BILLS DIGEST NO. 123, 2014–15              17 June 2015

Social Services Legislation Amendment (No. 2) Bill 2015

Don Arthur, Monika Sheppard and Alex Grove
Social Policy Section

Date introduced: 28 May 2015

House:  House of Representatives

Portfolio: Social Services

Commencement:   The formal provisions and Schedule 3 commence on the day of Royal Assent. Schedule 2 and most of Schedule 1 commence on 1 July 2015. Part 4 of Schedule 1 commences on 1 July 2016.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.

Purpose of the Bill

The purpose of the Social Services Legislation Amendment (No. 2) Bill 2015 (the Bill) is to amend the:

•       Social Security Act 1991 and the Social Security (Administration) Act 1999 to end case by case assessments under the Vulnerable Measure of income management, abolish the Matched Savings Payment and Voluntary Income Management Incentive Payment, and make a number of other minor amendments to the income management program

•       Aged Care Act 1997 and Aged Care (Transitional Provisions) Act 1997 to reflect two measures that were announced in the 2014–15 Mid-Year Economic and Fiscal Outlook:

–      cessation of the residential care subsidy for pre-entry leave, from 1 July 2015 and

–      abolition of the Aged Care Planning Advisory Committees as part of the Smaller Government initiative.

Structure of the Bill

This Bill is divided into three schedules with Schedule 1 further divided into five parts.

•       Schedule 1—Income management regime:

–      Part 1—Abolition of certain incentive payments

–      Part 2—Vulnerable welfare payment recipients

–      Part 3—Miscellaneous

–      Part 4—Consequential amendments

–      Part 5—Transitional and savings provisions

•       Schedule 2—Ceasing residential care subsidy for pre-entry leave and

•       Schedule 3—Aged Care Planning Advisory Committees.

The provisions in Schedule 1 amend the Social Security Act 1991 and the Social Security (Administration) Act 1999 and make consequential amendments to the Income Tax Assessment Act 1997. These amendments simplify the administration of income management by removing individual determinations for the vulnerable measure, abolish the voluntary income management incentive payment and the matched savings scheme (income management) payment, and make a number of other minor changes.

The provisions in Schedule 2 will amend the Aged Care Act 1997 to cease payment of residential care subsidy to providers holding a place for up to seven days before a care recipient enters care.

The provisions in Schedule 3 amend the Aged Care Act 1997 to reflect the Government’s decision to abolish Aged Care Planning Advisory Committees.

Income management—Schedule 1

Background

Income management was first introduced in 2007 as part of the Howard Government’s Northern Territory (NT) Emergency Response and was initially restricted to Indigenous communities in the NT.[1] Subsequent governments have expanded income management to include Indigenous and non-Indigenous people across the NT and at a number of other sites around Australia.[2]

Income management sets aside (or ‘quarantines’) a proportion of a recipient’s income support payment to pay for necessities such as food, clothing, housing and utilities. Recipients can spend their income-managed funds using a BasicsCard or by arranging for Centrelink to make a payment on their behalf (for example, regular rental payments).[3] Recipients can only use their BasicsCard at approved merchants and cannot use it to buy excluded goods, such as tobacco, alcohol, pornography or scratch lottery tickets.[4]

Income management measures and locations

As well as operating across the whole of the Northern Territory, income management operates in locations in Western Australia, Queensland, South Australia, New South Wales, and Victoria. Income management is not applied in the same way across all these locations. Different locations apply different combinations of income management measures (see Table 1).

Table 1 Income management locations and measures

Locations

Measures

Northern Territory

Child Protection

Vulnerable (social worker assessed)

Vulnerable (Youth Triggers)

Disengaged Youth

Long-term Welfare Payment Recipient

Supporting People at Risk

Voluntary

Cape York

People referred by the Family Responsibilities Commission

Voluntary

Perth metropolitan, Peel and Kimberly regions

Child Protection

Voluntary

Place Based Income Management: Logan (Qld), Rockhampton (Qld), Bankstown (NSW), Greater Shepparton (Vic) & Playford (SA)

Child Protection

Vulnerable (social worker assessed)

Vulnerable (Youth Triggers)

Voluntary

The Ceduna region, APY and Ng Lands, Kiwirrkurra Community and Laverton Shire

Child Protection

Vulnerable (social worker assessed)

Vulnerable (Youth Triggers)

Voluntary

Aside from the Cape York model, there are seven separate income management measures. Measures differ according to whether they are voluntary or compulsory, by the group they target, whether this group is identified on a case by case basis or through membership of a class, and by the percentage of a person’s income support the measure quarantines. The Cape York model operates using a single distinct measure (case by case referral by the Family Responsibilities Commission) and is unlikely to be affected by the measures in this Bill.

