Bills Digest no. 150 2009–10
Social Security and Indigenous Legislation Amendment
(Budget and Other Measures) Bill 2010
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
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Social Security and Indigenous Legislation
Amendment (Budget and Other Measures) Bill 2010
Date introduced: 18 March 2010.
House: House
of Representatives
Portfolio: Families, Housing, Community Services and Indigenous
Affairs.
Commencement: Schedules 1 and 3 commence on 1 July 2010. Items in
Schedule 2 have a range of commencement data that are tied to the
commencement of items in various other 2010 bills. See the table on
pages 2-4 of the Bill for details.
Links: The
links to the Bill, its Explanatory Memorandum and second
reading speech can be found on the Bills page, 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 amend the process for
assessing the eligibility of carers for Carer Allowance (Child) by
extending the use of the Disability Care Load Assessment
(Child) Determination 2009 to the assessment of eligibility of
that payment.
To make minor changes to the income management provisions of the
Social Security Law.
To introduce a guaranteed annual payment to the Indigenous Land
Corporation.
Carer Allowance (CA) is a payment of $106.70 per fortnight for
carers who provide daily care and attention at home to a person
with a disability or medical condition. If the person being cared
for is a dependent child aged under 16 years their disability must
be:
- One that appears on a list of disabilities or conditions that
automatically provide qualification for CA, or
- It must cause them to function below the usual level for their
age.
In the first case conditions such as autism, spina bifida or
cerebral palsy are examples of conditions that provide automatic
eligibility for CA. In the second case the Child Disability
Assessment Tool (CDAT) is used to assess whether or not the
child’s functional level would qualify their carer for
CA.
A Carer Payment (Child) Review Taskforce headed by Anthony Blunn
was established in March 2007 to examine the effectiveness of Carer
Payment (CP) as a safety net for carers of children with profound
disabilities or severe medical conditions.[1] The report of the review released in
early 2008 concluded that CP did not provide such a safety net and
recommended changes. Those changes introduced in 2009 were
contained in the Social Security Legislation Amendment
(Improved Support for Carers) Act 2009.[2]
One aspect of the changes introduced by that Act was of
particular relevance to the assessment of eligibility for CA
(child). That was the introduction of the Disability Care Load
Assessment (Child) (DLCA) as the means for assessing the
eligibility of carers of children with disabilities to receive CP
from 1 July 2009. The present bills will extend the use of this
assessment tool to the assessment of eligibility for CA
(child).
The Guide to the Social
Security Law describes the DLCA as follows:
The DCLA was developed in
consultation with representatives of peak disability and carer
groups, and with specialists in child disability from a range of
medical and allied health professional backgrounds.
The DCLA is comprised
of:
- a carer questionnaire (the Assessment of Care Load (ACL)
questionnaire), and
- a Treating Health Professional (THP) questionnaire (the
professional questionnaire).
ACL questionnaire
The ACL questionnaire is completed by the
person claiming CP. It assesses the level of care required by and
provided to the care receiver (care load) by the person claiming CP
based on questions about the behaviour, functional ability and
special care needs of the care receiver. A separate ACL
questionnaire must be completed for each care receiver aged under
16 years in respect of whom CP is claimed.
Professional questionnaire
The professional questionnaire is
completed by a THP for each child in respect of whom CP is claimed.
It assesses the functional ability, behaviour and special care
needs of the child to determine the total professional
questionnaire score.[3]
The Parliamentary Secretary
for Disabilities and Children’s Services, Bill Shorten MP
said in his second reading speech that:
This Disability Care Load Assessment (Child)
Determination will now also be used for qualification purposes for
carer allowance, bringing consistency to, and improving the overall
efficiency and effectiveness of, assessments for carer allowance
and carer payment paid in respect of children under 16. As is
currently the case, the list of recognised disabilities will also
continue in determining eligibility for carer allowance.[4]
Presently when a child for whom CA (child) is paid turns 16
years of age their carer ceases to qualify for CA and must apply
for CA (adult) in order to continue to receive CA. This can result
in carers missing out on payment if they do not complete the
paperwork in time. This bill will allow three months after the
child turns 16 years of age before eligibility for CA (child) ends.
A similar provision exists for people receiving CP.
The Bill includes several minor changes to the administration of
the income management system.
