August 2000
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