Figure 1 Income management measures

Case by case assessment and referral based on membership of a class

The distinction most important for this Bill is the distinction with the ‘Vulnerable’ category between compulsory measures that are applied on a case by case basis and those that are applied in a blanket way to all members of a class. In case by case measures, a decision maker makes a decision about referring a person to income management based on their individual circumstances. For example, under the Child Protection measure a State or Territory child protection worker can refer a person to income management.[5] In measures that apply to all members of a class a person’s individual circumstances are not taken into account before they are placed on income management. These measures are applied to everyone who meets certain criteria (in some cases a person who meets the criteria may apply for an exemption). For example, the Disengaged Youth Measure is applied to 15 to 25 year olds who have received certain income support payments for three of the last six months.[6]

The Vulnerable Measure of income management

The Vulnerable Measure of income management was created in 2010 as a case by case measure. However, in 2013 the Government extended the measure by introducing a set of ‘youth triggers’—a set of objective criteria that identified three categories of young people. The effect of this was to apply income management to members of a class. Across all income management locations, the majority of people income managed under the Vulnerable Measure are placed in the scheme as the result of these triggers. In the place based sites, 75 per cent of all income management participants are placed as the result of the Vulnerable Measure (youth triggers).[7]

The Vulnerable Measure was originally created as part of the Rudd Government’s reinstatement of the Racial Discrimination Act 1975’s application to measures introduced as part of the Northern Territory Emergency Response (NTER). According to a 2014 evaluation report on New Income Management in the Northern Territory:

The initial form was designed to provide Centrelink social workers with an additional tool to use in providing their services to individuals who are vulnerable and/or at risk, for example, individuals on an Age Pension or Disability Support Pension who are subject to financial harassment, or who have an impaired capacity to manage their finances.[8]

The original policy intent was to apply the Vulnerable Measure only on a case by case basis. According to Ministers Jenny Macklin and Warren Snowden ‘The legislation provides for case by case income management of vulnerable people identified by Centrelink social workers to protect them from pressure.’[9] The Explanatory Memorandum for the Social Security and Other Legislation Amendment (Welfare Reform and Reinstatement of Racial Discrimination Act) Bill 2009 also made it clear that determinations under the Vulnerable Measure would be made on an individual basis.[10] The principles Centrelink decision makers use to determine whether a person is a ‘vulnerable welfare payment recipient’ are set out in a legislative instrument.

Another pathway into income management is referral by state housing authorities. As part of the place-based income management trials, the Department of Social Services worked with state housing authorities to enable them to refer clients at risk of eviction due to rent arrears. These clients would then be assessed by Centrelink social workers.[11] The numbers referred under this arrangement may have been limited by privacy considerations. Because clients may need to agree to have their information released to Centrelink it may be easier to refer them under the Voluntary Income Management measure.

In 2013 Minister Macklin updated the principles to introduce the Vulnerable Measure (youth triggers).[12] Unless an exemption applies, this measure applies to people who meet at least one of the following criteria:

•       under 16 years old and receiving special benefit

•       between the ages of 16 and 21 and receiving youth allowance, Disability Support Pension or ABSTUDY at a rate calculated on the basis it is unreasonable to live at home

•       under 25 years old and have received crisis payment within the last 13 weeks due to having been released from gaol.

Exemptions apply for full time students and apprentices and people in a number of other circumstances.[13]

According to a 2014 evaluation report on Place Based Income Management, the Department of Social Services introduced the youth triggers measure in response to data from the New Income Management (NIM) in the NT evaluation report.[14]

The numbers of people under the Vulnerable Measure increased rapidly after the introduction of the new youth triggers with the youth triggers group quickly overtaking the social worker assessed group in size.[15] Young people who receive income support payments at the ‘unreasonable to live at home’ rate are the largest of the youth triggers sub groups.[16]

Payments and services that support income management

The Government provides additional support to people on income management through:

•       support from social workers and other specialist staff[17]

•       Financial Wellbeing and Capability services—income management participants have priority access to financial capability services. These include Money Management courses and other assistance for people experiencing financial difficulties[18]

•       Matched Savings Payments—people on compulsory income management are eligible for a matched savings scheme that offers $1 for every $1 saved up to a maximum of $500. Participants must complete an approved Money Management course and maintain a pattern of savings from their non-income managed funds for 13 weeks or longer after they begin the course[19] and

•       Voluntary Income Management Incentive Payment—people who participate in Voluntary Income Management can receive a $250 incentive payment for every 26 continuous weeks they remain on the measure.[20]

Both the Matched Savings Scheme Payments and Voluntary Income Management Incentive Payments are 100 per cent income managed.

Budget measures

The Government announced a two year extension to income management in the 2015–16 Budget. Costed at $146.7 million over three years, this measure will extend income management at all current locations until 30 June 2017.[21]

The Government also announced changes to the income management program will deliver savings of approximately $36 million over two years. These include:

•       ending social worker assessed placements onto the Vulnerable Measure of income management. From 1 July 2015 only people who qualify by virtue of the automatic youth triggers will be placed on the Vulnerable Measure[22]

•       phasing out the Voluntary Income Management Incentive Payment and the Matched Savings Payment[23] and

•       ending the compulsory requirement that all income management participants be referred to Financial Wellbeing and Capability services (this includes services such as Money Management).[24]

The Department of Social Services has also announced that it may expand income management to four new locations. Any expansion would take place after consultations with communities and with state and territory governments.[25]

Key issues and provisions

The key issues in Schedule 1 are the abolition of the Voluntary Incentive Payment and the Matched Savings Payment and the removal of case by case assessment of clients for the Vulnerable Measure of income management. The Bill also contains a number of miscellaneous, consequential and transitional provisions.

