Bills Digest No. 21   1997-98 Child Care Payments Bill 1997

Numerical Index | Alphabetical Index

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

Child Care Payments Bill 1997

Date Introduced: 26 June 1997
House: House of Representatives
Portfolio: Health and Family Services
Commencement: The day after the Bill receives Royal Assent


The Bill provides for a system of approved child care services and simplifies the paperwork associated with child care by using the Commonwealth Services Delivery Agency to process all applications and payments.The Bill also increases the threshold for the assets test, introduces a cap of 20 hours for parents who are not working, training or studying and seeks to limit the number of new places so as to distribute child care facilities where they are most needed.


The involvement of the Commonwealth Government in child care has grown from very modest beginnings in the early 1970s to being a substantial area of public policy in the 1990s. Originally designated as a limited program to help needy women and families it has become a multi-billion dollar industry formally caring for almost 600 000 childrenaged under 11 years of age. The paid child care sector now accounts for 0.5% of GDP with governments providing approximately 60% of the costs involved with providing this care(1).

The Commonwealth first became financially involved with child care in 1972. In that year the Child Care Act 1972 provided funding ($6.5m for the first year) for non-profit organisations (including local government bodies) to operate centre based day care facilities for children of working and sick parents. Funding was provided for capital grants, recurrent grants (to help pay qualified staff and provide for children in special need) and grants for research into matters relating to child care. To be eligible for this funding the centre based long day care centres had to operate for at least 48 weeks a year and be open for at least eight hours every working day.

Over time funding for other types of child care primarily Family Day Care, Occasional Care, Outside School Hours Care and Pre-Schools, has also been introduced and expanded.

Current Provision

The rate of expansion of the provision of child care can be judged by the fact that in 1996-97 in excess of $1.5b was provided for child care by governments throughout Australia- $1.1b by the Commonwealth and approximately $400m by the States and Territories.(2)

The main avenues through which the Commonwealth and the States help provide child careare as follows :

Child Care Assistance (formerly Fee Relief)

This form of assistance is provided by the Commonwealth and is a means tested payment that allows for fees to be reduced for parents and guardians that have their children cared for in long day care, family day care, occasional care and some pre-schools. There is also Child care Assistance available to low income families that utilise outside school hours services. The payment is made to the child care provider. This form of assistance is by far the largest provided with in excess of $700m being spent in 1996-97.

Child Care Cash Rebate

This rebate, introduced in 1994, is payable directly to the family and is not means tested. It can be claimed for part of the costs of work related child care in formal and informal (such as a paid babysitter) situations. The maximum rebate is $28.80 per week for one child and $63.30 for two or more children. In 1996-97 in excess of $120 m was provided via the Child care Cash Rebate.

Capital Grants

The Commonwealth, usually in conjunction with the States and Territories, provides capital grants and subsidies to non-profit community based child care services and to assist special needs groups. The amount of funding is based on assessments made as part of the national planning process. In 1996-97 the Commonwealth provided approximately $25m for capital grants.

Operational Subsidies

In excess of $150m was paid out in operational subsidies to community based long day care during 1996-97. However these subsidies, excluding those for occasional care, family day care, multi-functional and multi-functional Aboriginal children's services, ceased on July 1 1997. It is expected that savings of the order of $40m per annum will be made as a result of the curtailing of the eligibility for these subsidies. These subsidies are of the order of $15 to $22 per week depending on the circumstances at the various eligible long day centres.

Special Services and Program Support

Expenditure in this area (approximately $90m in 1996-97) includes programs designed to assist special needs groups, for example, children with disabilities and Aboriginal and Torres Strait Islander children. As well, funding is provided for program research and development and the national accreditation system.

State/Territory Pre-School Funding/Other Support

Approximately $300m per year is provided by the States and Territories to fund pre-school services. They also provide a range of other child care programs and contribute to areas such as the cost of inspecting premises under licensing arrangements.

Local Government Support

Local shires and councils also help offset the costs of providing child care primarily through the contribution of land and administrative support.

Rcent Policy Changes

Both the 1996-97 and 1997-98 Federal Budgets contained measures that have impacted, or will impact on, on the child care sector. Both budgets have emphasised moves towards a greater reliance on means tested child care assistance provided directly to parents as opposed to operational and capital assistance provided to service providers as well as a greater reliance on private providers of child care services.

1996-97 Budget

The main child care measures announced in the 1996-97 Budget were as follows:

Changes to Operational Subsidies

As mentioned earlier, from 1 July 1997 operational subsidies for community based long day care centres (excluding occasional care, family day care, multi-functional and multi-functional Aboriginal children's services) ceased. The main rationale for the withdrawal of this subsidy was that it 'would encourage community centres to be more efficient and cost competitive with the private sector' ...(and also)...'to remove inequities in Government assistance for families using private and community-based centres'(3).Under this measure the Government also announced that additional funding would be provided to help community centres restructure and obtain financial and management advice prior to the subsidies being withdrawn. It was argued that any expected increase in fees charged as a result of the cessation of the subsidies could well be partly offset by community centres becoming more cost efficient. At the time it was estimated that the removal of the subsidies would save the Commonwealth $35.1m in 1997-98, $40.5m in 1998-99 and $41.7m in 1999-2000.(4)

Limiting of Child Care Assistance

This measure, implemented on April 1 this year, limits child care assistance to 50 hours per week per child. However, working families who can show that they have a genuine need for in excess of 50 hours of care per child can be exempted from this limit. This change to child care assistance access is estimated to save approximately $30m in 1997-98 and approximately $33m in 1998-99.

