Bills Digest no. 44 2009–10
Family Assistance Legislation Amendment (Participation
Requirement) Bill 2009
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
Concluding comments
Contact officer & copyright details
Abbreviation Definition
COAG Council of Australian
Governments
DEEWR Department of
Education, Employment and Industrial Relations
FAA A New Tax System
(Family Assistance) Act 19s99
FAAA A New Tax System
(Family Assistance) (Administration) Act 1999
FaHCSIA Department of
Families, Housing, Community Services and Indigenous Affairs
FTB A Family Tax Benefit
Part A
LIA Legislative
Instruments Act 2003
NSA Newstart Allowance
SSA Social Security Act
1991
SAA Student Assistance
Act 1973
YA Youth Allowance
Passage history
Date
introduced: 16
September 2009
House: House of Representatives
Portfolio: Families, Housing, Community Services
and Indigenous Affairs
Commencement:
Sections 1 to 3 on Royal
assent. Schedule 1 on 1 January 2010.
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
To provide for legislative
amendments to family assistance legislation necessary to implement
a 2009-10 Budget initiative to improve education participation for
young people aged 16 to 20.
At the 30 April 2009 meeting of the Council of Australian
Governments (COAG), one of the agreements was the Jobs, Training
and Youth Transitions Agreement under the Compact with Young
Australians.[1] Under
this Compact, the Commonwealth and the States and Territories
agreed to implement a National Youth Participation Requirement, to
commence on 1 January 2010, which will make participation in
education, training or employment compulsory for all young people
until they turn 17. The National Youth Participation Requirement
will include:
- a mandatory requirement for all young people to participate in
schooling (meaning in school or an approved equivalent) until they
complete Year 10, and
- a mandatory requirement for young people who have completed
Year 10, to participate in full-time (defined as at least 25 hours
per week) education, training or employment, or a combination of
these activities, until age 17.
COAG further agreed to bring forward the 90 per cent Year 12 or
equivalent attainment rate target from 2020 to 2015. COAG also
agreed to the development of a 2015 progress measure to ensure
progress towards the 2020 target to halve the gap for Indigenous
students in Year 12 or equivalent attainment.
To support the National Youth Participation Requirement, the
Commonwealth agreed to make education and training a precondition
for the young person to access Youth Allowance (YA) or for the
parent/carer of a young person to access Family Tax Benefit Part A
(FTB-A).[2]
The government announced in the 2009-10 Budget a proposal aimed
at improving participation requirements for 15 to 20 year
olds.[3] The
initiative involves no longer allowing qualification for YA for
some unemployed jobseekers aged 15 to 20. Young people without a
Year 12 certificate, or its equivalent, will be classified as early
school leavers and will be required to be in full-time education or
training to be able to qualify for YA, or for their parent/carer to
qualify for FTB-A.
The legislation necessary to preclude qualification to YA to
early school leavers was provided for with the Social Security
Amendment (Training Incentives) Act 2009.[4] That Act received Royal Assent on
23 June 2009 and took effect from 1 July 2009.
This Bill is to preclude access to FTB-A for the parent/carer
from 1 January 2010, where the young person is an early school
leaver and not in education or training.
The Explanatory Memorandum accompanying the Bill provide
estimates of the costs and savings estimated to arise with the
participation requirements for both YA and FTB-A in the Budget
initiative. These savings and costs are estimated to be costs of
$81.6 million in 2009-10, $8.7 million in 2010-11 followed by
savings of $7.0 million in 2011-12 and $41.4 million in
2012-13.[5] The
savings and costs in the Explanatory Memorandum refer to both parts
of the Budget initiative for participation requirements, that is,
the non access to both YA and also precluding access to FTB-A,
where a young person is an early school leaver and is not in
education or training. The Budget papers estimate that the overall
net cost over four years for this initiative will be $41.9
million.[6]
The Budget papers did itemise savings and costs by portfolio.
The savings in the Department of Families, Housing, Community
Services and Indigenous Affairs (FaHCSIA) portfolio will be mainly
in reduced outlays of FTB-A. This was separately itemised as
savings of $18.9 million in 2009 10, $32.3 million in 2010 11,
$32.4 million in 2011 12 and $32.9 million in 2012 13.[7] In the Department of
Education, Employment and Industrial Relations (DEEWR) portfolio
there will be increased outlays for education programs expenditure
and some reduced outlays on the YA program. These estimates are
mainly based on estimates about the impact of the change by the
government.