Abolition of the Voluntary Incentive Payment and the Matched Savings Payment

As part of the 2015–16 Budget, the Government announced that it will phase out the Voluntary Incentive Payment and the Matched Savings Payment. The Matched Savings Payment will no longer be available after 31 December 2015 and the Voluntary Incentive Payment will no longer be available after 28 December 2015.[26] There is little evidence from government evaluations that either of these payments have been effective at achieving their objectives. However, some interest groups argue that the payments have value and should be retained (see ‘Position of major interest groups’ below).

Part 1 of Schedule 1 amends the Social Security Act 1991 and the Social Security (Administration) Act 1999 to remove references to the Matched Savings Payment and Voluntary Incentive Payment.

The Government argues that the Matched Savings payment ‘is underutilised and administratively burdensome’ and that evaluations show that the Voluntary Incentive Payment is not the major motivation for people to participate in income management.[27]

Take up of the Matched Savings Payment has been low. According to answers given in Senate Estimates in October 2014 only 45 payments had been made since the beginning of the scheme in July 2010.[28] By January 2015 this had risen to 57.[29] Researchers evaluating income management in the Northern Territory suggested two reasons for the low take up:

•       establishing a pattern of savings over 13 weeks is not a realistic goal because most income management participants struggle to make ends meet and

•       directing the Matched Savings Payment into income managed funds discourages participation.[30]

In an evaluation of the place based income management trial sites Deloitte Access Economics concluded that the Matched Savings Payment had not been effective at encouraging Vulnerable and Child Protection income management participants to undertake a money management course.[31]

There is little evidence that the Voluntary Income Management Incentive Payment has been effective at encouraging people who need assistance in managing their money to participate in income management. The evaluation of income management in the Northern Territory suggested that people who did not need help may have signed up for Voluntary Income Management in order to get the $250 payments.[32] A 2013 report on income management in the Northern Territory by the Australian National Audit Office suggested that the incentive payment might discourage some participants from moving off the scheme and make it less likely they would become more able to manage their financial affairs.[33] However the August 2014 evaluation of place based income management suggested that the incentive payment was not a major influence on participants’ decision to continue on income management.[34]

Vulnerable welfare payment recipients

In May 2015 the Government announced that, pending legislative approval, it would end case by case assessments for the Vulnerable Measure of income management. The Vulnerable Measure will apply to members of a class. This class will be prescribed by a legislative instrument.

The Bill amends the Social Security (Administration) Act 1999 to define a vulnerable welfare payment recipient as ‘a person who falls within a class of person prescribed by legislative instrument under section 123UGA.’ The Bill repeals the existing section 123UGA and substitutes ‘The Minister may, by legislative instrument, prescribe a class or classes of persons who are vulnerable welfare payment recipients.’

The Government argues that the case by case measure ‘was under-utilised and administratively burdensome’.[35] According to the Department of Social Services, removing case by case assessments will allow Centrelink social workers more time to focus on vulnerable clients.

While the Government has not announced any plans to extend the Vulnerable Measure of income management beyond the Vulnerable (youth triggers) group, the Explanatory Memorandum makes it clear that the amendments will allow the Government the flexibility to refine or extend the measure in the future.[36]

The Reference Group on Welfare Reform chaired by Patrick McClure argued that changes to income management should be informed by evaluations.[37] Evaluation reports released to date suggest membership of a class has not been an effective way to identify income support recipients likely to benefit from income management. According to researchers: ‘For a number of people in this small group (around 150 at any one time) some positive outcomes from income management have been reported’.[38] However, the researchers found no evidence that targeting individuals based on membership of a class was effective:

There was no evidence that targeting income management on the basis of duration in receipt of income support payment provides an effective basis for identifying those with particular vulnerabilities or a low level of money management skills. Similarly, there is no evidence that the range of income support payments at which Compulsory Income Management is targeted reflects the groups at highest risk. Compulsory Income Management is imposed upon a large group of people whom income management does not assist. This imposes costs upon those subject to income management and to the government.[39]

The August 2014 evaluation report on place based income management found little evidence that participants on the Vulnerable Measure were benefiting from income management. The evaluators reported:

based on the current findings at this stage it would seem that while [Voluntary Income Management] is well targeted and achieving appropriate outcomes particularly in the area of financial stress and reduced expenditure on non-priority goods, the [vulnerable] measure has yet to demonstrate similar benefits to the cohort it is targeted to over the short term, in particular the [Vulnerable (youth triggers)] customers.[40]

According to the evaluators, ‘It appears that the youth automatic trigger payments alone may be insufficient to accurately identify vulnerability for [Vulnerable (youth triggers)] customers.’[41] A number of interest groups such as the Australian Council of Social Service (ACOSS) share this view (see ‘Position of major interest groups’ below).

At the time the August 2014 evaluation report on place based income management was conducted the Vulnerable (youth triggers) measure had only been in place for a short time (it was introduced on 1 July 2013).[42] It is possible that the findings from later evaluation reports may be different. According to the Department of Social Services, a third report was due in January 2015 and the final report in May 2015.

