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Bills Digest No. 229  1997-98
Data-matching Program (Assistance and Tax) Amendment Bill 1998

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.

Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer and Copyright Details

Passage History

Date Introduced: 13 May 1998

House: House of Representatives

Portfolio: Social Security

Commencement: On Royal Assent

Purpose

To repeal the sunset clause in the Data-matching Program (Assistance and Tax) Act 1990.

Background

General

Data-matching legislation was introduced in 1990 to help detect and deter abuse of the social security and taxation systems.(2) The Data-matching Program (Assistance and Tax) Act 1990 (the Principal Act) establishes a legislative base for data-matching involving tax file numbers. Matching is carried out by the Data-Matching Agency which receives data from what are called 'source agencies.' Source agencies are the Commissioner of Taxation, the Department of Social Security, the Department of Employment, Education and Training, the Department of Health and Family Services, the Department of Veterans Affairs and the Services Delivery Agency.(3) The last five agencies are also called 'assistance agencies' in the Principal Act. In other words, they are agencies that make financial assistance payments to clients. Data provided to the Data-Matching Agency from assistance agencies include details of the identity and declared income of assistance agency clients and, where applicable, their partners, children and parents. The Commissioner of Taxation provides identity and taxable income details.

The Data-matching Program was described recently by the Australian National Audit Office (ANAO) in the following way:

• detect instances where people are possibly receiving incorrect or incompatible payments of Commonwealth benefits;
• verify with the Australian Taxation Office ... income details disclosed to the agencies which made the income support payments; and
• detect instances of tax evasion.(4)

Agencies may employ various responses if discrepancies are revealed by data-matching. In the case of assistance agencies, these responses include cancelling or suspending personal assistance, rejecting personal assistance claims, varying the rate or amount of personal assistance, recovering overpayment, investigating the possible commission of an offence, and informing a person that they may be entitled to personal assistance.(5) The Australian Taxation Office can issue a tax assessment or an amended assessment or investigate the possible commission of an offence.(6)

The Principal Act limits the use of data-matching in a number of ways. Thus, a 'full data-matching cycle conducted by the DMA has six steps ... which must be completed within two months of the cycle's commencement. No more than nine cycles may be conducted each calendar year and new cycles cannot commence until the previous cycle has finished.'(7) The Principal Act also contains privacy protection provisions. For example, the Privacy Commissioner must issue data-matching guidelines(8) and may investigate breaches of privacy under the Act.(9)

The Principal Act requires reports to be made to Parliament by the Data-Matching Agency and each source agency.(10) It also contains a sunset clause.(11) A sunset clause is 'a clause in a statute providing that the statute or part of it will cease to have effect at some future time.'

As originally enacted, the Data-matching Program (Assistance and Tax) Act 1990 contained a sunset clause which would have taken effect in January 1993-giving the Data-matching Program an initial life-span of two years. When the second set of comprehensive reports(12) on the Data-matching Program was tabled on 15 October 1992, Parliament debated whether the Program should be continued. Subsequently, the Principal Act was amended to allow the Program to continue by extending the sunset clause to 22 January 1994 and to require further comprehensive reports to be tabled by the end of October 1993. In 1993, the Principal Act was again amended to extend the sunset clause to 22 January 1996.(13) On each occasion, the Government proposed repealing the sunset clause but Parliament decided instead to retain it and extend the life of the Program for a finite period.(14)

In 1995, Parliament again debated whether to repeal the sunset clause. A provision to this effect had been included in the Social Security Legislation Amendment (Carer Pension and Other Measures) Bill 1995. However, the Government and the Opposition agreed instead to extend the sunset clause by three years.(15) The sunset clause is due to take effect on 22 January 1999.

