Bills Digest no. 75 2005–06
Community Services Legislation Amendment (Welfare to Work) Bill
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
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Family and Community Services
Legislation Amendment (Welfare to Work) Bill
Date Introduced: 9 November 2005
Portfolio: Family and Community Services
Commencement: On Royal Assent.
The Family and Community Services
Legislation Amendment (Welfare to Work) Bill 2005 (the Bill) amends
provisions of A New Tax System (Family Assistance) Act
1999 and the A New Tax System (Family
Assistance)(Administration) Act 1999 concerning the
work/training/study test that determines the maximum number of
hours of child care for which Child Care Benefit (CCB) may be paid.
The amendments will apply from 3 July 2006.
Part of the Welfare to Work package of measures announced in the
2005 Budget was concerned with increasing the provision of child
care to assist people moving from welfare to work. The following
child care measures were announced:
The Government will provide $266.4 million over
four years to increase the number of child care places to support
parents who are obliged to seek work under the new workforce
participation obligations. Increases will be provided for Outside
School Hours Care (84,300 places), Family Day Care (2,500 places),
In-Home Care (1,000 places) and Jobs, Education and Training (JET)
The Government will focus the operation of the JET
fee assistance programme on employment outcomes. JET provides child
care fee assistance to eligible jobless parents undertaking study,
job search activities and those who have commenced paid or unpaid
work. Under this measure, parents who are studying will be eligible
for assistance only if they undertake courses up to 12 months
duration which provide for specific workforce preparation
The Government will also modify the childcare
work, training and study test. The number of hours of Child Care
Benefit (CCB) a family will be eligible to receive without meeting
the work test will be increased from 20 to 24 a week. To be
eligible for more than 24 hours of CCB per week, both members of
the couple or sole parent will need to demonstrate that they have
an ongoing work, or work related activity, equalling at least 15
hours per week.(1)
The Bill deals with changes to the CCB work/training/study test
as it applies to approved child care. It makes two major
- It limits access to 25 to 50 hours per week per child of CCB to
families where both parents spend at least 15 hours per week
engaged in work, training or study. It is only the child care
benefit (CCB) in approved child care that is affected.
- It increases the limit on the number of hours of CCB available
to families that do not pass the work/training/study test from 20
to 24 hours per week.
Approved care is that provided by centre-based long day care
centres, family day care, outside school hours care, in-home child
care, vacation care and occasional care.
The changes in this Bill will not apply to registered
care.(2) Registered care is care provide by a person who
registers with the Department of Family and Community Services
(FACS). Nannies and relatives often fall into this category. CCB
for registered child care is only paid where the
work/training/study test is satisfied. This will not change, but
the current test will continue to apply for registered care.
At present the work/training/study test is used to determine
which families can access between 21 and 50 hours of approved care.
However, the parents only need to satisfy the test at some time in
a week and there is no minimum number of hours of the activity that
must be performed. There is a long list of activities that allow a
person to satisfy the test. It includes:
Paid work or self employment
Setting up a business
Casual or call employment
Looking for work
Studying or training to improve work skills or employment
Long service leave
Paid or unpaid parental leave
Self-employment sick leave
Carer sick leave
Receiving Carer Payment
Receiving Carer Allowance for a disabled adult or a disabled
Caring for a disabled person(3)
Certain exceptions to the test also apply as follows:
Customer or their partner is in prison or otherwise lawfully
Customer or their partner is disabled.
Customer or their partner is living overseas.
Customer or their partner is the grandparent or great
grandparent of the child
Child is at risk of serious abuse or neglect.
An approved service is the only provider of a particular type of
care in an area.
Most of these activities and exemption are set out in
disallowable instruments, but a few are specified in the Family
Assistance Act 1999.
Under the Bill, parents will only be eligible for CCB for 25 to
50 hours per week in approved child care if they satisfy the new
section 17A activity requirement. These require that at least 15
hours of activities are undertaken for the week .
The 2004 Census of Child Care Services conducted by FACS
indicates that, in 2004, 90 per cent of child care hours in long
day care were used for work related care.(4) For outside
school hours care and vacation care for school age children, the
proportion was higher at 97 per cent and 93 per cent respectively
and, for occasional care, it was much lower at about 49 per
The issue of priority of access to often scarce child care
places has been raised in the media from time to time, with the
current work/training/study test sometimes being blamed for not
adequately giving priority to working families.(5)
The measures in this Bill answer those criticisms by ensuring
that those undertaking work, training or study for less than 15
hours per week will be limited to 24 hours of CCB per week. The new
limit of 24 hours per week ensures that those who have commitments
of up to 14 hours per week have adequate travelling time added.