The Commonwealth Ombudsman has expressed concern that:

… the sole use of an automated decision-making process to determine that a person is a vulnerable welfare payment recipient creates a risk that vulnerable customers might be further disadvantaged through the application of IM in their particular circumstances.[43]

The Ombudsman argues that a subjective consideration of an individual’s circumstances is important in order to ensure that the individual is accorded natural justice and that the application of income management is consistent with the scheme’s purpose of supporting and assisting the individual.[44] The Ombudsman is currently preparing a report about the Vulnerable (youth triggers) measure of income management.[45]

Other provisions

The Bill also contains a number of miscellaneous, consequential and transitional provisions. These are explained on pages three to four of the Explanatory Memorandum.[46]

Financial implications

In the 2015–16 Budget the Government provides $146.7 million over three years to extend existing income management arrangements in all current locations for another two years.[47] This spending is not a result of the measures in this Bill.

The Government also estimates savings of $36 million over two years as a result of changes to income management.[48] The savings associated with this Bill are:

•       removal of vulnerable social worker assessments ($4 million over two years) and

•       abolition of voluntary incentive payment and matched savings payment ($6 million over two years).

Most of the savings ($26 million over two years) will come from administrative changes such as reducing the number of compulsory contacts that Centrelink staff have with income management participants. These savings do not directly result from measures in this Bill.[49]

Policy position of non-government parties/independents

In a dissenting report from the Senate Community Affairs Legislation Committee Labor Senators opposed the Bill in its current form:

In particular Labor Senators do not support the proposed changes to the Centrelink social worker role under the vulnerable measure of income management.

Labor Senators do not support any changes that alter the role of a Centrelink social worker in making initial determinations to place people on income management; and reduce the ongoing interaction with people on income management.[50]

The Australian Greens have called on the Government to abandon income management. Senator Rachel Siewert expressed particular concern about the effect on young people receiving the ‘unreasonable to live at home’ rate of Youth Allowance.[51] In a dissenting report from the Senate Community Affairs Legislation Committee, Greens Senators opposed the Bill and raised concerns about the appropriateness of amending legislative arrangements without also providing copies of the draft regulations. Greens Senators recommended:

The Australian Greens recommend that the Bill not be passed, and that all forms of compulsory income management should be repealed immediately.

The Australian Greens recommend that those who have joined income management schemes voluntarily should retain access to the bonus payment.

The Australian Greens recommend that any savings from the abolition of these programs should be used to restore the funding to social services that was cut in the 2014/15 budget.[52]

Position of major interest groups

Major interest groups have raised concerns about changes to the Vulnerable Measure of income management. Under the changes the Government plans to retain a measure that appears to be relatively ineffective but widely used (Vulnerable Measure (youth triggers)) while eliminating a measure that is not widely used but appears to be effective (Vulnerable Measure (social worker assessed)).

A number of major interest groups are opposed to compulsory income management system as a whole. For example the National Welfare Rights Network regards the system as ‘fundamentally flawed’. Other groups support compulsory income management when it is applied on a case by case basis. For example, The Ngaanyatjarra Pitjantjatjara Yankunytjatjara (NPY) Women’s Council supports compulsory income management to protect vulnerable people such as those who are elderly or disabled.[53]

While there is some support for compulsory income management applied on case by case basis, there appears to be much less support for income management applied to members of a class (such as the Vulnerable Measure (youth triggers)).

At the time this digest was prepared the Senate Community Affairs Legislation Committee had only received six submissions from interest groups. Some of the information below comes from public statements made before the Social Services Legislation Amendment (No. 2) Bill 2015 was circulated.

Australian Association of Social Workers

In 2011 the Australian Association of Social Workers (AASW) released a position paper opposing applying income management based on membership of a class:

… income management should be proposed on a voluntary basis unless in cases where it is recommended following implementation of legal instruments such as Child Protection, Domestic Violence or Adult Guardianship, in which the process is non‐discriminatory and is not applied on an automatic basis under circumstance of race, geographic area, type of benefit or duration of payment.[54]

Australian Council of Social Service

In their submission to the Committee the Australian Council of Social Service (ACOSS) write:

ACOSS strongly opposes the move to reduce the capacity for social workers to make assessments about whether or not an individual meets the vulnerability criteria and would benefit from compulsory income management. The more broadly and inflexibly the policy applies, the greater the risk of capturing individuals who may not be assisted by or may experience harm from mandatory controls over financial decision‐making. As noted above, documented harms include damage to financial management skills and strong negative subjective experiences, including shame and humiliation. We are very concerned that, instead of moving towards careful individual assessment, this Bill will make the imposition of compulsory income management an administrative decision exercised by Centrelink officers without social work qualifications, against rigid external criteria, not focussed on the best interests of the individual affected.[55]

In the past ACOSS has also argued that the Vulnerable Measure (youth triggers) is poorly targeted and that the exemption criteria are not linked to responsible money management.[56]

ACOSS do not oppose the abolition of the Matched Savings Payment and Voluntary Income Management Incentive Payment.[57]

Benevolent Society

The Benevolent Society opposes applying income management based on membership of a class. In a submission to the Review of Australia’s Welfare System (McClure Review), the Society stated:

The Benevolent Society does not support a blanket application of income management to specific groups, as there is insufficient evidence that income management is effective.[58]

Good Shepherd Australia New Zealand and Good Shepherd Microfinance

Good Shepherd has been critical of income management when it is applied on the basis of membership of a class (a ‘blanket approach’). In a submission to the Review of Australia’s Welfare System (McClure Review), Good Shepherd stated:

One of our fundamental issues to do with Income Management as a blanket approach to larger groups of people is that it assumes that people who rely on income support do not know how to manage money, which is contrary to evidence (Corrie T. , 2011). There are also existing, cheaper mechanisms that enable people to manage their expenses, such as Centrepay, which is used widely and successfully by the people we work with to manage their money.