Income management was introduced by the Howard Government under
the Social Security and Other Legislation (Welfare Payment
Reform) Act 2007 (Welfare Payment Reform Act). Under income
management, the welfare payments of certain individuals may be
directly reduced and the amount diverted to be paid into a special
account. Changes to establish income management were made to the
Social Security Act 1991 (Social Security Act), A New
Tax System (Family Assistance) Act 1999 (Family Assistance
Act) and Veterans’ Entitlements Act 1986
(Veterans’ Entitlements Act).
According to the Explanatory Memorandum for the Bill introducing
the Welfare Payment Reform Act, the purpose of the changes was to
‘help address child neglect and encourage school
attendance’.[5]
Under the income management scheme the Government quarantines a
specified amount of a person’s welfare payments for use in
paying for the ‘priority needs of that person, their partner
and their children’.[6] Payments quarantined under income management may not be
spent on alcohol, tobacco, pornography or gambling.[7]
Currently, a person receiving welfare payments may become
subject to income management for one of the following reasons:
- the person is a resident of any of 73 specified Indigenous
communities and associated outstations in the NT (established as
part of the Northern Territory Emergency Response)
- the person is a resident of one of four Cape York Welfare
Reform Trial communities and has been referred to the Family
Responsibilities Commission for one of several specified reasons
including failure to ensure a child under their care attends school
regularly or being subject to a child safety report, or
- the person is a resident of Western Australia and has been
referred by child protection authorities to Centrelink to have
their payments managed because it is believed that this will assist
the person in ‘providing for the priority needs of [their]
children’.[8]
The Rudd Government is currently seeking to make substantial
changes to the income management system through a bill currently
before the Parliament, the Social Security and Other
Legislation Amendment (Welfare Reform and Reinstatement of Racial
Discrimination Act) Bill 2009 (WRRDA Bill).
On 25 November 2009, the Rudd Government announced that it will
replace the existing income management scheme for prescribed NT
Indigenous communities with a broader scheme targeted at
‘vulnerable regions’ and ‘individuals at
risk’.[9] From
1 July 2010, the new scheme will be introduced throughout the
Northern Territory as a whole, including urban, regional and remote
areas. According to the Government, this is to be the ‘first
step in a national roll out of income management in disadvantaged
regions’.[10]
It is intended that the income management reforms are to apply to
people in the following categories:
- people aged 15 to 24 who have been in receipt of Youth
Allowance (other), Newstart Allowance, special benefit or Parenting
Payment for more than 13 weeks in the first 26 weeks (disengaged
youth)
- people aged 25 and above (and younger than pension age) who
have been in long-term receipt of specified payments, including
Newstart Allowance and Parenting Payment (long-term welfare payment
recipients)
- people referred for income management by child protection
authorities, and
- people assessed by Centrelink social workers as requiring
income management due to vulnerability to financial crisis,
domestic violence or economic abuse.[11]
Affected income support recipients will have 50 per cent of
their regular payments and 100 per cent of lump sum payments
quarantined in a separate account that may only be used for the
purchase of ‘the essentials of life’, such as food,
clothes and rent.
For a description and
analysis of these changes, see the Parliamentary Library bills
digest, no. 94, 2009-10, for the WRRDA Bill at: http://www.aph.gov.au/Library/pubs/bd/2009-10/10bd094.pdf.
The proposed changes in this Bill are minor and administrative
in nature and appear to be relatively uncontroversial. They are not
directly related to those in the WRRDA Bill.
Income Management Record
The Bill replaces the term ‘Income Management Special
Account’ with the term ‘Income Management Record’
in the social security law. The former term has a particular
meaning under the Financial Management and Accountability Act
1997 as an appropriation mechanism. This change is intended to
clarify that the mechanism for recording and tracking a
person’s welfare payment under the income management system
is an accounting mechanism, rather than an appropriation
mechanism.
Recovery of debts and mistakenly credited funds
The Bill expands the methods available for the Government to
recover income management debts. These methods would include those
available to recover debts associated with other welfare payments
under the Social Security Act 1991. Recovery methods
available under the Social Security Act 1991 include:
- deductions from the person’s pension, benefit or
allowance
- legal proceedings
- garnishee notice
- arrangement for payment of debt
- recovery of amounts from financial institutions, and
- deductions by consent from the social security payment of a
third party.
The changes also allow for the Secretary of the Department of
Families, Housing, Community Services and Indigenous Affairs (the
Secretary) to waive or write off an income management debt in
certain circumstances.
