Bills Digest no. 7, 2016–17
PDF version [1867KB]
Nitin Gupta, Kai Swoboda, Daniel Weight
Economics Section
Paula Pyburne
Law and Bills Digest Section
Alex St John
Science, Technology, Environment and Resources Section
Don Arthur, Amanda Biggs, Luke Buckmaster, Dale
Daniels, Alex Grove, Marilyn Harrington, Michael Klapdor, Matthew Thomas
Social Policy Section
12
September 2016
Contents
The Bills Digest at a glance
Table 1: Schedules previously
introduced and analysed in this Digest
Purpose of the Bill
Committee consideration
Views on the Bill
Financial implications
Table 2: Financial impact table ($m)
Schedules 1–3—Higher education
provisions
History of the measures
Purpose of the Schedules
Background
Financial implications
Table 3: Impact over the forward
estimates ($m)
Statement of Compatibility with Human
Rights
Key provisions
Schedule 4—Job commitment bonus
Purpose of the measure
Commencement
Background
Policy position of non-Government
parties/Independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Key Issues and Provisions
Concluding Comments
Schedule 6—Indexation of private
health insurance thresholds
Purpose of the Schedule
Commencement
Background
Private health insurance rebate
Medicare levy surcharge
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Schedule 7—Abolishing the National
Health Performance Authority
Purpose
Commencement
Background
Performance of the Authority
The MYEFO announcement
Committee consideration
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Table 4: Expected savings $m
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Schedule 8—Aged care
History of the measures
Commencement
Purpose of the Schedule
Background
Provider funding and compliance
Red tape reduction
Committee consideration
Previous committee consideration
Economics Legislation Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Part 1—Compliance
Part 2—Adviser and administrator
panels
Part 3—Approved provider obligations
Comment
Schedule 9—Dental services
History of the Schedule
Purpose of the Schedule
Commencement
Background
Dental health status
Government funding of dental services
Dental Benefits Act 2008
Eligibility
Table 5: CDBS eligibility in 2014 by
government payment received
Utilisation and cost of CDBS
National Partnership Agreements
(NPAs) on dental services
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Table 6: Savings over the forward
estimates provided in the EM
Table 7: Savings over the forward
estimates provided in the 2016–17 Budget
Table 8: Funding allocation under the
National Partnership on the child and adult public dental scheme
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Schedule 11—Student start-up
scholarships
History of the amendment
Purpose of the Schedule
Commencement
Background
Removing the grandfathering
arrangements
Financial implications
Table 9: Impact over the forward
estimates ($m)
Statement of Compatibility with Human
Rights
Key provisions
Schedule 12 Interest charge
Purpose of the Schedule
Commencement
Background
History of the Schedule
Why impose an interest charge on
debt?
Committee consideration
Senate Community Affairs Legislation
Committee
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Key provisions and issues
Key provisions
Issues
Schedule 14—Parental leave payments
History of the measure
Purpose of the Schedule
Commencement
Background
Paid Parental Leave Scheme
Baby Bonus and newborn payments
Impact of PLP and DAPP on other
payments
Why were PLP and DAPP excluded from
the income tests?
Rationale for the change
Policy position of non-government
parties/independents
Position of major interest groups
Statement of Compatibility with Human
Rights
Financial implications
Key issues
Key provisions
Schedule 15—Fringe benefits
Purpose of the Measure
Commencement
Background
Financial implications
Position of major interest groups
Key issues
Key provisions
Schedule 16—Carer Allowance
Purpose of the Schedule
Commencement
Background
Origins of the backdating provisions
2006 changes
Rationale for the change
Policy position of non-government
parties/independents
Position of major interest groups
Carers Australia
Australian Council of Social Service
Statement of Compatibility with Human
Rights
Key issues
Provisions
Schedule 20—Psychiatric confinement
History of the schedule
Purpose of the schedule
Background
Recent media coverage — the Toki case
The Government’s rationale for the
measure
The original policy intent
Committee consideration
Senate Community Affairs Legislation
Committee
Parliamentary Joint Committee on
Human Rights
Position of major interest groups
Policy intent
Forensic patients should not be
treated in the same way as those convicted of a crime
Discrimination against people with a
mental impairment
Distinction between serious and
non-serious crimes is not relevant
Impact on rehabilitation and
reintegration
Need for consultation with states and
territories
Financial implications
Table 10: Savings over the forward
estimates
Key issues and provisions
Meaning of ‘course of rehabilitation’
Introduction of a distinction between
serious and non-serious offences
Meaning of serious offence
Period of integration back into the
community
Responsibilities of the
states/territories and the Commonwealth
Concluding comments
Schedule 21—Closing carbon tax
compensation to new welfare recipients
Purpose of the measure
Commencement
Nature of the Energy Supplement
Background
Abbott Government
changes
Payment of the Energy Supplement
Current payment rates
Table 11: Selected Energy Supplement
payment rates
Nature of the Single Income Family
Supplement
Rationale for closing off carbon tax
compensation
Policy position of non-government
parties
Australian Labor Party
Australian Greens
Minor parties and independents
Position of major interest groups
Statement of compatibility with Human
Rights
Key issues
Who will be affected?
The adequacy of allowance payment
rates
Indexation issue means many worse off
than had the carbon price compensation never been introduced
Figure 1: Impact of 2013 indexation
adjustment on Newstart Allowance rates
Table 12: Fortnightly payment rates
compared to those if Energy Supplement never introduced, as at
20 September 2016
Complexity of the social security
system
Comment
Key provisions
Part 1—A New Tax System (Family
Assistance) Act 1999
Part 2—Social Security Act 1991
Part 3—Farm Household Support Act
2014
Part 4—Veterans’ Entitlements Act
1986
Part 5—Military Rehabilitation and
Compensation Act 2004
Part 6—Social Security Act 1991
Part 7—A New Tax System (Family
Assistance) Act 1999
Schedule 22—Rates of R&D tax
offset
History of the measure
Purpose of the measure
Commencement
Background
Committee consideration
Senate Economics Legislation
Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Table 13: Financial implications of
Schedule 22
Statement of Compatibility with Human
Rights
Key issues and provisions
Schedule 24—Single appeal path under
the Military Rehabilitation and Compensation Act
History of the amendments
Commencement
Purpose
Background
Current military compensation
arrangements
Military Rehabilitation and Compensation
Commission
Review of determinations of the
Commission
Figure 2: Outline of current review
arrangements
Review of Military Compensation
Arrangements
Rationale for the changes
Senate Foreign Affairs, Defence and
Trade Legislation Committee
Committee consideration
Senate Standing Committee for the
Selection of Bills
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Labor Party
Senator Lambie
Senator Xenophon
Position of major interest groups
Financial implications
Table 14: Impact over the forward
estimates
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Single appeal path
Recovery of costs
Commencement
Date introduced: 31
August 2016
House: House of
Representatives
Portfolio: Treasury
Commencement: Various
(see analysis of each Schedule)
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 Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at September 2016.