Income management does not work as a blanket solution, and evaluations on its effectiveness are unconvincing. As a community or individually led and owned initiative, it can form part of a suite of supports but in itself is insufficient.[59]

Major church providers

Anglicare Australia, Catholic Social Services Australia, and UnitingCare are all opposed to compulsory income management applied to people based on membership of a class.

Anglicare Australia’s position is that income management should only be used on a voluntary, time limited basis where it is supported by other services and supports.[60]

Catholic Social Services Australia (CSSA) has opposed applying income management based on membership of a class. In a submission to the Review of Australia’s Welfare System (McClure Review), CSSA stated:

CSSA believes that income management should be a last resort and applied on a case by case basis or where a community has requested it. Because of the risk that income management can entrench dependency, it should be temporary and accompanied by measures that help individuals, families and communities address underlying problems.[61]

UnitingCare Australia is opposed to compulsory income management. In their submission they recommend:

… that the committee ask the government to provide evidence demonstrating improved outcomes that have been measured and are attributable [to] involuntary income management; and evidence of improved outcomes that have been measured and are attributable to the BasicsCard. If the government cannot produce that evidence, then the measures should be opposed.[62]

While UnitingCare Australia is not opposed to Voluntary Income Management, they have raised concerns about the high cost of administering the scheme.[63] They do not support the abolition of the Voluntary Income Management Incentive Payment arguing that if income management is used ‘then incentives to support it should be encouraged.’[64]

National Council for Single Mothers and their Children

The National Council for Single Mothers and their Children (NCSMC) is opposed to compulsory income management. However, if the policy remains in place NCSMC supports the retention of the Matched Savings Payment and Voluntary Income Management Incentive Payment.[65]

National Welfare Rights Network

The National Welfare Rights Network (NWRN) has argued that compulsory income management is fundamentally flawed.[66] NWRN opposes targeting based on membership of a class. In its submission on this Bill they recommended:

… that the Government introduce an incentive based voluntary income management model, or in the alternative, introduce a genuine case-by-case income management model (rather than declared areas or targeting specific “classes” of people).[67]

NWRN argues against imposing income management on classes of people without any assessment of individual circumstances. NWRN’s view is that decision makers should have a free standing discretion to exempt a person from income management based on their circumstances. In their submission they argue that:

The danger of imposing income management on classes of people is that there is no assessment or consideration of whether income management will benefit that particular person, or assist them to overcome their vulnerability, or whether income management may in fact be detrimental to their wellbeing.[68]

NWRN supports the abolition of the Matched Savings Payment.[69] This is consistent with the position it has taken in the past.[70]

NPY Women’s Council

The Ngaanyatjarra Pitjantjatjara Yankunytjatjara (NPY) Women’s Council supports income management. However this support applies to voluntary and case by case income management rather than income management applied to members of a class:

Overall, NPYWC members would prefer that the roll-out of IM be done on a voluntary basis so that individuals ‘opt-in’.

However, if there are serious concerns that are verified about child protection, or risk to vulnerable people such as the aged or disabled, then the majority of members agree that IM should be applied immediately. Members are concerned about children who miss out on food and clothing and agree that children need to be protected and supported.[71]

Victorian Aboriginal Legal Service

In a 2010 submission, the Victorian Aboriginal Legal Services (VALS) recommended that the Government:

Abolish compulsory welfare quarantining, or where quarantining continues, that it be available on a voluntary basis, or employed only as a measure of last resort, applied on an evidence-based, case-by-case basis, that maintains full recourse to administrative and judicial review.[72]

Aged care—Schedules 2 and 3

Ceasing residential care subsidy for pre-entry leave

The Government currently pays a residential care subsidy to approved providers who supply residential care to a person approved to receive that care (care recipient). The subsidy is paid for each day that the recipient is cared for and accommodated in a residential facility, and when the recipient is on approved leave. One type of approved leave is pre-entry leave—that is, leave undertaken by the recipient before the commencement of residential care. The period of pre-entry leave is defined in the Aged Care Act 1997 (Cth) (section 42–3) and the amount paid to a provider in respect of that period is 30 per cent of the subsidy.[73]

Key provisions

Schedule 2 of the Bill ceases the payment of residential care subsidy for pre-entry leave, and makes consequential amendments to fee and leave provisions.

Items 1 and 6 remove an approved provider’s eligibility for residential care subsidy for pre-entry leave.

Items 2 and 7 clarify that pre-entry leave does not count toward a 52-day cap for approved leave.