This proposal has not been done before and no one really knows
how many of the current numbers of unemployed jobseekers aged 15 to
20, who are early school leavers, who will take up the education or
training requirements to be able to access YA or for their
parent/carer to access FTB-A.
YA can be paid to a young person who is:
- aged 16 - 20 years looking for full time work or undertaking a
combination of approved activities, or have a temporary exemption
from the participation and Activity Test requirements. From 1 July
2009, where the young person does not have a year 12 certificate,
or an equivalent qualification (Certificate level II or above),
they are required to undertake study or training to meet the
activity test, or
- aged 16 - 24 years and studying or undertaking an Australian
Apprenticeship full-time.
A young person applying for YA is assessed as either dependant
or independent. Where the young person is considered dependent,
then parental means testing applies as well as the personal income
and assets tests that apply to YA. Parental means testing includes
a Parental Income Test,[8] a Family Assets Test[9] and also the Family Actual Means Test.[10]
Where the young person is considered independent, only the YA
personal income and asset testing is applied to the young person.
Parental means testing does not apply.
Independence for YA may be met where a young person:
- has worked full-time (at least 30 hours a week) for at least 18
months in the last two years
- has worked part-time (at least 15 hours a week) for at least
two years since leaving school
- has been out of school for at least 18 months and has earned at
least 75 per cent of the maximum rate of pay under
wage level A of the Australian Pay and Classification Scale in
an 18 month period
- has a
partial capacity to work as determined by a
job capacity assessment
- is or has been previously married or living in a marriage-like
relationship for at least 12 months
- has a dependant child
- has parents who cannot exercise their responsibilities
- is unable to live at home due to extreme family breakdown,
violence in the home, or serious threats to their health or
well-being
- is a refugee without parents living in Australia or is an
orphan, or
- is in State care, or only stopped being in State care because
of age.
To qualify as independent in a marriage-like relationship, the
young person must be over the age of consent in the State or
Territory they live in for that time. Six month relationships are
accepted in special circumstances.
Where the young person does not meet one of these independence
tests, they are considered dependent and then therefore parental
means testing applies for YA.
For a young person aged 16 to 24 years, YA is the preferred
payment as it can be paid at a higher rate that the rate of FTB-A
payable. Where YA is not payable (commonly as family income or
assets are too high), an alternative form of assistance commonly
claimed by a parent/carer is FTB-A. Where YA is payable to a young
person, FTB-A is not payable to a parent/carer. Where YA is not
payable to a young person, FTB-A may be payable to a parent/carer
if they have:
- a dependant child aged under 21 in their care for at least 35
per cent of the time, or
- a dependant full-time student aged 21 24 in their care for at
least 35 per cent of the time.
Whether FTB-A can be paid will depend on the
level of the family income. The income test cut-off limits for YA,
being income support, are lower than those applying to FTB-A, which
is income supplement. So it is common for YA not to be payable as
the family income is too high but FTB-A to be payable, as the
family income is below the FTB-A cut-off limits.
In 2009, the YA parental income test free area is
$32 800 per year. The maximum rate of YA reduces by 25 cents for
each $1 of parental income above this free area. So for a dependant
young person aged under 18 years living at home, in 2009 the
maximum rate of YA is $203.30 per fortnight. This means for this
young person, YA would not be payable where parental income
exceeded about $54 000. This assumes there are no other children in
the parent s/carer s care.
In 2009, the FTB-A family income test free area is $44 165 per
year. The maximum rate of FTB-A[11] reduces by 25 cents in each $1 of income above
this free area until the FTB-A rate reaches the base rate. This
FTB-A base rate is paid until annual family income reaches $94
316.
The income limits above which only the base rate of FTB-A are
set out below.[12]
For young persons aged 16
to 17 years, the maximum rate of FTB-A is the same as the base rate
and in 2009 this is $50.12 per fortnight. Likewise, the same
applies to the FTB-A rate for a young person aged 18 to 24 years
and the 2009 rate is $67.34 per fortnight. So for FTB-A paid in
respect of a young person aged 16 to 17 years or 18 to 24 years the
same rate is paid until annual family income exceeds $94 316.
Thereafter, income above $94 316 reduces the FTB-A rate until
income reaches the cut-off limits see below.[13]
So for a young person aged
16 to 24 years, where YA is not payable as family income is too
high, FTB-A may be payable to a parent/carer, where family income
is less than the FTB-A cut-off limit.
