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.
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Peter Yeend
22 October 2009
Bills Digest Service
Parliamentary Library
© Commonwealth of Australia
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