The Bills Digest at a glance
The Budget Savings (Omnibus) Bill
2016 (the Bill) contains 24 schedules across eight portfolios:
- Education
-
Employment
- Environment and Energy
- Health and Aged Care
- Social Services
- Veteran’s Affairs
-
Industry, Innovation and Science and
- Treasury.
As shown in the table below, many of the measures have
been previously introduced to Parliament. This Digest includes discussion of schedules
for which analysis had been completed at the time of publication. Schedules for
which analysis has been provided are highlighted in the table. It is intended
that an updated Bills Digest that includes those schedules not analysed here,
will be provided at a later date.
Table 1:
Schedules previously introduced and analysed in this Digest
Purpose of the Bill
The purpose of the Budget Savings (Omnibus) Bill 2016 is
to amend various acts to:
- introduce
a new minimum threshold for repaying Higher Education Loan Programme debts from 1 July 2018, lowering it from the current income
threshold of $54,868 per annum to $51,956 per annum, and establish a
repayment rate of two per cent for those whose income exceeds the
threshold amount but which is less than $57,730 (Schedule 1)
- change
the indexation arrangements for grants made under the Higher Education
Support Act 2003 from 1 January 2018, replacing the current Higher
Education Grants Index (HEGI), which comprises 75 per cent of 90 per cent
of the Professional, Scientific and Technical Services Labour Price Index and
25 per cent of the Consumer Price Index (CPI), with the CPI (Schedule 2)
- discontinue
the HECS-HELP benefit, which provides an incentive for graduates
of particular courses (mathematics, statistics or science; education, nursing
or midwifery; and early childhood education) to take up related occupations or
work in specified locations by reducing their compulsory HELP repayments,
from 1 July 2017 (Schedule 3)
- abolish
the Job Commitment Bonus (Schedule 4)
- reduce
funding to the Australian Renewable Energy Agency, giving effect to the
Government’s policy to discontinue providing grants for renewable energy
research and development in favour of a limited new loans and equity investment
scheme known as the Clean
Energy Innovation Fund (Schedule 5)
- extend
the pause on the indexation of the income tiers that apply to the Medicare Levy
Surcharge and the private health insurance rebate for three years from 1 July
2018 (Schedule 6)
- abolish
the National Health Performance Authority and transfer its assets and
liabilities to the Australian Institute of Health and Welfare (Schedule 7)
- strengthen
compliance measures for aged care providers when assessing residents for
funding purposes; reduce the regulation of advisers and administrators who may
be appointed to assist non-compliant providers; and reduce reporting
requirements relating to key personnel of providers (Schedule 8)
- close
the Child Dental Benefits Schedule from 1 January 2017, and establish a
framework to provide financial assistance to the states and territories for the
purpose of rendering dental services after 1 January 2017 (Schedule 9)
- remove
the exemption from the newly arrived resident’s waiting period for social
security payments and benefits for new migrants who are family members of
Australian citizens or long-time permanent residents (Schedule 10)
- remove
grandfathering arrangements for current recipients of the Student Start-up Scholarship,
thereby terminating this benefit (Schedule 11)
- provide
for a new interest charge scheme for debts arising in relation to family
assistance, social security, paid parental leave and student assistance
payments (Schedule 12)
- provide
that a person who does not have satisfactory arrangements in place to repay
their family assistance, social security, paid parental leave and student
assistance debt(s) may be prevented from leaving Australia without either
having paid their debt(s) or made arrangements to pay (Schedule 13)
- include
Parental Leave Pay and Dad and Partner Pay payments in the income test for
income support payments (such as pensions and allowances) (Schedule 14)
- change
the way the value of fringe benefits is assessed for the purpose of the income
test for family assistance payments and some income support payments (Schedule
15)
- remove
backdating provisions for Carer Allowance (Schedule 16)
- continue
a freeze on the indexation of certain income test thresholds and limits for
Family Tax Benefit and paid parental leave (Schedule 17)
- remove
certain exemptions from the social security and veterans’ affairs income and
assets tests for aged care residents who are renting out their former home (Schedule
18)
- include
employment income earned by income support recipients during a 12 week
‘employment nil rate period’ in the income test for Family Tax Benefit Part A
and the parental income test for payments to young people, such as Youth
Allowance (Schedule 19)
- provide
that that people who are undergoing psychiatric confinement because they have
been charged with a serious offence cannot receive social security payments
except during a period when they are being integrated back into the community (Schedule
20)
- close
two carbon price compensation payments, the Energy Supplement and Single Income
Family Supplement, to new recipients of social security, family assistance and
veterans’ affairs payments (Schedule 21)
- reduce
the rates of tax offset available under the research and development (R&D)
tax incentive for the first $100 million of eligible expenditure by 1.5
percentage points (Schedule 22)
- create
a new reporting framework, known as Single Touch Payroll for substantial
employers to automatically provide payroll and superannuation information to
the Commissioner of Taxation at the time it is created (Schedule 23)
- create
a single appeal path with respect to the review of original determinations made
under the Military Rehabilitation and Compensation Act 2004; and extend
the circumstances in which the Administrative Appeals Tribunal may award costs
to a claimant with respect to a review of a decision made by the Veterans’ Review
Board (Schedule 24).
Committee
consideration
The Bill has been referred to the Senate Economics
Legislation Committee for inquiry and report by 13 September 2016. Details
of the inquiry are at: Budget
Savings (Omnibus) Bill 2016.
Views on the Bill
Public debate on the Bill has largely focused on
particular Schedules, rather than the Bill as a whole. Some stakeholders noted
the length of time allowed for consideration of the Bill and submission to the
Senate Economics Legislation Committee inquiry was short, and indicated this
limited their consideration of the Bill.[1]
Information on the policy positions of non-government parties, independents and
major stakeholders relating to particular measures is in the discussion of each
Schedule.