FTB-A also has an income limit for the young person s personal
income and in 2009 FTB-A is not payable where this exceeds $12 742
a year.
The participation requirements for young persons without Year 12
completion have already been put in place for qualification to YA
and they commenced from 1 July 2009.[14] The activity test requirements for
qualification to FTB-A in this Bill are consistent with the YA
requirements. The YA requirements impact on families with lower
income, as access to YA under family means testing is tighter than
access to FTB-A. The activity test requirements in this Bill for
FTB-A will impact on families with higher incomes.
As was the case with the YA changes, the cost and savings
estimates for placing activity test requirements for qualification
to FTB-A for young people are essentially guesses, as the activity
test requirements to be in study or training have not been applied
to young persons for FTB-A before.
Item 1 inserts a new definition of approved
course of study into the A New Tax System (Family Assistance)
Act 1999 (FAA). An approved course of study in the FAA is to
have the same meaning as set out in sub-section 541B(5) in the
Social Security Act 1991 (SSA).[15] This use of the approved course of
study definition in the SSA is consistent with other approved
course of study definitions providing welfare assistance, like for
YA.
Item 4 inserts a new section
17B in the FAA describing activity test requirements for
FTB and also exemptions from the activity test. The activity test
is met for FTB qualification where the young person has completed
Year 12 or is studying. Exemptions from the activity test are also
described including:
- no course being available
- no course being accessible
- the person is not qualified to undertake the course, or
- the person is unable to undertake the course for reasons of a
disability.
New section 17B also empowers the Secretary to
write guidelines in a Legislative Instrument about the application
of new paragraph 17B(1)(b), being whether the
young person is undertaking appropriate study to achieve Year 12
completion and also new paragraph 17B(2)(c) about
special circumstances preventing the young person from being in
study. The Minister said in the second reading speech[16] when presenting the
Bill, that there will be exemptions for special circumstances and
the guidelines will be written by the Secretary and set out in a
Legislative Instrument. Legislative Instruments are generally
disallowable by the Parliament under the Legislative
Instruments Act 2003 (LIA), unless the Principal Act, LIA or
its regulations, otherwise provides.[17]
Item 5 makes amendments to the definition of a
FTB child in the FAA. The existing definition of a FTB child is
replaced with provisions that set out a description for a child
aged under 16 with no activity test requirements, followed by
separate definitions for a young person aged 16 to 17 with an
activity test requirement and also a young person aged 18 to 20,
also with an activity test requirement.
Item 11 amends section 29 of the A New Tax
System (Family Assistance) (Administration) Act 1999 (FAAA).
Section 29 contains provisions to empower the Secretary to request
information required to determine qualification or the setting of a
rate. These are standard information requesting provisions that
apply to all income support and supplement payments. Generally they
empower the Secretary to request information necessary to determine
qualification to a claim or in respect of payments and payment
rate. Item 11 includes references to the activity
test and the provision of information required to determine if a
person meets, or should be exempted from, the activity test
requirements.
Whilst the activity test requirements in Schedule 1 commence on
1 January 2010, item 13 amends this slightly in
the case of existing claimants for FTB-A paid by instalment.
Specifically, if an instalment claim is made before 1 January 2010,
only instalments that are payable on or after 1 May 2010 are
subject to the Schedule 1 requirements: subitem
13(2). By comparison, the Schedule 1 requirements will
immediately apply to any claims made on or after 1 January 2010,
even if the first instalment is payable before 1 May 2010:
subitem 13(1). However, the requirements do not
affect any payment relating to a period before January 2010 that
is, they are not retrospective.
Item 14 defines the activity test requirements
transitional period to be from 1 January to 30 April 2010.
Item 14 also empowers the Secretary to request
information in respect of a claim or payments in this transitional
period, if it is about payments for a period on or after 1 May
2010.
Concluding comments
The application of activity test requirements for a young person
to have completed Year 12 study or to be in education to be a
qualifying young person for FTB-A is consistent with requirements
already in place for qualification to YA.[18] These requirements arise from a COAG
agreement the Jobs, Training and Youth Transitions Agreement under
the Compact with Young Australians.[19]
The cost and savings estimates for placing activity test
requirements for qualification to FTB-A for young people are
essentially guesses, as the activity test requirements to be in
study or training have not been applied to young persons for FTB-A
before.
Copyright Commonwealth of Australia
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2413.
Peter Yeend
22 October 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
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