Cessation of Indexation of Child Care Assistance Fee Ceiling and Child Care Cash Rebate Ceilings

This measure has the effect of freezing the levels of child care assistance and child care cash rebate fee ceilings for two years. The indexation of these two forms of assistance was due on April 1 1997 and April 1 1998. It is estimated that, as a result of this measure, there will be savings of $17.5m in 1997-98 and approximately $31m in 1998-99.

Reduction of Child Care Cash Rebate Benefit to 20% for High Income Families

Implemented on 1 April this year, this measure reduced the child care cash rebate from 30% to 20% for families with incomes above the Family Tax Initiative income cut off ($70,000 per annum for families with one child). Savings of approximately $10m in 1997-98 and $11m in 1998-99 are expected as a result of this measure.

Abolish Additional Income Allowed for Additional Dependent Children when Assessing Eligibility for Child Care Assistance

The aim of this measure is to simplify the income testing of child care assistance and to align it with the income testing for Family Payment. The measure was introduced on 1 April this year and means that no longer can families deduct $30 per week from their incomes for each dependent child under 16 when assessing their eligibility for Child care Assistance. This change is expected to save approximately $22m this financial year and $24m in 1998-99.

Reduction in Income Cutoffs for Second and Subsequent Children for Child Care Assistance

This measure also took effect on 1 April this year and means that the income cutoffs with respect to eligibility for child care assistance for families with two or more children have been reduced as follows - to $74,880 per annum for families with two children and $91,416 for families with three or more children. Approximately $4m this financial year and $4.5m next financial year is expected to be saved as a result of this measure.

Tightening Up of Fringe Benefits Test when Assessing Eligibility for Child Care Assistance

This measure extends the range of fringe benefits that are included in the income tests for child care assistance and is due to come into effect on 1 January 1998. The savings expected from this measure are $100,000 in 1997-98 and $300,000 in 1998-99.

Changes to New Growth Strategy for Long Day Care Centres

The New Growth Strategy, which came into operation in 1994, is a Commonwealth initiative aimed at providing funds to local government and community organisations so as to increase the number of work related child care places. This measure means that the Government will not proceed with uncommitted community based and employer sponsored centre based places in the New Growth Strategy. Rather it will rely on the private sector to provide additional new centre based care. Approximately $11m of capital funding over four years will however be retained to provide additional child care places in rural areas. Expected savings are $28.8m in 1997-98 and $25.6m in 1998-99.

New Payment Arrangements for Child Care Assistance and Child Care Cash Rebate

From 1 January 1998 both Child care Assistance (which will be paid directly to parents rather than to providers) and the child care cash rebate will be paid by the new Commonwealth Service Delivery Agency. Whilst only small savings are expected in the 1997-98 financial year it is estimated that savings of the order of $20m will result in the two subsequent two financial years.

Funding for Consultation On Reform of the Child Care Assistance System

A small amount of funding ($500,000 in 1996-97 and $200,000 for each of the next three financial years) was provided under this measure to allow consultations to take place with all relevant players on a range of child care issues, including the National Planning Framework, access guidelines and charging practices.

1997-98 Budget

The latest Howard Government Budget also includes a number of important changes to existing child care arrangements. The main changes announced were :

Reform of School Age Care

The main aim of this measure is to improve the access and affordability of low and middle income families to Outside School Hours Care Services. It is due to be implemented on 1 January 1998. The essence of the change is that school children who utilise Outside School Hours Services will be provided with the same subsidies that are currently provided to families who utilise long day care services. The expected cost of this measure is $5m in 1997-98 and $5.1m in 1998-99.

Tighter Targeting of Child Care Assistance

As from 1 January 1998 there will be a limit of 20 hours per week on access to child care assistance for each child utilising child care for non-work purposes. The expected savings from this measure are $4.4m this financial year, $16m in 1998-99 and $25.4m in 1999-2000.

Paying Child Care Assistance in Arrears

The change to paying child care assistance fortnightly in arrears (it currently is paid in advance) from 1 January 1999 will bring the payment of child care assistance into line with other assistance that will be paid out by the new Commonwealth Service Delivery Agency. This measure is expected to save $32.5m in 1998-99 and $3.1m in 1999-2000.

Covering the Cost of Child Care for Participants in the Work for the Dole Scheme

Under this measure child care costs for the children of participants in the Work for the Dole Initiative will be met by the Government. The measure is expected to cost $500,000 in 1997-98 and $100,000 in 1998-99.