In his second reading speech, the Treasurer Scott Morrison
argued the Labor Party ‘should honour their commitments in the election to
support these savings measures that they included in their own budget costings
during the election’.[2]
However, Manager of Opposition Business, Tony Burke, stated the Bill included
measures that had not been part of Labor’s election commitment costings.[3]
The Greens have indicated that they oppose a number of the
Schedules, stating: ‘The Greens refuse to accept that the only way to balance
the budget is at the expense of the health of millions of Australian kids or by
cutting investment and jobs in clean energy technology’.[4]
Financial
implications
The Explanatory Memorandum to the Bill includes a table
showing the anticipated financial implications of the Bill.[5]
A correction was made to the Explanatory Memorandum to update an error relating
to the financial impact of Schedule 11—Student start-up scholarships.[6]
Including this correction, the Government anticipates the financial impact of
the Bill overall to be as follows:
Table 2:
Financial impact table ($m)
| 2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
Total |
| -92.1 |
467.9 |
1,601.6 |
1,917.4 |
2,101.9 |
5,996.6 |
Source: Correction
to the Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016.
Information on the financial implications of particular
measures is provided in the discussion of each Schedule.
Schedules 1–3—Higher education provisions
History of the measures
Schedules 1–3 of the Bill propose measures that will change
the repayment requirements for Higher Education Loan Programme
(HELP) debts, change the indexation arrangements for higher education grants
and discontinue the HECS-HELP benefit.
The Bill’s higher education measures were
first announced in the in the 2014–15 Budget.[7]
Two previous attempts were made to legislate the measures through:
Both these Bills failed to pass the Senate.
As one of his first acts as Minister for
Education and Training, Senator Simon Birmingham announced in October 2015
that the higher education reforms proposed in the 2014–15 Budget would be
delayed until 2017 at the earliest and consultation would follow.[10] This decision was confirmed in the 2016–17 Budget, which
announced that the implementation of the higher education reforms proposed in
the 2014-15 Budget, together with other reforms announced in the Mid-year Economic and Fiscal Outlook
2014–15, would be delayed by an ‘additional year’ in order to ‘undertake
further consultation’.[11]
Purpose of the Schedules
The purpose of Schedules 1–3 of the Bill is to amend the Higher
Education Support Act 2003 (the HESA) to:
-
introduce a new minimum repayment income threshold for all HELP debts from 1 July 2018, lowering it from the current
income threshold of $54,868 per annum to $51,956 per annum, and
establish a repayment rate of two per cent for those whose income
exceeds the threshold amount but is less than $57,730 (Schedule 1)
- change the indexation arrangements for grants made under the HESA
from 1 January 2018, replacing the current Higher Education Grants Index
(HEGI), which comprises 75 per cent of 90 per cent of the Professional,
Scientific and Technical Services Labour Price Index and 25 per cent of the
Consumer Price Index (CPI), with the CPI (Schedule 2) and
- discontinue the HECS-HELP benefit, which provides
an incentive for graduates of particular courses (mathematics, statistics or
science; education, nursing or midwifery; and early childhood education) to
take up related occupations or work in specified locations by reducing their
compulsory HELP repayments, from 1 July 2017 (Schedule 3).[12]
Background
For further information about the measures contained in
Schedules 1–3, see the following Bills Digests:
- C Ey, Higher
Education and Research Reform Amendment Bill 2014, Bills digest, 33,
2014–15, Parliamentary Library, Canberra, 2014 and
- J Griffiths, Higher
Education and Research Reform Bill 2014, Bills digest. 69, 2014–15,
Parliamentary Library, Canberra, 2015.
Note: this section will be revised at a later date should
time allow for this Bills Digest to be updated.
Financial implications
It is estimated that the measures in Schedules 1, 2 and 3 of
the Bill will have a total impact on the underlying cash balance of $79.4
million over the forward estimates as shown in the following table.
Table 3: Impact over the forward estimates ($m)
| Schedule |
Measure |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
Total |
| 1 |
Minimum repayment income for HELP debts |
0.0 |
-2.1 |
-2.2 |
2.8 |
4.8 |
3.3 |
| 2 |
Indexation of higher education support amounts |
0.0 |
0.0 |
0.0 |
9.7 |
44.9 |
54.6 |
| 3 |
Removal of HECS-HELP benefit |
0.0 |
0.0 |
7.2 |
7.1 |
7.3 |
21.5 |
Source: Explanatory Memorandum, Budget
Savings (Omnibus) Bill 2016, p. 5.
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 compatibility of Schedules 1, 2 and 3 of the Bill 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 Schedules
are compatible.[13]
At the time of writing this Bills Digest, the Parliamentary
Joint Committee on Human Rights had not commented on the Bill.
Key provisions
This section will be provided at a later date should time
allow for this Bills Digest to be updated.
Schedule 4—Job commitment bonus
Purpose of
the measure
The purpose of the amendments in Schedule 4 to the Bill is
to repeal provisions of the Social
Security Act 1991, the Social
Security (Administration) Act 1999 (the SS Admin Act), the Farm
Household Support Act 2014 and the Income
Tax Assessment Act 1997 which provide for the Job Commitment Bonus.
Commencement
The provisions in Schedule 4 commence on the later of 1
January 2017 and the day after Royal Assent.
Background
The introduction of a Job
Commitment Bonus was a Coalition Commitment at the 2010 and 2013 Federal
elections.[14]
The measure was included in the Coalition Government’s December 2013 Mid-Year Economic And Fiscal Outlook
and a Bill giving effect to it—the Social Security Legislation Amendment (Increased
Employment Participation) Bill 2014—was passed by both Houses Of Parliament on
16 June 2014.[15]
The Job Commitment Bonus (the Bonus) commenced in 2014.[16]
Under the Bonus, job seekers aged 18 to 30 years who have
been unemployed and in receipt of income support for 12 months or more are
eligible for a $2,500 tax-free payment if they gain paid employment and remain
off income support for a continuous period of 12 months. If they remain in
continuous gainful work for an additional 12 months (a continuous period of 24
months in total) job seekers are eligible for a further $4,000 tax-free
payment.[17]
The Bonus is demand-driven and was originally predicted to
cost $157.1 million over five years.[18]
Take up of the Bonus has been far less than was anticipated.