The Bill also makes it possible for the Government to recover
funds wrongly credited to an income management account in
circumstances where a person has died or where funds are otherwise
mistakenly credited to a person’s income management
account.
Credit of income management accounts before debt
recovery
The Bill provides for the Secretary to credit to a
person’s income management account the amount of any debt
raised against a third party (such as a community store) prior to
the debt actually being recovered from that third party. This is
intended to protect the interests of a person subject to income
management in situations in which a third party such as a community
store ceases to operate. Currently, any income managed funds held
by such a community store would become debts to the Commonwealth
and the person would not be reimbursed until the debt recovery
process is completed.
The changes in this Bill would mean that the income managed
person would not have to wait for the funds to be recovered before
their account can be credited with the funds in question.
Student scholarships
The Bill makes it possible for the Minister Families, Housing,
Community Services and Indigenous Affairs to specify that an amount
lower than 100 per cent may be deducted from a person’s
scholarship payment if the person is subject to income management
and eligible for one of two new scholarships proposed by the
Government.
The scholarships, the student start up scholarship payment and
the relocation scholarship payment, were introduced by the
Government as part of student income support reforms and commenced
on 1 April 2010.[12] Currently, 100 per cent of each scholarship is subject
to income management for those subject to the income management
system. This Bill proposes to allow the Minister to specify a
smaller amount than 100 per cent to be deducted from either of the
above scholarships payable to those subject to income
management.
Other amendments
The Bill also makes amendments aimed at addressing situations in
which the processing of a transaction has been delayed from being
credited to an income management account and the balance of the
account has fallen below the value of a delayed debit transaction.
First, the Bill provides the Secretary with the option of either
debiting the transaction to the person’s income management
account (the current mechanism) or to raise a debt against
the person that can be recovered by using any of the debt recovery
mechanisms outlined above. The Government argues that this is
‘beneficial to the customer and allow[s] an affected customer
to pay off a debt owed to the Commonwealth in a more flexible
manner than simply having his or her income management account
debited’.[13]
Second, in order to assist with this process the Bill makes it
clear that that a person’s income management account is only
credited or debited at such time as the corresponding accounting
entry is made, rather than by force of law at the time of the
transaction.
The Indigenous Land Corporation (ILC) is a Commonwealth
statutory authority established in 1995 to assist Indigenous people
with land acquisition and land management. The body was originally
set up under the Land Fund and Indigenous Land Corporation
(ATSCI Amendment) Act 1995, but now functions under the
subsequently enacted The Aboriginal and Torres Strait Islander
Act 2005 (the Act). The Act also now governs the
functioning of the Aboriginal and Torres Strait Islander Land
Account (the Land Account). The Land Account provides the ILC with
funds. The Act and funding mechanism will be amended by some of the
provisions of the Social Security and Indigenous Legislation
Amendment (Budget and Other Measures) Bill 2010 (the
Bill).
To date, the ILC has received an annual payment from the
government equivalent to the ‘realised real return’ on
the investments of the Land Account in the previous year. The
realised real return is the difference between (a) what the Land
Account is able to earn through the investment of its capital and
(b) what the income would be if it had risen in line with inflation
where inflation is measured by the implicit price deflator for
gross non-farm product trend index. The government appropriates the
difference to the ILC. The ‘realised real return’ has
fluctuated markedly as shown in the following table from page 19 of
the ILC’s Annual Report 08-09.
The fluctuations in appropriations have presented the ILC with
planning difficulties, and the ILC has been seeking changes. In
each of its last two annual reports, the ILC has sought a
legislative change to provide a minimum level of annual funding to
the ILC from the Land Account and a widening of the investment
powers of the Land Account. The Bill addresses the first of
the above.
The Bill provides for the ILC to receive from the Government two
possible amounts starting on 1 July 2010.
The first is a guaranteed annual payment. In 2010-11, this
amount will be $45 million. In following financial years, this
amount will be indexed to changes in the consumer price index. The
effect of indexation will be to maintain the real value of the
guaranteed annual payment. These indexed payments will even be made
in years when they would effectively reduce the real capital value
of the Account. i.e. when the guaranteed sum exceeds the
Fund’s realised real return.