Increase In Number of Family Day Care Places

This important initiative is aimed at providing a further 500 additional Day Care places in 1997-98 and 1998-99 and an additional 750 places in 1999-2000 and 2000-2001. The main aim of the measure is to increase the number of Day Care places in rural and remote areas where the supply of private child care places is limited. The expected cost of the measure is $700,000 this financial year, $1.7m in 1998-99 and $3.3m in 1999-2000.

Limiting via the Planning System the Number of New Private Child Care Places

Under this measure there will be a limit placed on the number of new private sector places in long day care centres in 1998 and 1999. In effect it means that in 1998 and 1999 the number of new private child care places eligible for child care assistance will be restricted to 7 000 per annum. It is estimated that savings of $212m over four years will be achieved as a result of this measure.

Possible Effects of the Reforms

There has been much comment from the various players involved with child care in Australia about the effects of the changes (or the proposed changes) introduced by the Howard Government. For example, commenting on the changes in the 1997 Budget, the National Children's Services Forum, a body representing many child care bodies, welcomed the moves to limit the number of new private child care places to 7 000 per year in 1998 and 1999 and the 20 hour a week cap on subsidised non-work related child care. However, it did criticise what it termed the Government's failure to support the community based long day care sector and to tackle the issue of rising fees. The Forum was also of the view that that the loss of the operational subsidy could push child care fees up and force some centres to close.(5)

Other changes such as the plan to pay both Child care Assistance and the Child care Cash Rebate from the one agency (the Commonwealth Service Delivery Agency), the reforms to School Aged Care and the increase in the number of Family Day Care places have also been generally welcomed by the various players in the child care industry. As well, the move towards greater means testing of child care assistance can perhaps be viewed as a move towards providing the available funds in a more targeted and equitable manner. However, given that the Commonwealth has, or will be, taking several hundred million dollars from the child care system over a four year period it is likely that there will be some 'pain' associated with the changes to child care arrangements.

One of the key concerns with the changes announced is that the tighter targeting and the overall reduction in Commonwealth funding (and in particular, the withdrawal of operational subsidies for community based long day care centres) may be forcing women out of the work force or into part time work and/or forcing them into child care options (such as informal care or 'backyard' care) that are not seen as in the best interests of the children concerned. The President of the ACTU, Ms Jennie George, has claimed that women are being forced out of the workforce because of the increasing cost of child care or they were moving their children to inferior, unregulated care.(6) A survey, conducted by the Australian Services Union in May and June 1997, found that 71% of 21 councils surveyed in Melbourne had increased child care fees or planned to do so by 1 July this year. The survey found that fee increases ranged from $7 to $30 per week for each child.(7) It is difficult to ascertain just what effects such changes are having on women in the workforce. According to Australian Bureau of Statistics data (seasonally adjusted), the number of women in full time employment fell by 23 000 in June this year whilst the number of women in part time work went up by 20 000. For the equivalent period full time work for men went up by 5 500 and part time work by 9 000.(8) However, given that there are a range of factors that influence the labour market at any one time it is not possible to say that such figures are related to funding cuts for child care. Some of the fall in women's employment for that month may be due to changes in child care arrangements, and there is anecdotal evidence to suggest this, but additional time and data is needed for a conclusive link to be established.

Main Provisions

Chapter 2 - Child Care Assistance

Proposed section 20 sets out who will qualify for child care assistance.The requirements are that:

  • they have a dependent child (or a dependent child of their partner);
  • that the child is in the care of an approved child care service;
  • that either the person or their partner incurs or has incurred a liability to pay for the session of child care (irrespective of whether or not they have actually paid);
  • that the child has been immunised (or exempted by a medical practitioner on certain grounds);
  • that the person or their partner is an 'inhabitant of Australia' during the relevant session;
  • that the person has provided their tax file number;
  • that the person satisfies the work/training/study test and does not exceed the assets test.

The Bill provides definitions for a number of the above terms.For example, 'partner' is defined in proposed section 11 to include married and de facto partners who are not living separately and apart on a permanent or indefinite basis and who are not in a prohibited relationship (ie blood relations specified in section 23B of the Marriage Act 1961).Same-sex partners are excluded from the definition but otherwise the test for de facto partners is similar to other legislative formulations (ie length of relationship, joint ownership of assets, emotional support etc).

The Immunisation Requirement

Proposed sections 8, 22, 23, 43, 70, 80, 81, 96, 122 all deal with the immunisation requirement but they are all covered, for the purposes of the digest, in this section.

The Bill is consistent with the current National Campaign to improve Australia's immunisation rates of children.Immunisation is defined in terms of what a child of a certain age should have received according to the latest edition of the Standard Vaccination Schedule published by the National Health and Medical Research Council.The general requirement is that children attending child care be fully immunised before any child care assistance is payable.The Bill will allow the Secretary to give a person applying for child care assistance notice requiring that person to provide within 28 days either:

1)   evidence to satisfy the Secretary that the child is fully immunised; or

2)   a written certificate from a 'recognised immunisation provider' that they have
  discussed the benefits and risks of immunising the child; and

3)   a written declaration to the effect that they have a conscientious objection
  to immunising the child; or

4)   a medical certificate is provided that indicates that the immunisation of the
  child would be 'medically contraindicated' under the specifications set
  out in the Australian Immunisation Handbook.