In a Senate Estimates hearing of 6 May 2016 a representative from the
Department of Employment stated that, as at 31 March 2016, there had been only
16 per cent of the expected claims for the 2015–16 financial year.[19]
According to the Explanatory Memorandum to this Bill, less than 30 per cent of
expected claims for the 2015–16 Financial Year were achieved.[20]
Expenditure on the Bonus as at 31 March 2016 was $5.53
million, and, according to Employment Portfolio Budget Statements for 2016–17,
total spending on the Bonus for 2015–16 was expected to be $34.234 million.[21]
This higher figure is likely to be due largely to a number of Bonus claimants
having qualified for their second payment on 1 July 2016. Expected expenditure
on the Bonus for the 2016–17 financial year is $15.686 million.[22]
Given the lower than expected take-up of the Bonus, and
evidence of deadweight loss (that is, claimants of the Bonus who would most
likely have stayed in work without the incentive), the Government made the
decision to cease the Bonus as part of the 2016–17 Budget.[23]
Beyond its low take up, the stated rationale for ceasing the Bonus is:
... the Job Commitment Bonus did not increase job seekers’
efforts to find a job and generally was not an incentive for potentially
eligible individuals to stay in a job. Survey results showed that, of those
people who were aware of the Bonus, the majority said that the Bonus did not
increase their job application effort, the number of jobs they applied for, or
their motivation to find a job. Individuals who were potentially eligible for
the Bonus generally stated that their main motivation was to move from welfare
into work. Once they got work, they expressed a desire to stay in work and off
income support, regardless of the Bonus.[24]
These findings bear out the observations made in the Bills
Digest for the Social Security Legislation Amendment (Increased Employment
Participation) Bill 2014.[25]
In the Bills Digest it was argued that the Bonus was an
experiment that was premised on two highly questionable assumptions.[26]
The first of these was that young people who are long-term unemployed do not
want to take up ongoing work and the second, that a large financial incentive
would entice many more young long-term unemployed people into employment.
The Bills Digest argued that, based on the available
evidence, the majority of young people do want to work, or to work more hours,
but face a number of barriers to achieving their employment goals. It also
contended that, whether or not long-term unemployed people are unwilling to
work, they must meet strict participation requirements if they are to remain
eligible for their payment.[27]
Perhaps most importantly, the Bills Digest pointed out
that long-term unemployed people have significant financial incentives to find paid
work as Newstart Allowance and Youth Allowance are paid at low rates that are
calculated to encourage people to participate in paid employment.[28]
Policy position of non-Government parties/Independents
Neither Labor nor other non-Government parties or Independents
appear to have publicly expressed a position with regard to the proposed
cessation of the Job Commitment Bonus.
Position of major interest groups
There has been very little commentary on the proposal to
cease the Bonus. This is perhaps to be expected, as those stakeholders who
commented on the measure when it was introduced argued that it was unlikely to
reduce youth unemployment.
In its Employment Proposals for the 2015–16 Federal Budget
the Australian Council of Social Service (ACOSS) recommended that the Bonus be
abolished, with the savings to be diverted into the Employment Fund.[29]
Financial
implications
According to the 2016–17 Budget Papers, ceasing the Bonus
from 31 December 2016 will result in savings of $242.1 million over the
five years from 2015–16.[30]
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 acknowledges that
the amendments in Schedule 4 engage the following rights:
- the
right to social security in Article 9 of the International Covenant On
Economic, Social And Cultural Rights (ICESCR)
- the
right to an adequate standard of living in Article 11(1) of the ICESCR
- the
right to work in Article 6 of the ICESCR and
- the
right to equality and non-discrimination in Article 2(2) of the ICESCR and
Article 26 of the International Covenant on Civil and Political Rights (ICCPR).
However, the Government considers that the amendments in
Schedule 4 to the Bill are compatible with human rights because to the extent
that they may limit human rights, those limitations are reasonable, necessary
and proportionate.[31]
Key Issues
and Provisions
Part 1 of Schedule 4 to the Bill repeals
those parts of the SS Act and SS Admin Act that refer to and
provide for the payment of the Bonus.
Part 2 of the Schedule similarly repeals those
parts of the Farm Household Support Act and Income Tax Assessment Act
that provide for or relate to the Bonus.
Part 3 spells out the transitional arrangements
associated with the cessation of the Bonus.
Within Part 3, subitem 13(1) emphasises that a
jobseeker cannot become qualified for the Bonus on or after the cessation of
the Bonus. However, if a person is overpaid or incurs a debt in relation to the
payment of the Bonus, this will still apply on or after the date the Bonus
ceases (Part 3, subitem 13(2)).
Part 3, Division 1, Subdivision FD of the SS Admin Act
provides for the claims process for the Bonus. Under this subdivision a
person's claim for a Bonus must generally be made within 90 days of the
person’s qualifying for the Bonus. Nevertheless, if a jobseeker qualified for a
Bonus and was permitted to make a claim before the cessation of the Bonus, they
will still be able to make a claim after the Bonus ceases, provided that claim
is made within 90 days of the person qualifying for the Bonus (Part 3, subitem
13(3)).
The Bonus claims process under the SS Admin Act
will continue to apply on and after the cessation of the Bonus in relation to
decisions and determinations made before, on or after the cessation of the
Bonus (Part 3, subitem 13(4)). Parts 4 and 4A of the SS Admin Act
provide for the internal review of decisions and review of decisions by the
Administrative Appeals Tribunal (AAT), respectively. These provisions will
continue to apply on and following the cessation of the Bonus with regard to
Bonus-related decisions made before, on or after the cessation of the Bonus
(Part 3, subitem 13(5)).
The Bonus is tax-free, and this will continue to be the
case on and after the cessation of the Bonus, in relation to all Bonus payments
(Part 3, subitem 13(6)).
Concluding Comments
It might be argued that the abolition of the Bonus is
consistent with the Government’s stated general approach to social welfare,
under which ‘policies that are found to be effective will be
continued or enhanced, while ineffective policies will be improved or ceased,
with funding made available to new approaches’.[32]
Schedule 6—Indexation
of private health insurance thresholds
Purpose of the Schedule
The purpose of Schedule 6 is to
amend the Private
Health Insurance Act 2007 to extend the pause on the indexation of
the income tiers that apply to the Medicare Levy Surcharge (MLS)[33]
and the private health insurance rebate (the rebate) for three years from 1 July
2018.[34]
Commencement
The provisions in Schedule 6 to the Bill commence on the
day after Royal Assent.