Items 3 and 8 clarify that pre-entry leave ceases at the end of the day, the day before a person enters the residential care service.

Items 4 and 10 specify that a person on pre-entry leave can only be charged the standard resident contribution (an amount determined by the Minister by legislative instrument, or an amount equal to 85 per cent of the basic age pension amount).

Item 5 and 12 confirm that the amendments apply only to days that occur on or after 1 July 2015.

Position of major interest groups

Aged & Community Services Australia, the national peak body for non-profit aged care service providers, has argued that ceasing payment of the residential care subsidy for pre-entry leave will result in providers having less money to invest in care and services—such as the employment of staff.[74]

One approved provider—BaptistCare—supported this comment, with Chief Executive Officer, Reverend Dr Lucy Morris, stating that, for her organisation, the removal of the subsidy represents one full-time employee’s salary. This is on top of previous staffing losses when the subsidy was reduced to 30 per cent in 2013, together with the removal of several supplementary payments.[75] 

Another approved provider—Doutta Galla Aged Services—emphasised that the subsidy gives prospective residents ‘peace of mind at a time of significant change’, allowing providers to hold a placement without either party incurring financial stress as a result. The Chairman, Bruce Mildenhall, indicated that it would not be fair to pass on any costs of the measure to new residents, which were estimated to cost that provider about $185,000 annually.[76]

Aged Care Planning Advisory Committees (Schedule 3)

Each financial year, the Minister determines the number of aged care places available for allocation in each state and territory, for each type of care (residential, home or flexible). The Department distributes these places to regions within each jurisdiction in a process known as the Regional Distribution of Aged Care Places (RDOACP).[77] The Aged Care Act 1997 (Cth) allows the Secretary to establish Aged Care Planning Advisory Committees to provide advice about the distribution of places among regions and the proportion of care to be provided to certain people (section 12–7), as specified in the Allocation Principles.[78]

In December 2014, the Minister for Finance, Mathias Cormann, announced that ‘[The Aged Care Planning Advisory Committee] mechanism is being ceased and a streamlined consultation process will be developed for the 2015 Aged Care Approvals Round’.[79] On 10 June 2015, the Assistant Minister for Social Services, Mitch Fifield, announced that applications for this round will open in August.[80]

Item 3 of Schedule 3 of the Bill repeals section 12–7 of the Aged Care Act 1997 (Cth) so that the Secretary can no longer establish Aged Care Planning Advisory Committees.

According to the Explanatory Memorandum, the last appointments to the various committees expired in September 2014.[81] The effect of the Bill is therefore that there is no advisory body to assist the Secretary in the RDOACP process. Further details of the new streamlined consultation process are not yet available. It is difficult to determine how the Secretary will make RDOACP decisions and whether the resulting distributions will be appropriately targeted.

Financial implications

The Explanatory Memorandum states that cessation of the residential care payment will achieve savings of $11.6 million, as announced in the Mid-Year Economic Fiscal Outlook.[82] The abolition of the Aged Care Planning Advisory Committees will have no financial impact.

Committee consideration

Senate Standing Committee on Community Affairs

The provisions of the Bill were referred to the Senate Standing Committee on Community Affairs for inquiry and report by 15 June 2015. Details of the inquiry, including the report, can be found on the committee’s webpage.[83]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills has not yet considered the Bill.

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights has not yet considered the Bill. The Committee has, however, frequently had cause to consider ‘income management’. In its more detailed consideration of the matter it commented:

1.214 The committee accepts that the goals pursued by the income management measures are important and legitimate goals and are intended to promote the enjoyment of various aspects of human rights as articulated in the Minister's analysis and the explanatory statements accompanying the legislative instruments.

1.215 The committee, however, considers that the income management regime involves a significant intrusion into the freedom and autonomy of individuals to organise their private and family lives by making their own decisions about the way in which they use their social security payments.[84]

More recently the Committee has foreshadowed a review of the NTER and related legislation which is scheduled to be released shortly.[85]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[86]

Concluding comments

While the Vulnerable Measure of income management was originally intended to be a case by case measure, in 2013 the Government used a legislative instrument to introduce a new sub measure that applied the measure to members of a class (the youth triggers group).[87] It is possible that, at some time in the future, the Government could seek to introduce a new case by case sub measure by using a legislative instrument.

While the Bill’s provisions only allow the Minister to prescribe a class or classes of persons’ as vulnerable welfare payment recipients in a legislative instrument, it is possible that a class of people could be defined in terms of those who have been assessed as likely to benefit from income management (for example, by a state government authority).

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

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[2].              L Buckmaster, ‘Does income management work?’, Parliamentary Library briefing book : key issues for the 44th Parliament, Research paper series, 2013–14, Parliamentary Library, Canberra, 2013, accessed 16 June 2015.

[3].              Department of Human Services (DHS), ‘About income management’, DHS website, accessed 16 June 2015.

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[6].              Department of Social Services (DSS), ‘11.5.1.20 Who is income managed under the disengaged youth measure, Guide to Social Security Law, DSS website, 11 May 2015, accessed 17 June 2015.

[7].              Australian Government, ‘Income Management Summary (2 January 2015)’, data.gov.au, 2 March 2015, accessed 16 June 2015.