Proposed section 8 deals with the issue of persons who are 'conscientious objectors' to immunisation.There is a reasonably strict test for determining a conscientious objector, as they must have a 'fundamental conviction that immunisation should not take place' and that conviction must be 'so compelling that the person has to refuse to allow the child to be immunised.'

Whilst few doubt the benefits of widespread immunisation, (for further general information on immunisation, refer to the Bills Digest No. 13 1997-98 Social Security and Veterans' Legislation Amendment (Family and Other Measures) Bill 1997) for the measures in the Bill are not without their critics.For example, the linking of child care rebates with a requirement for immunisation has been criticised by academic Eva Cox on the basis that adding what is essentially a health measure on to the 'already complicated' arrangement for claiming child care was likely to deter families in the lower socio-economic groups who were less capable of dealing with bureaucracy.Cox argued: the lowest income bracket, only 42 per cent actually claimed the child care cash rebate out of those eligible, as opposed to 70 per cent from the highest family income bracket....People who have low literacy rates, who are scared of authority, who are not very good at filling in forms...are the ones that are going to miss out....It is exactly the same groups that don't get immunised now who don't pick up the child care rebate and won't claim the second half of the baby bonus, and so I just think that, as a strategy, this is not going to work.It is just going to mean that these families actually end up poorer but are still unimmunised.(9)

Also there is the issue of availability of the vaccine.For example, in July 1997 there was a chronic shortage of the triple antigen vaccine (Diptheria, Tetanus and Whooping Cough) and doctors were forced to turn away children for about 10 days.(10) While this may have been a 'one-off' event, there is no provision in the Bill to cover such a situation and parents of unimmunised children would not be eligible for the benefits.

The Tax File Number Requirement

Proposed sections 6, 7, 44, 45, 71, 72, 97, 98, 123, 124 all discuss the provision of a tax file number.If the claimant is within Australia then the Secretary can request them to provide a tax file number but may not compel them to do so.As is the usual case, compliance with a request to provide a tax file number means either:providing it; or signing an authorisation for the Commissioner of Taxation to tell the Secretary the tax file number.

Absenteeism From Child Care

Proposed section 25 sets out the circumstances when a child may be absent from child care without forfeiting the entitlement to a child care payment.Absences of less than 30 days (proposed subsection 25(5)), or absences caused by illness (either of the child or either partner provided that a medical certificate exists) are not counted for the purposes of a child care payment for the whole period.(Longer absences will disqualify a person from being entitled to child care payments [proposed section 30]).Proposed section 82 has similar provisions relating to absenteeism and how it affects payment of the child care rebate.

The Assets Test

Proposed section 27 introduces an assets test such that child care assistance is not available if the person's assets exceed $406,000 (indexed) unless otherwise specified in the regulations.The Bill provides that the Minister may determine a higher amount than this but such a determination is a disallowable instrument and therefore can be rejected by either House of Parliament.The method of valuing the assets is outlined in proposed section 28 and the detail will be provided in any regulations subsequently made.

How Claims Will be Made

Proposed section 37 of the Bill allows both prospective (ie on an ongoing basis) and retrospective claims for child care assistance within certain limits.The maximum prospective claim is for a 12 month period (unless extended by the Secretary by 4-52 weekson certain limited grounds).The criteria for extending the period are not set out in the Bill explicitly(see proposed subsection 33(2)).

Claims for child care assistance must be:

  • in writing in the form approved (proposed section 40(a));
  • accompanied by the requisite information (proposed section 40(b)); and
  • lodged at an office of the Department or other approved office (proposed section 41).

As is the case with other applications for benefits, the claim may be withdrawn either orally or in writing (proposed section 42).

The Secretary may require other information to be provided, such as the tax file numbers of the claimant and their partner (proposed sections 44 and 45). Similarly the Secretary can require that the child be immunised subject to the alternatives set out above.

Part 5 - Determination of Claims

Part 5 of the Bill deals with the determination of child care payment claims, Division 1 being for 'prospective claims' and Division 2 covering 'retrospective claims'.

Proposed section 47 allows payment to be made for a prospective period up to four weeks ahead of the date that the claim is submitted.An additional period is also payable if the Secretary is satisfied with the information provided by the claimant.Provided that the claim meets all the requirements, the Secretary must grant payment.

The maximum prospective claim is for a period of 12 months (proposed section 48).This provision is similar to proposed sections 37 and 33(2) discussed above.There is also a maximum assistance period (generally 12 months unless otherwise determined by the Secretary under proposed section 33 on the basis of information provided by the claimant) set in proposed section 48.Retrospective claims for child care assistance can be made under proposed sections 49-51 and once again the Secretary can determine the maximum assistance period.