Background
The MLS and private health insurance rebate were introduced by
the Howard Government as part of a suite of measures to halt and reverse the
slide in private health insurance membership which had emerged in the mid‑1990s.[35]
Along with Lifetime Health Cover (LHC)[36]
the MLS and the rebate were intended to encourage the take‑up of private
health insurance and reduce pressure on the public hospital system.
Private health insurance rebate
The cost of purchasing private health insurance is made more
affordable through the means-tested rebate. Income tiers determine the level of
rebate for which an individual or family is eligible. Those on incomes below
the base tier of $90,000 (for individuals) or $180,000 (for families) receive the
highest level of rebate, while those in the three higher income tiers receive a
proportionally lower rebate. Those on incomes above the highest income tier of
$140,000 (for individuals) and $280,000 (for families) receive zero rebate on
the cost of their premiums. Higher rebates are available to those aged over 65.[37]
The cost to the Government of the rebate was $6.2 billion in
2015–16.[38]
A three year pause on indexation of the income tiers was
announced in the 2014–15 budget.[39]
The pause was effected by the enactment of the Private
Health Insurance Amendment Act (No. 1) 2014. Extending the pause for an
additional three years is expected to slow the growth rate of the rebate but
budget estimates still forecast it will grow 2.5 per cent in real terms over
the period 2015–16 to 2016–17, and 1.3 per cent over the period 2016–17 to
2019–20.[40]
This is due to expectations that uptake of private health insurance will
continue.
Some 55.7 per cent of the population is covered by some form
of private health insurance.[41]
The extension of the pause on indexation was announced in
the 2016–17 budget.[42]
It will mean that those on incomes that have increased above the base tier
level or moved into higher income tiers, will see the value of their rebate
reduce relative to the premium they pay for their health insurance policy. The
budgetary effect will be to reduce government outlays on the rebate.
Medicare levy surcharge
Higher income earners who choose not to purchase private
health insurance are liable for the MLS (in addition to the two per cent
Medicare levy on taxable income). The MLS is calculated at a rate of between
1.0 to 1.5 per cent of taxable income, depending on which of the three income
tiers the taxpayer falls into.
Medicare itself is funded through a combination of general
taxation, plus a two per cent levy on taxable income (the Medicare Levy) and
the means-tested MLS. The MLS contributes only a small proportion of the total
raised. In 2013–14, some 177,000 individuals paid the MLS which raised around $232.2
million.[43]
As a result of this measure, some individuals who previously
would not have been liable for the MLS may become liable if their incomes
increase and move them into the higher income tiers where liability for the MLS
applies. Others may see the rate of their levy liability increase.
In total, the income thresholds will have been paused at
2014–15 levels for a period of six years.
Policy position of non-government parties/independents
During the Federal election campaign, Labor indicated it
would support the pause in indexation being extended for a further three years.[44]
The measure was included in Labor’s
Plan for budget repair that is fair package which was provided to
the independent Parliamentary Budget Office for costing.[45]
The Greens support phasing out private health insurance,
but they have yet to state a position on this measure. When legislation
introducing the indexation pause was debated in 2014, the Greens supported the
savings that would result from fewer people qualifying for the rebate; but they
criticised the measure in relation to the MLS as punishing people who choose
not to purchase private health insurance.[46]
Independent Senator Nick Xenophon did not support the measure
either, but for different reasons. He argued in favour of maintaining
indexation as it would support the private health sector, and criticised the
Government for moving away from its commitment to fully restore the private
health insurance rebate.[47]
Other Independents did not participate in the debate at
the time.
The positions of current cross-benchers have yet to be
stated.
Position of major interest groups
Major stakeholder groups have yet to respond to the
amendments that are proposed in Schedule 6 of the Bill. However, when it was
announced at the budget that the pause in indexation would continue for a
further three years a number of stakeholders and health experts offered
comment.
Then President of the Australian Medical Association (AMA)
Professor Brian Owler responded by saying that ‘patients will be further
disadvantaged’ by the measure and that ‘it will be another hit to household
budgets, and represent extra disincentives to people accessing health care when
they need it’.[48]
Suzanne Greenwood of Catholic Health Australia (CHA) also noted that ‘[m]any
private health insurance members will also face higher premium costs from 2018
as a result of a three year freeze in the indexation of the income tiers
thresholds’.[49]
Jennifer Doggett reported that she received advice from
the Department of Health that the measure is only expected to affect 27 per
cent of private health insurance members.[50]
Doggett also observed that the Government was ‘contradicting its rhetoric about
improving the value and attractiveness of PHI to consumers’, but added ‘given
the scale of consumer dissatisfaction and the fact that it will only impact
upon 27% of fund members, this additional move is unlikely to be a game changer
for PHI membership’.[51]
Health economist Ian McAuley has reportedly argued that ‘the
freeze in the threshold for private health rebates and the Medicare Levy
Surcharge takes the cost of subsidising the insurance sector off the budget and
into the "dark world of hidden subsidies"’. Over time he says, ‘the
government will gradually shell out less for the rebate, while the pressure on
individual taxpayers to buy private health cover will increase’.[52]
No specific commentary from private health insurers on the
extension of the indexation pause was identified. However, in a media statement
Private Healthcare Australia, representing private health insurers, commented
generally on budget measures relating to private health insurance. While
welcoming ‘the Government’s commitment to improving the sustainability and affordability
of the private healthcare sector’, it warned ‘the Government should take
immediate steps to reduce pressure on premiums’ and pointed out that many
members of private health funds ‘are not wealthy’.[53]
Financial implications
The Explanatory Memorandum (EM) details savings to 2019–20
of $381.0 million.[54]
This is different to the savings of $744.2 million over three years forecast in
the 2016–17 budget.[55]
This difference is likely due to the different time periods covered by the EM
compared to that in the budget document. The EM figure relates to the total
savings for the two years 2018–19 and 2019–20, while the budget estimate is for
a three year period.
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 Schedule’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 Schedule 6 is compatible.[56]
Parliamentary Joint Committee on Human Rights
At the time of writing this Bills Digest the Parliamentary
Joint Committee on Human Rights had not made any comments about the Bill.
Key issues and provisions
Schedule 6 of the Bill contains one item that amends the
indexation provision in the Private Health
Insurance Act 2007. Subsection 22-45(3A) specifies the years that
indexation of the income tiers is not to apply. Currently, this is the
financial years 2015–16 to 2017–18. Item 1 of Schedule 6 specifies that
the provision be amended to include the years 2018–19, 2019–20 and 2020–21.