The ILC may receive a second payment from the Land Fund in
addition to the first payment. The additional payment will be made
if the actual capital value of the Land Account exceeds its real
capital value. The amount of the additional payment is the
difference between the two values. In a year when the Land
Account’s actual capital value is less than its real capital
value (i.e. the value it would need to be at to be keeping up with
inflation) no additional payment would be made, and none would be
made until actual capital value again exceeds the real value.
The Bill also provides for an independent review of the
effectiveness of the new funding arrangements.
The Carer Allowance changes are part of a broader 2008 Budget
measure addressing broader carer issues. The impact of the measures
in this bill is not separately identified, but is not likely to be
large.
The income management changes in this bill are also likely to
have nil or negligible financial impact.
The Indigenous Land Corporation changes may, in some
circumstances reduce the real capital value of the Indigenous Land
Fund Account, but as that money has already been set aside, the
financial impact of these changes might rightly be put, as they
have in Government budget papers, as nil.
Schedule 1: Carer Allowance
Item 7 inserts new paragraph
953(1)(e) into the Social Security Act 1991. This provides
that for a carer to be eligible for CA (child) the care receiver
must have a recognised disability or have been given a rating of
‘intense’ under the Disability Care Load Assessment
(Child) Determination.
Item 10 inserts new section
953A which provides for eligibility for CA (child) to
continue after a child turns 16 years of age until they have been
assessed under the Adult Disability Assessment Tool or 3 months has
elapsed since their birthday.
Items 2–36 amend the Social Security
Administration Act to establish the Income Management Record
by replacing the term ‘Special Account’ with the term
‘Income Management Record’.
Item 37 establishes transitional arrangements
ensuring that the balance of a person’s ‘Income
Management Special Account’ is credited to their
‘Income Management Record’.
Items 38–44 amend the Social Security
Act and Items 45–48 amend the
Social Security Administration Act to expand the methods
available for the Government to recover income management debts to
include those available to recover debts associated with other
welfare payments.
Items 49–50 amend the Social Security
Administration Act to provide for the Government to be able to
recover funds wrongly credited to an income management account in
circumstances where a person has died or where funds are otherwise
mistakenly credited to a person’s income management
account.
Items 51–57 amend the Social Security
Administration Act to allow the Secretary to credit to a
person’s income management account the amount of any debt
raised against a third party (such as a community store) prior to
the debt actually being recovered from that third party.
Item 61 amends the Social Security
Administration Act to provide that where the processing of a
transaction has been delayed from being credited to an income
management account and the balance of the account has fallen below
the value of the delayed debit transaction, the Secretary may
either debit the transaction to the person’s income
management account (the current mechanism) or raise a debt
against the person that can be recovered by using any of the debt
recovery mechanisms established in Item 39.
Item 62 assists with the process established in
the previous item by making it clear that a person’s income
management account is only credited or debited at such time as the
corresponding accounting entry is made, rather than by force of law
at the time of the transaction.
The provisions in Schedule 3 amend the Aboriginal and Torres
Strait Islander Act 2005 to give effect to the
Government’s intention to provide a minimum level of annual
funding to the ILC. Most pertinent are the following items in the
schedule.
Item 6 of the amending schedule provides for a
new section 192Y and 193. These new sections will
provide for the annual payment of $45 million from the Land Account
to the ILC (even if that payment reduces the Land Account’s
actual capital value to less than its real capital value) , for the
indexation formula which will be applied annually to that sum, and
for an additional payment in years when the actual capital value of
the Land Account exceeds its real capital value, this payment being
the difference between these two values. Item 15
provides for a new subsection 193L(3) to (8),
which in turn provides a formula for calculating the amount of
money the ILC may borrow in any financial year. So that the ILC may
borrow only so much as that for which Commonwealth will offer loan
guarantees, Item 20 provides a new
subsection 193N(2) to (7) to reset the formula for
calculating the ILC’s annual guarantee limit.
Item 22 provides for a new section
193U. This new section will require Regulations to be made
to establish independent reviews of the effectiveness of the new
funding arrangements. The Regulations must state the purpose,
timing and content of the review, and provisions are made for
reports from the reviews to be given to the Minister.
Item 24 specifies the base from which the
amounts mentioned in item 15 and 20 shall be calculated (being the
specific sum of $294,170,517).
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2410.
Dale Daniels, John Garden and Luke Buckmaster
1 June 2010
Bills Digest Service
Parliamentary Library
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