Part 6 simply provides that the rate of child care assistance will be calculated according to the formula in Schedule 1

Part 7 - Payment of child Care Assistance

Proposed sections 54-59 allow payments of child care to be made either in instalments or in a lump-sum.The latter being for retrospective claims.Payments by instalments are made in advance and paid on the usual 'family payment payday' as with other Social Security benefits.

Proposed section 60 makes the payments of child care payable to the child care operator rather than the parent or other person responsible for the childThe exception being where the operator has already been paid by the parent and therefore the payment is in the nature of a reimbursement to the parent etc (proposed section 61).

The method of payment (proposed section 62) is the standard direct credit payment into the child care operator's nominated bank or other account unless otherwise nominated by the Secretary.

Division 3 provides for the lump sum payment of retrospective claims into the bank (or other) account of the claimant (proposed sections 65-67).

Proposed sections 64, 68, 116 all deal with the situation where one of the recipients of the benefit has died.Applications for payment (which has not already been paid to the deceased person) by 'another person' are permitted and the payment will be made so long as the application is lodged within 26 weeks of the death of the first person.

The Obligations On Child Care Assistance Recipients

Part 8 sets out the obligations on recipients of child care payments.As well as the immunisation and tax file issues which have been discussed above, Part 8 sets out a number of other events that will trigger a duty to notify the department.There are criminal sanctions for non-compliance:

  • Proposed section 73 makes it a criminal offence punishable by up to 6 months imprisonment to fail to notify the Department of the happening of certain events or changes in circumstances;
  • Proposed section 74 makes it a criminal offence punishable by up to 6 months imprisonment to fail to provide certain requested information to the Department; and
  • Proposed section 75 makes it a criminal offence punishable by up to 6 months imprisonment to fail to provide the Department with information required that relates to child care assistance in a specified past period.

Whilst the Bill does not specify precisely what information may be sought (other than a change of address), it allows the Secretary to require the person to supply a 'statement about a specified matter' and this may relate to an entitlement to child care assistance in a past period.The requirements to produce information are similar to those relating social security (proposed sections 74-75).

Chapter 3 - Child Care Rebate

Chapter 3 deals with the entitlement to child care rebates.Proposed section 78 requires that:

  • the child be a dependent of the person or their partner during the session of child care;
  • the child care be provided in Australia by one of the specified categories of child care agencies (eg. occasional care, family day care, long day care etc.);
  • the child is not a dependent of the operator of the child care or the partner of the operator (including business partnerships [but not the more exclusive associate as used in areas such as tax legislation]);
  • the person (or their partner) has incurred a liability to pay for the child care session (irrespective of whether it has been paid);
  • the person (or their partner) meets the tests set out for work, training or study (and the assets test); and
  • there is no reason under the immunisation requirements for refusing the rebate.

The expression 'dependent child' is defined in proposed section 79 and includes all children under 13 and children between 13 and 17 who, by reason of a physical, intellectual or psychiatric disability, require special daily care and attention over and above what is normally required by the child of that age who is not so afflicted.

Part 4 - Claims for Child Care Rebate

These provisions, (proposed section 90-98) dealing with claims for child care rebate,are similar to the provisions described above governing child care assistance.Both prospective and retrospective claims can be made and the formal requirements are as outlined above (proposed sections 37-45).

Part 5 - Determination of Claims

This part, dealing with claims for child care rebate, is substantially the same as the provisions relating to the determination of child care assistance in proposed sections 46-52 above.

Part 6 simply specifies that the rate of child care rebate will be worked out in accordance with Schedule 2.

Part 7 - Payment of Child Care Rebate

This part, dealing with claims for child care rebate, is substantially the same as the provisions relating to the payment of child care assistance in proposed sections 54-68 above.

Part 8 - Recipient Obligations

This part, dealing with claims for child care rebate, is substantially the same as the provisions relating to the recipient obligations for obtaining child care assistance contained in proposed sections 69-76 above.

Chapter 4 - Overpayments and Debt Recovery

Chapter 4 concerns overpayments and debt recovery other than emergency child care assistance (which is covered in Chapter 5 - see below).Child care overpayments will be recoverable as if they were debts due to the Commonwealth (proposed section 132).

Proposed section 133 deals with the situations where:

  • a person was either not entitled to the child care payment (which may have to be repaid either by the person or the child care assistance service, depending on who received the initial funding);
  • a person (or a child care service operator) received a duplicate amount (or two instalments covering the same period).In this case, the person (or the operator as the case may be) would be liable to the Commonwealth for the amount of the overpayment;
  • a person receives an overpayment because the amount payable was incorrectly calculated (in which case the person is responsible for repaying the amount over and above what they were entitled to);
  • While this could appear to mean that although a miscalculation of the benefit payable is made by the payment agency, the recipient, even if ignorant of the mistake will be required to repay the excess amount, proposed section 157 provides that such overpayments debts must bewaived ).

The regulations determining the date of payments under proposed subsections 52(1) and 105(1) are relevant for the above purposes.

Proposed section 134 covers debts arising as a result of an Administrative Appeals Tribunal (the AAT) order reducing the amount payable to a person.The difference between what was actually paid and what the AAT determined as the amount that should have been paid, is recoverable as a debt due to the Commonwealth.