Schedule 7—Abolishing
the National Health Performance Authority
Purpose
The provisions in Schedule 7 of the Bill amend the National
Health Reform Act 2011 to abolish the National Health Performance
Authority and to transfer its assets and liabilities to the Australian
Institute of Health and Welfare (AIHW).
Commencement
The amendments in Schedule 7 of the Bill commence on the
earlier of a single day to be fixed by Proclamation or six months after the
Royal Assent.
Background
Prime Minister Rudd first outlined plans to introduce
national performance standards for health care providers in his address to the National Press Club on health reform on 3 March
2010.[57]
The subsequent National Health and Hospitals Network Agreement (NHHN
Agreement) made in April 2010 between the Commonwealth and all state and
territory governments, except Western Australia, committed governments to
establishing an independent National Performance Authority that would be
responsible for:
- monitoring
the performance of health care providers from 1 July 2011
- reporting
against clinical safety and quality performance standards developed by the Australian
Commission on Safety and Quality in Health Care (ACSQHC), and
- producing
reports on waiting times, adverse events, patient satisfaction and financial
management in public and private hospitals.[58]
Accordingly the National Health Performance Authority (the
Authority) was established, by statute, in 2011.[59]
The main functions of the Authority were to monitor and publish
reports on the performance of:
- local
hospital networks
- public
hospitals
- private
hospitals
- primary
healthcare organisations, and
- other
healthcare organisations providing health services.[60]
Performance
of the Authority
The Authority was the first national body to report on
both hospitals and Medicare Locals[61]
across Australia.[62]
The Authority has fulfilled its role by producing numerous
reports comparing the performance of healthcare services and facilities across
the country. These reports have helped identify where performance is variable
or where improvement is needed. For example, the Authority’s reports into
vaccination rates helped identify regions where childhood vaccination levels
were below target levels.[63]
Another significant report highlighted differences in the length of time
patients with the same condition spend in hospital, with the report finding
that the average length of stay can vary by as much three or four times.[64]
One of the most valuable reports produced by the Authority in partnership with
the ACSQHC was the Australian Atlas of Healthcare Variation, published
in 2015. The Atlas aimed to identify unnecessary variation in health care and thus
improve health outcomes. For the first time, data from the Medicare Benefits
Schedule (MBS), Pharmaceutical Benefits Scheme (PBS) and Admitted Patient Care
National Minimum Data Set (APC NMDS) was used to identify variations across
healthcare settings.[65]
The Authority has also reported regularly on rates of hand hygiene and healthcare-associated
Staphylococcus aureus bloodstream infections across health facilities. Its
recent report comparing costs of acute care in public hospitals was the first
report internationally that compared the relative efficiency of a nation’s
hospitals.[66]
The Authority also contributed data for the MyHospitals
and MyHealthyCommunities websites. In 2014–15, reports on the
Authority’s corporate website, MyHospitals and MyHealthyCommunities
websites generated more than three million page views.[67]
All Authority reporting was underpinned by performance
indicators in the Council of Australian Governments’ (COAG) Performance and
Accountability Framework.[68]
The MYEFO announcement
In its Mid-year Economic and Fiscal Outlook statement
for 2015–16, the Government announced that it would rationalise the
functions of a number of agencies. In particular, it would abolish the
Authority from 30 June 2016 and transfer its functions to the AIHW, the ACSQHC,
and the Department of Health.[69]
Consistent with this statement the Authority closed with effect from 30 June
2016.
The amendments in Schedule 7 to the Bill formalise that
action.
The rationale for the closure is set out in the
Explanatory Memorandum to the Bill as follows:
The responsibilities of the National Health Performance
Authority (NHPA) overlap with those of the Australian Institute of Health and
Welfare (AIHW) in terms of the collection and dissemination of accurate,
relevant and useful information on the performance of Australia’s health system
and health services. The overlap resulted in the duplication of functions and
an uncoordinated approach to reporting. The closure of the NHPA and the
rationalisation of functions across the two agencies will strengthen AIHW’s
national leadership role in the collection and publication of health
information and statistics. [70]
Committee consideration
The measures in Schedule 7 to the Bill are new measures and
have not been the subject of earlier consideration by the Parliament.
The Bill was referred to the Economics Legislation Committee
for consideration on 1 September 2016, but a reporting date was not specified.[71]
At the time of writing this Bills Digest the amendments contained in
Schedule 7 have not been the subject of report by any Senate Committee.
Policy position of non-government parties/independents
The Authority has closed. Neither the non-government
parties nor independent members appear to have commented about the closure.
Position of major interest groups
Similarly there are no comments from major interest groups.
Financial implications
According to the Explanatory Memorandum, the measures in
Schedule 7 to the Bill will result in the following savings:
Table 4: Expected savings $m
| 2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
Total |
| -0.7 |
22.1 |
21.8 |
22.7 |
22.7 |
88.6 |
Explanatory
Memorandum, Budget Savings (Omnibus) Bill 2016, p. 5.
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 Schedule’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 Schedule 7 is compatible.[72]
Parliamentary Joint Committee on Human Rights
At the time of writing this Bills Digest the Parliamentary
Joint Committee on Human Rights had not made any comments in relation to the
measures in Schedule 7 to the Bill.
Key issues and provisions
Item 10, in Part 1 of Schedule 7 to the Bill
repeals Chapter 3 of the National Health Reform Act which establishes
the Authority. The other items in Part 1 of Schedule 7 to the Bill make
consequential amendments to the National Health Reform Act to remove
references to the Authority.
Part 2 of Schedule 7 to the Bill contains application and
transitional provisions to, amongst other things:
- transfer
the assets and liabilities of the Authority to the AIHW[73]
- ensure
that anything done by, or in relation to the Authority before the transition
time has effect at and after that time as if it had been done by the
AIHW—the transition time being the date on which the provisions
of Schedule 7 commence[74]
- transfer
any legal proceedings of the Authority and any of its records and documents to
the AIHW[75]
and
- require
the Health Secretary to prepare and give to the Health Minister for
presentation to the Parliament a final report on the activities of the
Authority.[76]
Schedule 8—Aged care
History of the measures
Part 1 of Schedule 8, which amends compliance measures for
residential aged care providers, has not been previously included in a Bill.