[8].              J R Bray, M Gray, K Hand and I Katz, Evaluating new income management in the Northern Territory: final evaluation report, SPRC and Australian National University, September 2014, accessed 16 June 2015.

[9].              J Macklin and W Snowdon, Major welfare reforms to support vulnerable Australians, media release, 22 June 2010, accessed 16 June 2015.

[10].              Explanatory Memorandum, Social Security and Other Legislation Amendment (Welfare Reform and Reinstatement of Racial Discrimination Act) Bill 2009, p. 22, accessed 16 June 2015.

[11].              Department of Social Services, Discussion paper: potential income management housing referral pathways, January 2012, accessed 16 June 2015.

[12].              Social Security (Administration) (Vulnerable Welfare Payment Recipient) Principles 2013, accessed 16 June 2015.

[13].              Department of Social Services (DSS), ‘11.4.2.10 Decision-making principles for identifying a vulnerable welfare payment recipient, Guide to Social Security Law, DSS website, 11 May 2015, accessed 16 June 2015.

[14].              Deloitte Access Economics, Place Based Income Management – process and short term outcomes evaluation, Department of Social Services August 2014, p. 3, accessed 16 June 2015.

[15].              The most recent data on income management participation broken down by income management measure and location is available from: data.gov.au, ‘Income Management Summary Data’, accessed 16 June 2015.

[16].              National Welfare Rights Network, State of play: income management in 2014, a briefing paper by the National Welfare Rights Network, March 2014, p. 2, accessed 16 June 2015; J R Bray, M Gray, K Hand, I Katz, op. cit., p. 52.

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[21].              Australian Government, Budget measures: budget paper no. 2: 2015–16, p. 160, accessed 16 June 2015.

[22].              DSS, Questions and answers: changes to income management 2015, May 2015, accessed 16 June 2015.

              According to the Department’s questions and answers document: ‘From 1 July 2015, customers who are on the Vulnerable Measure will continue to be income managed until their scheduled end date. People may still qualify for a different form of income management and may volunteer if eligible.’

[23].              DSS, Income management: 2015 Budget, accessed 16 June 2015.

[24].              The Budget also announced $25.6 million over two years to continue funding for Commonwealth Financial Counselling and Capability support services in existing income management locations. Australian Government, Budget measures: budget paper no. 2: 2015–16, op. cit., p. 157.

[25].              Ibid.

[26].              DSS, Questions and answers: changes to income management 2015, op. cit.

[27].              Ibid.

[28].              Senate Community Affairs Legislation Committee, Official Committee Hansard, 23 October 2014, accessed 16 June 2015.

[29].              Data.gov.au, ‘Income Management Summary – 2 January 2015’, op. cit., p. 2.

[30].              J R Bray, M Gray, K Hand and I Katz, Evaluating new income management in the Northern Territory: final evaluation report, op. cit., p. 246.

[31].              Deloitte Access Economics, Place Based Income Management – process and short term outcomes evaluation, op. cit., p. 95.

[32].              J R Bray, M Gray, K Hand and I Katz, op. cit., pp. 246–47.

[33].              Australian National Audit Office, Administration of new income management in the Northern Territory, Audit report no. 19, 2012–13, p. 18, accessed 16 June 2015.

[34].              Deloitte Access Economics, op. cit., p. 114.

[35].              Explanatory Memorandum, Social Services Legislation Amendment (No. 2) Bill 2015, p. 2, accessed 16 June 2015.

[36].              Ibid., p. 2.

[37].              Reference Group on Welfare Reform, A new system for better employment and social outcomes: report of the Reference Group on Welfare Reform to the Minister for Social Services: final report, February 2015, p. 114, accessed 16 June 2015.

[38].              J R Bray, M Gray, K Hand and I Katz, op. cit., p. 319.

[39].              Ibid., p. 319.

[40].              Deloitte Access Economics, op. cit., p. 96.

[41].              Ibid., p. 85.

[42].              Senate Community Affairs Legislation Committee, Official Committee Hansard, op. cit., p. 118.

[43].              Commonwealth Ombudsman, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, 11 June 2015, p. 4, accessed 16 June 2015.

[44].              Ibid., p. 4.

[45].              Ibid., p. 3.

[46].              Explanatory Memorandum, Social Services Legislation Amendment (No. 2) Bill 2015, op. cit., pp. 3–4.

[47].              Australian Government, Budget measures: budget paper no. 2: 2015–16, op. cit., p. 160.

[48].              DSS, Income management: 2015 Budget, op. cit.

[49].              Senate Community Affairs Legislation Committee, Official Committee Hansard, 4 June 2015, pp. 43–44, accessed 16 June 2015.

[50].              Labor Senators, Labor Senators' Dissenting Report, Community Affairs Legislation Committee, Social Services Legislation Amendment (No. 2) Bill 2015 [Provisions], The Senate, Canberra, 2015, accessed 16 June 2015.

[51].              R Siewert, Income management targets vulnerable young Australians, media release, 15 March 2014, accessed 16 June 2015.

[52].              Labor Senators, Australian Greens’ Dissenting Report, Community Affairs Legislation Committee, Social Services Legislation Amendment (No. 2) Bill 2015 [Provisions], The Senate, Canberra, 2015, accessed 16 June 2015.