Proposed section 135 deals with overpayments resulting from a false statement or representation either by the recipient or another person.In such case the overpayment is recoverable as a debt due to the Commonwealth.

Proposed section 136 provides that when a person, who was not the intended recipient, receives and cashes a cheque, that amount is recoverable as a debt due to the Commonwealth.

Proposed section 137 covers the situation where two or more people may have given a false statement or representation.The provision will ensure that the recipient and the person(s) making the statement (where there has been a conviction for aiding and abetting, conspiring to defraud or inciting another to defraud) are jointly and severally liable for the debt due to the Commonwealth.

Proposed section 138 deals with overpayments detected under the data-matching program.The Data-matching Program (Assistance and Tax) Act 1990 provides (in section 11) that if an assistance agency (defined to include the Department of Social Security) decides, on the basis of information received from the data-matching system, that a person's entitlement should be reduced, cancelled, suspended or rejected, the agency must first give notice to the person.The person then has an opportunity to respond to the notice.In other words, if under the data-matching program an overpayment is discovered, notice is given and not responded to, that amount is recoverable as a debt due to the Commonwealth.

According to the Second Reading Speech, this will require consequential amendments to the Data-matching Program (Assistance and Tax) Act 1990.

Proposed sections 139 and 140 provide that interest is payable on any debts owing to the Commonwealth unless the debtor enters into an agreement (within 14 days of receiving notice) with the Secretary to repay the debt by 'reasonable instalments' or repays the debt in full.

Proposed section 141 prescribes a penalty interest rate of 20% (unless a lower rate is determined by the Minister) for debts remaining outstanding and where the debtor has failed to enter into an agreement to repay the debt (or has failed to keep to that agreement).(Given current interest rates, the 20% penalty rate may be considered excessive).

If the Commonwealth choses to use garnishee provisions to recover the debt, then any associated costs (eg of obtaining the order and enforcing it) are also recoverable.

The methods of recovering overpaid child care assistance are contained in proposed sections 145 to 153.They range from the administrative type methods of deductions (and off-setting) against other child care payments to a range of legal proceedings for debt recovery.Proposed section 148 sets a time limit of 6 years within which recovery proceedings can be taken, although if the debt arises as a result of the claimant's false statement then the six year limit only starts to run on the day that an officer of the department became aware or 'could reasonably be expected to have become aware' of the circumstances.

Proposed section 149 allows the Commonwealth to sue in a court of competent jurisdiction for debt recovery.This would include Magistrate's Courts and Supreme Courts, depending upon the amount involved.

Garnisheeing of wages or bank accounts is also permitted under proposed section 150 even if such action would ordinarily not be permitted by a law of the relevant State or Territory.

Proposed section 153 allows the debt to be deducted from another person's child care payment with their consent.Presumably it is intended that the 'consenting person' will have some other connection with the debtor that would result in their consenting to the deduction. This is not spelled out in proposed section 153 nor is it mentioned in the Explanatory Memorandum p50.There is no requirement that any effect of a reduction in assistance in respect of another child may have on that child be taken into account when determining wether such a deduction is to be made.

Part 4 - Non-Recovery of Debts

Proposed sections 155 and 156 allow the Secretary to either write off the debt or waive all or part of it in certain circumstances.Where the debt has occurred as a result of an administrative error by the Commonwealth, the Secretary must waive the portion of the debt that arose solely as a result of the error (proposed section 157).There are also provisions allowing the debt to be waived if it is under $200 and it is not cost effective to pursue it, or if the debtor has been convicted of an offence in relation to the debt and is serving a longer custodial sentence because of an unwillingness or inability to pay the debt, or if the claim has been settled in a court or in the AAT by way of a consent order.There are other types of waivers permitted in proposed sections 161-163.

Chapter 5 - Emergency Child Care Assistance

Chapter 5 deals with emergency child care assistance (ECA).This allows a payment to be made to the operator of a child care assistance service for providing care to a child that they assess to be a 'child at risk' (ie at risk of physical, emotional or psychological abuse).Payments can not be made for children who are wards of the State or Territory (however described) - proposed section 170.Under proposed section 172 payments of ECA are limited to one continuous period of up to four weeks in a twelve month period (unless the Secretary determines that the child is a child at risk).

Proposed section 167 allows the Minister to make guidelines that are required, necessary or convenient for implementing the provisions regarding ECA.The guidelines will be made by determination in writing.Such written determinations are disallowable instruments and therefore either House of Parliament may move a motion disallowing them within 15 sitting days of them being tabled.

Proposed section 168 allows the operator of a child care assistance service to apply for payment in respect of the ECA provided.The Secretary will have the power under proposed section 169 to require further information of the operator.The operator has 28 days unless a shorter period is specified by the Secretary, within which to provide the information.If the operator fails to provide the requested information then the Secretary may stop further payments and may recover amounts already paid.