The measures in Part 2 of Schedule 8, which amend
arrangements for adviser and administrator panels, were set out in equivalent
terms in items 3–12 of Part 3 in Schedule 7 of the Omnibus Repeal Day (Spring
2015) Bill 2015 (the Spring 2015 Bill), which was introduced into the House of
Representatives on 12 November 2015.[77]
The Spring 2015 Bill lapsed on prorogation of the 44th Parliament on 15 April
2016. A Bills Digest was prepared in respect of the Spring 2015 Bill.[78]
The measures in Part 3 of Schedule 8, which amend provider
obligations relating to key personnel, have a lengthy history. They were first
set out in equivalent terms in items 2–6 of Part 2 to Schedule 7 of the Omnibus
Repeal Day (Spring 2014) Bill 2014 (the Spring 2014 Bill), which was introduced
into the House of Representatives on 22 October 2014.[79]
The Spring 2014 Bill was debated in both Houses of the Parliament. However, the
House of Representatives disagreed to certain amendments proposed by the Senate
in relation to other provisions of the Spring 2014 Bill and the Bill lapsed on
prorogation of Parliament. A Bills Digest was prepared in respect of the Spring
2014 Bill.[80]The
measures were again set out in equivalent terms in items 13–17 in Part 4 of
Schedule 7 to the Spring 2015 Bill.
Commencement
The provisions in Part 1 of Schedule 8 to the Bill
commence on the earlier of a date to be fixed by Proclamation or six months
after Royal Assent.
The provisions in Part 2 of Schedule 8 to the Bill commence
on the day after Royal Assent.
The provisions in Part 3 of Schedule 8 to the Bill
commence on the 28th day after the Royal Assent.
Purpose of
the Schedule
The purpose of the amendments in Schedule 8 of the Budget
Savings (Omnibus) Bill 2016 (the Bill) is to amend the Aged Care Act 1997
to:
- strengthen
compliance measures for providers when assessing residents for funding purposes
- reduce
the regulation of advisers and administrators who may be appointed to assist
non-compliant providers and
- reduce
reporting requirements relating to key personnel of providers.
Background
The Australian Government subsidises aged care services for
older people who cannot live without support in their own homes.[81]
The Aged Care Act and associated Principles provide
the regulatory, funding and quality framework for residential aged care, home
care and flexible care services.[82]
As at 30 June 2015, under the Aged Care Act there
were:
- 72,702
operational home care packages providing aged care services to individuals in
their homes[83]
- 192,370
operational residential care places providing permanent and respite care in
aged care homes and[84]
- 7,629
operational flexible care places in a variety of care environments, such as Multi-Purpose
Services in rural or remote areas and transition care for people returning home
after a hospital stay.[85]
The majority of Australian Government expenditure under
the Aged Care Act in 2014–15 was for residential care subsidies and
supplements ($10.6 billion), with $1.28 billion spent on home care packages and
$407.5 million on flexible care programmes.[86]
Provider funding and compliance
Australian Government subsidies for residential aged care
are largely determined by a tool known as the Aged Care Funding Instrument (ACFI). Aged care
providers apply the ACFI to determine the base funding for each resident. The
ACFI assesses the care needs of permanent residents through a series of
questions that determine funding across three domains: Activities of Daily
Living (ADL), Behaviour and Complex Health Care (CHC). The greater the assessed
need in each domain, the higher the basic subsidy for the resident. This basic
subsidy (determined by the ACFI) accounted for the majority of the funding
($9.7 billion out of $10.6 billion) the Australian Government paid for
permanent residential care subsidies and supplements in 2014–15.[87]
Even though the Australian Government caps the
number of aged care places it will subsidise, residential aged care funding can
still exceed forecasts because ACFI assessments completed by individual
providers affect the level of subsidy that each place attracts. Growth in ACFI
funding has been higher than forecast since 2014. In 2014–15, annual real
growth in the daily average ACFI funding per resident was 7.4 per cent
(compared to projected real growth of 5.6 per cent). In the 2016-17 Budget,
annual real growth was revised from 3.2 per cent to 5.2 per cent to reflect the
growth in ACFI expenditure.[88]
The Government has taken steps to rein in this
higher than expected growth, particularly in the CHC domain, which it believes
cannot be explained by an increase in the frailty of residents (as the other
two domains have not grown at the same rate).[89] In
the Mid-Year Economic and Fiscal Outlook 2015–16 (MYEFO), the Government
announced $472.4 million in savings over four years through changes to the ACFI
scoring matrix.[90] This was followed in the 2016–17 Budget by a further $1.2 billion in
savings over four years through further changes to the scoring matrix and scoring
questions, as well as halving the indexation of the CHC component of the basic
subsidy in 2016–17.[91] Stakeholders such as aged care providers and health peak bodies have
reacted negatively to these ‘cuts’, expressing concern that they may adversely
affect resident care and investment in the industry.[92]
This is not the first time ACFI has been
revised due to concerns about excessive growth. For example, the Gillard Labor
Government tightened ACFI assessment criteria and strengthened compliance
powers in 2012 in order to redirect funding to its Living Longer. Living
Better aged care reform package.[93]
Some of the ACFI savings have already been
implemented through amendments to legislative instruments made under the Aged
Care Act.[94] Others are due to be implemented on 1 January 2017, presumably through
further amendment of legislative instruments.[95]
These savings are not implemented by this Bill, and are not discussed further
in this Bills Digest (other than briefly in the section on the policy
position of non-government parties and independents).
This Bill does, however, implement a related 2015–16 MYEFO
measure to improve provider compliance when completing ACFI assessments of
residents. This is in response to the high level of ACFI claims by providers
that are deemed to be incorrect or false when audited by the Department of
Health.[96]
The latest data show that between 1 January and 31 March 2016, 12.3 per cent of
ACFI reviews led to a downgraded classification for the resident, but only 0.7
per cent led to an upgraded classification (87.0 per cent resulted in no
change).[97]
This represents a downgrading of around one in eight audited ACFI claims,
although providers have pointed out that the Department adopts a risk
management approach when choosing which claims to audit.[98]
The measure, titled ‘Aged Care Provider Funding – improved
compliance’, is described in MYEFO as follows:
The Government will achieve savings of $61.9 million over
four years by strengthening compliance activities associated with the provision
of funding to residential aged care providers. The Government will update audit
processes and systems to better target high risk claimants, strengthen debt
recovery arrangements and expand fees and fines for repetitive false claims.
Providers will also receive training on the claiming process.[99]
The updating of audit processes and provider training will
presumably be implemented administratively, but the strengthened debt recovery
arrangements, fees and fines are implemented by Part 1 of Schedule 8 of the
Bill.