[53].              NPY Women’s Council, Position Statement on Income Management, May 2012, accessed 16 June 2015.

[54].              Australian Association of Social Workers, Income Management: position paper, July 2011, p. 7, accessed 16 June 2015.

[55].              Australian Council of Social Service (ACOSS), Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, 9 June 2015, p. 3, accessed 16 June 2015.

[56].              Australian Council of Social Service, Compulsory Income Management: a flawed answer to a complex problem, ACOSS, policy analysis, updated September 2014, accessed 16 June 2015.

[57].              ACOSS, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, op. cit., p. 3

[58].              Benevolent Society, Submission to the Review of Australia’s Welfare System, 5 August 2014, accessed 16 June 2015.

[59].              Good Shepherd Australia New Zealand and Good Shepherd Microfinance, Response to the interim report of the Reference Group on Welfare Reform to the Minister for Social Services, August 2014, accessed 16 June 2015.

[60].              Anglicare Australia, Cutting costs, limiting opportunities, Submission in response to Senate Community Affairs Legislation Committee, Inquiry into the Social Services Legislation Amendment (No. 2) and Social Services Legislation Amendment (Youth Employment and Other Measures) Bills 2015, May 2015, accessed 16 June 2015.

[61].              Catholic Social Services Australia, Interim report on welfare reform: submission by Catholic Social Services Australia, 8 August 2014, p. 16, accessed 16 June 2015.

[62].              UnitingCare Australia, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, 9 June 2015, p. 4, accessed 16 June 2015.

[63].              UnitingCare Australia, Submission to the Review of Australia’s Welfare System, 8 August 2014, accessed 16 June 2015.

[64].              UnitingCare Australia, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, op. cit., p. 3.

[65].              National Council of Single Mothers and their Children, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, 10 June 2015, p. 3, accessed 16 June 2015.

[66].              National Welfare Rights Network, State of play: income Management in 2014, op. cit.

[67].              National Welfare Rights Network, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, 10 June 2015, p. 10, accessed 16 June 2015.

[68].              Ibid., p. 9.

[69].              National Welfare Rights Network, Submission to the Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, op. cit., p. 12.

[70].              P Karvelas, ‘Only one recipient of $53m matched savings scheme’, The Australian, (online edition), 16 March 2011, accessed 17 June 2015.

[71].              NPY Women’s Council, Position Statement on Income Management, op. cit.

[72].              Victorian Aboriginal Legal Service Co-operative, Submission to the Welfare Payments Reform Branch - Commonwealth Government in response to the policy outlines for new model of income management, 22 June 2010, accessed 16 June 2015.

[73].              Aged Care (Subsidy, Fees and Payments) Determination 2014, section 42–3, accessed 12 June 2015.

[74].              Aged & Community Services Australia, Cessation of the Pre-Entry Leave subsidy, media release, 15 December 2014, accessed 12 June 2015.

[75].              BaptistCare, Decision to remove further subsidy in Residential Aged Care by Federal Government, media release, December 2014, accessed 12 June 2015. Also see: Residential Care Subsidy Amendment (Leave from Care) Determination 2013, accessed 12 June 2015.

[76].              ‘Subsidy cessation cruel “blow” to the aged’, DPS News, January 2015, accessed 12 June 2015.

[77].              DSS, ‘5.3.2 How does the Commonwealth plan its allocation of places’, Guide to Aged Care Law, DSS website, accessed 12 June 2015..

[78].              Allocation Principles 2014, accessed 17 June 2014.

[79].              M Cormann (Minister for Finance), Smaller Government–towards a sustainable future, Ministerial paper, December 2014, p. 22, accessed 12 June 2015.

[80].              M Fifield (Assistant Minister for Social Services), Aged Care Approval Round 2015 to open in August, media release, 10 June 2015, accessed
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[81].              Explanatory Memorandum, Social Services Legislation Amendment (No. 2) Bill 2015, op. cit., p. 8.

[82].              Australian Government, Mid-year economic and fiscal outlook, p. 197, accessed 12 June 2015.

[83].              Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation Amendment (No. 2) Bill 2015, The Senate, Canberra, 2015, accessed 17 June 2015.

[84].              Parliamentary Joint Committee on Human Rights, Eleventh report of 2013, Stronger Futures in the Northern Territory Act 2012 and related legislation, ‘Evaluating New Income Management’, The Senate, Canberra, June 2013, pp. 45–62, accessed 17 June 2015.

[85].              In a recent report the Committee expressed concern regarding income management measures and said ‘[t]he Committee notes that it intends to report on its Review of Stronger Futures in the Northern Territory Act 2012 and related legislation in mid-2015.’ Parliamentary Joint Committee on Human Rights, Nineteenth report of the 44th Parliament, The Senate, Canberra, 3 March 2015, p. 38, accessed 17 June 2015.

[86].              The Statement of Compatibility with Human Rights can be found on pages 9–12 of the Explanatory Memorandum to the Bill.

[87].              Social Security (Administration) (Vulnerable Welfare Payment Recipient) Principles 2013, accessed 17 June 2015.