In 1993-94, ANAO published a report entitled Department of Social Security:
Data-matching. In 1996, ANAO produced a follow-up audit. The 1996 report concluded:

Overall, the Department has made substantial achievements through implementing legislative changes, improved reporting procedures, savings collection, better targeting and project evaluation processes. These changes have resulted in both substantial increases in savings generated by the Program and in efficiency improvements. The findings of the follow-up audit are that following a recent Departmental restructure which has made provision to address recommendation 11, there has been progress on all the recommendations. While noting this progress, there are several recommendations which have yet to be fully addressed, primarily in the areas of reducing the variability in review results across offices, enhancing the TFN registration process, and validating savings assumptions.(16)

A summary of the original ANAO recommendations and the 1996 follow-up findings can be found at Appendix 3 of the 1996 report, Follow-up Audit. Data-matching.

The 1996 Follow up Audit by ANAO reported that in 1994-95, ' ... the Program generated around $80 million in net benefits across all participating agencies, of which $69.6 million is attributable to DSS.'(17)

Item 1 of Schedule 1 repeals section 21 of the Data-matching Program (Assistance and Tax) Act 1990. Section 21 is the sunset clause. Without repeal or amendment of section 21, the sunset clause would come into effect on 22 January 1999 and the relevant parts of the Act would cease to be in force.

Item 2 of Schedule 1 provides that the repeal effected by Item 1 applies to all data matching cycles irrespective of whether they commenced before or after the commencement of the Data-matching Program (Assistance and Tax) Amendment Act 1998.

Endnotes

1. Department of Employment, Education, Training, and Youth Affairs, Data Matching Program (Assistance and Tax) Act 1990. Report on Progress 1996, AGPS, Canberra, 1996, 2.

2. Parliamentary Debates (Hansard), Senate, Data-matching Program (Assistance and Tax) Bill 1990, Second Reading Speech, 6 December 1990, 5078.

3. Section 3, Data-matching Program (Assistance and Tax) Act 1990. The Services Delivery Agency is the agency established by the Commonwealth Services Delivery Agency Act 1997. The Agency is now officially known as Centrelink. It links a number of Commonwealth functions including all programs formerly administered by the Department of Social Security, the student assistance functions of the Department of Employment, Education, Training and Youth Affairs and, from 1998, child care programs which were the responsibility of the Department of Health and Family Services.

4. Australian National Audit Office, Follow-up Audit. Audit Report No.12 1996-97, AGPS, Canberra, 1996, xi.

5. Section 10.

6. Section 10.

7. ANAO, op.cit, 3.

8. Section 12 and the Schedule.

9. Section 13.

10. Subsections 12(2A), (2B) & (2C).

11. The CCH Macquarie Dictionary of Law, Revised Edition, CCH, North Ryde, 1996.

12. The expression 'comprehensive report' is found in subsection 12(2A) of the Principal Act.

13. The Principal Act was also amended to require comprehensive reports to be tabled in Parliament by the end of October 1994 and the end of October 1995.

14. Parliamentary Debates (Hansard), House of Representatives, Second Reading Speech, Social Security Legislation Amendment (Carer Pension and Other Measures) Bill 1995, 25 October 1995, 2944.

15. See Mr P Ruddock MP, Social Security Legislation Amendment (Carer Pension and Other Measures) Bill 1995, Parliamentary Debates (Hansard), House of Representatives, 29 November 1995, 4031. At this time, the Government of the Day proposed the removal of the sunset clause on the basis that the data-matching program had achieved and would continue to achieve substantial savings in public expenditure. The Opposition of the Day opposed the removal of the sunset clause. At the time Mr Ruddock said results from data matching were 'quite ambiguous in terms of the expectations that were first outlined as to the results that might be achieved. It is for this reason that, if parliament at a future date comes to a view that data matching should be discontinued, it can come to that view. The sunset clause ensures that that can happen.' Parliamentary Debates (Hansard), House of Representatives, 29 November 1995, 4031. Amendments made in 1995 also meant that annual reports on the Program would have a statistical focus and that comprehensive reports would only be required every three years.

16. ANAO, op.cit, 5. Recommendation 11 was that 'the Department widens its advisory and consultative arrangements as part of the process of research into new and emerging risk areas to be combated by data-matching. See page 32.

17. Ibid, xi.

Contact Officer and Copyright Details

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

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ISSN 1328-8091
© Commonwealth of Australia 1998

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Published by the Department of the Parliamentary Library, 1998.

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