Chapter 6 - Approval and Registration of Child Care Services

Child care assistance services must be approved for the purposes of the Bill before a child care payment can be made in respect of a child attending the service.Chapter 6 deals with the obtaining of approval and the conditions that may be set on approval.

The child care service must make an application if it wants approval and must provide a statement to the effect that it has a tax file number (although the Secretary is not authorised to demand or even to record the tax file number) proposed section 176.

If the child care service meets the eligibility rules (those matters determined by the Minister under proposed sections 185-190 and contained in a disallowable instrument) then the Secretary must approve the application but may impose conditions on that approval or exempt the service from complying with some of the rules.Child care assistance services must hold an allocation of 'child care assistance hours' and must not exceed their allowance (proposed subsections 177(2) and (3)).It is also a requirement under proposed subsection 177 (5) that the service comply with all Commonwealth, State and Territory laws relating to child care.

The penalties for breaching any conditions of approval are contained in proposed section 179 and include the Secretary varying the conditions, imposing additional conditions, reducing the centre's allocation of hours or suspending or cancelling the service's approval as a child care assistance service.However, before doing any of these things, the Secretary must give written notice to the operator of the service which contains a summary of the proposed sanction and the evidence relied upon and which invites the operator to provide a written response within 28 days, which the Secretary must then take into account before making the final decision (Proposed section 180).

Proposed section 184 makes it an offence for an operator not to notify in writing the Secretary of any changes which would have affected the decision to grant approval or which would justify the loss of approval.The penalty is 20 penalty units (currently equivalent to $2,000).

The eligibility rules for different types of child care services may be determined by the Minister in writing (proposed sections 185-188) and there will be provision for the Secretary to exempt a specified child care service from certain eligibility rules or classes of rules (proposed section 189).

Division 2 of Part 1 deals with the mechanism for allocating the number of child care assistance hours to the various child care services.Proposed section 199 sets a limit for both 1998 and 1999 of 1,008,000 hours per fortnight for centre based long day care services.The allocation of hours will be phased out for centre based long day care services after 31 December 1999 (proposed section 178).

The allocation of hours will vary from region to region to 'best meet child care assistance needs' and the Secretary is required to take certain factors into account to ensure that child care hours are allocated based on need and any other matters specified in the guidelines.

This part is substantially the same as Part 1 of Chapter 6 above, except that it covers child care rebate and not child care assistance.Also proposed section 207 provides for the registration of child care services (as opposed to proposed section 175 which provided for the 'approval' of child care services for childcare assistance) for child care rebate.

Part 3 - Review of Decisions

Proposed sections 219-220 cover the decisions which are reviewable internally or by the Administrative Appeals Tribunal (the AAT).These include decisions regarding the approval of a particular child care service, decisions regarding conditions to be imposed and decisions regarding exemptions or cancellations of approval.

Regulations may be made providing for the initial review to be done internally and then made subject to a review by the AAT, also refer to Chapter 9, below, for further information relating to informal review.

Chapter 7 - Information Management

Proposed section 221 gives the Secretary a general power to obtain information from a person and makes it an offence punishable by up to 12 months imprisonment for failing to comply with a notice requiring the provision of such information.

Where a debt (from the debtor), is owed to the Commonwealth, proposed section 222 allows the Secretary to demand information relevant to the debtor's financial situation and to the address of the debtor (again with an offence punishable by up to 12 months imprisonment for failing to comply).Proposed section 223 allows the Secretary to obtain relevant documents from someone else that the Secretary believes might have 'information or a document'.Failure to comply with such a request for information will be an offence, with a maximum penalty of imprisonment for 12 months.

Proposed section 225 allows the Secretary to obtain information (including information relating to a class of persons) that might verify claims for child care payments.Information obtained in this manner must be destroyed after 3 months if it is not relevant or is unlikely to be relevant.

Proposed section 228 makes it clear that the Bill will override any conflicting State or Territory law regarding the provision of information under it and, again, it will be an offence not to comply with such a requirement.

Part 2 imposes confidentiality requirements on the information and makes unauthorised access to or use of the protected information an offence punishable by imprisonment of up to 2 years. Proposed section 233 prevents courts or tribunals subpoenaing the protected information unless it is one of a limited category of circumstances. Proposed sections 236-238 contain other offences relating to the disclosure of the protected information.

Chapter 8 - General Provisions About Offences and Penalties

Proposed section 243 deals with the situation where a person has been convicted of one of the offence of fraud, making an untrue statement, making a false representation or obtaining a benefit under false pretences in respect of a child care payment.The section outlines what penalties the Court may impose but prevents the person being imprisoned for receiving a child care payment because of an 'act, failure or omission' of theirs.

Chapter 9 - General Provisions About Review of Decisions

Certain decisions made under the Act are reviewable by the Social Security Appeals Tribunal (the SSAT) and others by the AAT.Part 1 of Chapter 9 permits internal review and even when an application has been made to one of those tribunals for review, proposed section 248 allows the Secretary to undertake a review of the decision and affirm, vary or set aside the previous decision as appropriate.Proposed section 250 allows payments to continue where a review is underway and there has been an adverse decision against a claimant but that decision depends upon the exercise of a discretion or the holding of an opinion.