However, it is difficult to predict whether the changes will
significantly change the level of child care use by people without
substantial work, training or study commitments.
The work/training/study test will influence eligibility for the
new Child Care Tax Rebate. The Taxation Law Amendment (2005
Measures No. 4) Bill that will provide for that rebate is currently
before the Parliament. Eligibility for the rebate would be
restricted to families that satisfy the work/training/study test
including the amendments to it proposed in this Bill.
The Labor opposition has criticised the Government for failing
to recognise that the new section 17A requirements in this bill
will prevent some parents from obtaining the rebate. However, the
Treasurer has indicated that amendments will be made to ensure that
the current test will apply for the purposes of the Child Care Tax
Schedule 1 removes references to the 20 hour
per week limit for non work related care and substitutes a 24 hour
per week limit.
It also includes transitional arrangements for those with an
existing 20 hour determination. These transitional provisions
require the Secretary to give notice to the CCB claimant and the
approved child care service that an existing 20-hour determination
will be a 24-hour determination from 3 July 2006.
Schedule 2 Item 9 inserts
new section 17A into the A New Tax System
(Family Assistance) Act 1999. It includes the new activity
requirements to be incorporated into the work/training/study/ test
for those claiming CCB from approved child care services.
Item 4 inserts new section 14(1A)
which provides that for the purposes of determining whether a limit
of 50 hours applies to approved child care, the work/training/study
test is only satisfied if the activity requirements of the
new section 17A are met, unless the person is
New sub-section 17A(1) sets out two ways to
satisfy the test: by doing one activity for at least 15 hours per
week or by doing a combination of activities for a total of at
least 15 hours per week.
New sub-section 17A(2) allows the secretary to
determine, by legislative instrument, activities that count towards
meeting the activity requirements. The Explanatory Memorandum gives
some examples of activities that are likely to be included, such as
setting up a business or caring for a child with a disability.
However, it is unclear how or if the hours spent in these
activities could be verified. The Bill does amend section 157 of
the A New Tax System (Family Assistance) (Administration) Act
1999 which enables the Secretary of FACS to verify the number
of hours of employment (Item 32), work or work related commitments
and training (Item 3). For many employment and training activities,
verification could be sought from an employer or training
institution but it may be more difficult to verify the number of
hours involved in, for example, setting up a business.
New sub-section 17A(4) provides for the
averaging of hours over any two successive weeks so that the 15
hours per week requirement can be met by performing acceptable
activities for at least 30 hours in a fortnight. However none of
the hours from the weeks in a fortnight where hours have been
averaged to meet the activity requirements can be carried over into
any subsequent week to help meet the activity requirement for that
week.(7) So if, for example, over a three week period a
person worked ten hours in one week, 25 hours in the next and then
ten hours in the third week, the excess hours in the second week
could only be used to top up the hours worked in one of the other
Items 11 and 13 of Schedule 2 provide that the
new test with its section 17A activity requirements does not
replace the current test for those for whom the activity
requirements in new section 17A do not apply.
- Budget Measures 2005-06, Budget Paper No.2, p.
- Department of Family and Community Services, Submission to the
Senate Community Affairs Legislation Committee examining the
Family and Community Services Legislation Amendment (Welfare to
work) Bill 2005, para. 15.
- Department of Family and Community Services, Family
Assistance Guide, para. 184.108.40.206 Eligibility Requirements for
Up to 50 Hours CCB, at: http://www.facs.gov.au/faguide/guide/26310.htm
- Department of Family and Community Services, 2004 Census of
Child Care Services, p. 15. Full text at:
- For example see: S. Dunlevy, Working Parents Demand Priority ,
Daily Telegraph, 2 March 2005 p.22. For full text see
and S. Dunlevy, Money for Nothing , Daily Telegraph, 28
February 2005, p. 5. For full text see:
- Hon. P. Costello MP, Child Care Tax Rebate Will Continue For
Part Time Workers after 1 July 2006 , Media Release, 23
June 2005. For full text see:
- See the Explanatory Memorandum, p.11-12 for detail and
examples. Full text at:
Social Policy Section
Law and Bills Digest Section
20 December 2005
Bills Digest Service
Information and Research Services
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© Commonwealth of Australia 2005
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