Part 2 sets out which decisions are reviewable by the SSAT and obliges the SSAT to provide a mechanism of review that is 'fair, just, economical, informal and quick'.Payments can continue whilst a decision is being reviewed.

Part 3 sets out which decisions are reviewable by the AAT and includes decisions that have already been reviewed by the SSAT.Part 4 modifies the application of the Administrative Appeals Tribunal Act 1975 to facilitate the review by the AAT of decisions made by the SSAT.

Chapter 10 - Administration

This chapter sets out procedural issues such as the Secretary's power to delegate decision making to certain officers in the department and the fact that all 'decisions' are to be in writing.Proposed section 279 allows notices under the Bill to be left at or posted to the last known residential or business address of the person.

Chapter 11 - Miscellaneous

Proposed section 282 obliges unincorporated associations (and partnerships under 283) to be treated as though they were a person and each member can be personally have committed an offence if they 'knowingly aided, abetted, counselled or procured the relevant act'.

Schedule 1

This Schedule contain the formula for calculating the rate of child care assistance.The formula is based on the number of hours of child care, the percentage for which child assistance is available and the rate of payments, which is contained in Module E, and ranges from $1.95 to $3.05 per hour.

Schedule 1 - Module D introduces the limit of 20 hours child care if the parent (or if a couple if both are) is not working, training or studying within the definition of the Bill.In other cases there is a weekly 50 hour limit of eligible care.

Concluding Comments

A number of commentators on the amendments to the child care system have stated that the amendments will result in increased fees and are likely to result in fewer child care places being available.(11) Given women's predominant role in child care, these measures will particularly affect women.Increasing child care costs will have the effect of raising the level of what economists refer to as the 'reservation wage', ie the net wage take necessary to induce a household member to enter paid employment.A rise in the cost of going to work will have a strong effect on part-time workers whose net disposable income is generally not high.However, the actual impact of the proposed changes is difficult to judge.This is because a rise in the 'reservation wage' produces two (contradictory) effects.Some workers may reduce their hours of paid employment or opt out altogether, whilst others may seek additional paid work in order to cover the fixed costs of going to work.In a labour market where there is already serious unemployment and underemployment, the net effect of raising the cost of childcare is likely to be in the direction of reduced hours and opting out.Any increase in fees is also likely to affect single parents and families that are less well off.A fee rise of between $5 and $20 per week(12) has been estimated and this is likely to impact more on poorer families.Another possible result, raised by some commentators, could be an increase in the number of unregulated child-carers.This would in turn raise issues as to the ongoing quality of child-care.

An article in The Financial Review quotes Prue Warrilow, a director of child-care consultancy Families at Work as saying that the withdrawal of the subsidy for community-based long day care centres and the increased fees are 'causing families to rethink their usage of formal child care...parents who use community-based child care are already cutting back on their hours in anticipation of fee rises likely to be between $5 and $15 a week.This will cause some of the centres to close their doors in time...Meanwhile, families are turning to informal care or reducing their working hours to cope'.(13)

Family Services Minister Judi Moylan has argued that the Budget measures affecting child-care 'delivered firm support for families and ensured services were evenly distributed'.(14)

The Minister's second reading speech states:

The Bill embodies the Government's commitment to assist families with dependant children to participate in the workforce and to assist the community by ensuring that child care is affordable for low and middle income families and by improving access to quality child care.


  1. Economic Planning Advisory Commission, Future Child Care Provision in Australia, Final Report, November 1996: 12
  2. ibid :15
  3. Department of Health and Family Services, Portfolio Budget Statements 1996-97: 180 181
  4. ibid :180
  5. As reported in The Age, 15 May 1997
  6. ibid, 2 July 1997
  7. ibid
  8. As reported in The Weekend Australian, July 12 13 1997
  9. Interview with Eva Cox on PM 25 February 1997, Reporters Monica Attard and Sharon O'Neill, Academic advocates administrative changes to the Government's proposed immunisation scheme
  10. Story on AAP 25 July 1997 Vaccine Shortage Puts Doubt On Govt Immunisation Plan
  11. Eg Press clippings Hele, M Courier Mail 4 June 1997 After-school concerns at p12, AAP story 1 July 1997 Child-care Cuts Make Service Costs Too High: NSW Govt; Gunn, M article in The Australian 23 June 1997 Child care fees to Rise, Staff Face Axe p3.
  12. Estimate quoted in Loane, S Cost of Child Care Rivalling School Fees article in The Sydney Morning Herald 14 June 1997: 9
  13. Bagwell, S Bean counters set child-care agenda article in The Financial Review 21 May 1997: 21
  14. Franklin, M Delay in Child care Changes Attacked, article in The Courier Mail24 May 1997: 15

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Greg McIntosh (Background)
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29 August 1997
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ISSN 1328-8091
© Commonwealth of Australia 1997

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Published by the Department of the Parliamentary Library, 1997.

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Last updated: 1 September 1997

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