Red tape reduction
The Coalition committed to reducing red tape and paperwork
for aged care providers during the 2013 Federal election campaign. As part of
this commitment, the Coalition pledged to ‘reduce the requirement to provide
the same information in multiple forms’, noting that when ‘there is an addition
in key personnel, the provider has to complete an 11 page form and a four page
form when they cease to be key personnel’. [100]
Following its 2013 election win, the Coalition Government
established the Aged Care Sector Committee (ACSC) to provide advice to
Government on aged care policy and reform. The ACSC includes ‘representatives
from across the aged care sector, including, peak bodies, large for-profit and
not-for-profit providers, consumers, workforce, the National Aged Care Alliance
and the Department.’[101]
The ACSC worked with the Government to develop a Red Tape Reduction Action Plan
(RTRAP), which was approved by former Prime Minister, Tony Abbott, in 2014.[102]
The RTRAP ‘sets out a range of actions that can be taken to
reduce unnecessary red tape for aged care providers and consumers’.[103]
Parts 2 and 3 of Schedule 8 of the Bill implement two minor deregulatory
measures contained in the RTRAP. Part 2 implements item 34 of the RTRAP, which
is to explore ‘abolishing the administrator/advisor panels and associated
legislative requirements’.[104]
These panels consist of advisors and administrators, approved by the Secretary
of the Department, who can be appointed to assist providers who have been
non-compliant in their ACFI appraisals or in their responsibilities under the Aged
Care Act.[105]
The rationale given for their abolition in the RTRAP is that:
Including these arrangements in legislation limits
flexibility and can result in responses that do not take account of the fact
that, in most cases, approved providers are best placed to determine what
resources are required to meet their obligations.[106]
Part 3 implements item 16 of the RTRAP, which is to ‘Simplify
Key Personnel requirements’.[107]
Providers are currently required to inform the Department every time one of
their key personnel (such as a director, chief executive officer or head of
nursing) changes.[108]
The RTRAP contends that this requirement should be removed because it adds no
value, as providers are ‘already responsible for ensuring the basic suitability
of their Key Personnel’, and repeatedly notifying changes in key personnel
provides ‘little probative value’ to the Department as a regulator.[109]
Committee consideration
Previous committee consideration
The Spring 2014 Bill, which originally contained the
measures which now form Part 3 of Schedule 8 of the Bill, was not referred to a
Committee for inquiry and report. The Senate Scrutiny of Bills Committee and
the Parliamentary Joint Committee on Human Rights both commented on the Spring
2014 Bill 2014, but not specifically on the aged care measures.[110]
The Spring 2015 Bill, which
contained the amendments which now form Parts 2 and 3 of Schedule 8 of the
Bill, was referred to the Senate Finance and Public Administration Legislation
Committee. The Committee recommended that the Spring 2015 Bill
be passed, but did not make any specific comment on the aged care measures.[111]
The Senate Scrutiny of Bills Committee and the Parliamentary Joint Committee on
Human Rights both commented on the Spring 2015 Bill,
but not specifically on the aged care measures.[112]
Economics Legislation Committee
The Bill has been referred to the Economics Legislation
Committee for inquiry and report by 13 September 2016. Details of the inquiry
are at the inquiry
webpage.
Senate Standing Committee for the Scrutiny of Bills
At the time of writing this Bills Digest, the Senate
Standing Committee for the Scrutiny of Bills had not considered the Bill.
Policy position of non-government parties/independents
Labor expressed its support for the measures dealing with
adviser and administrator panels and approved provider obligations relating to
key personnel when they were previously introduced.[113]
No statements by other non-government parties and independents relating to
these measures have been identified.
Shayne Neumann, former Shadow Minister for Ageing,
described the $472 million ACFI savings in the 2015-16 MYEFO as ‘cruel and
heartless’, and the $1.2 billion ACFI savings in the 2016–17 Budget as a
‘savage cut’.[114]
However, he indicated during the 2016 election campaign that Labor would not
reverse the Budget cuts if elected.[115]
As noted previously, these cuts are not implemented by this Bill.
No statements specifically setting out Labor’s position on
the ACFI compliance measures announced in the 2015–16 MYEFO (and included in
Part 1 of Schedule 8 of this Bill) have been identified.
The Australian Greens and Senator Nick Xenophon are
opposed to the ACFI cuts from the 2015–16 MYEFO and 2016–17 Budget.[116]
Senator Jacqui Lambie is opposed to the cuts from the Budget.[117]
However, their position on the ACFI compliance measures contained in this Bill
is not known. Senator Siewert has indicated that the Greens will support
“sensible reform” on ACFI, whilst Senator Xenophon has stated that “[i]f there
has been any rorting of the current complex healthcare payments, then that
needs to be dealt with rather than penalising all providers”.[118]
Position of major interest groups
As noted above, the measures relating to adviser and
administrator panels and key personnel notification are in keeping with the red
tape reduction measures recommended by the ACSC. As the ACSC has representation
from key stakeholders including providers, health and consumer groups, these
measures are unlikely to be controversial.
The recent aged care ‘cuts’ have been very controversial.[119]
However, there has been less debate specifically on the compliance measures
enacted by this Bill.
While the Government cites data showing significant
downgrading of ACFI claims as evidence of ‘non-compliance or sharp practices’,
provider peak bodies contend that the same data show that providers are
‘administering the ACFI reasonably’.[120]
Aged and Community Services Australia (ACSA), the peak body for not-for-profit
and faith-based aged care providers, has noted that the sector has not been
provided with data by the Government to support the allegations of ACFI
claiming misuse. However, it was also reported that ACSA ‘welcomed the
government’s “more intense” regime as it knew the vast majority of aged care
providers complied faithfully with the funding instrument’.[121]
There have been media reports of aged care companies
achieving a significant ‘uplift’ in ACFI funding per resident.[122]
Cameron O’Reilly, Chief Executive of the Aged Care Guild (an association of large
for-profit residential aged care providers), has defended ACFI claiming
practices, contending that as older people receive more support to stay at home
for longer, those who do enter residential aged care have higher levels of
need, which are reflected in ACFI claiming patterns.[123]
Financial implications
The measures dealing with adviser and administrator panels
and approved provider obligations relating to key personnel have previously
been included in Bills that were described as having ‘no financial
implications’.[124]
The measures aimed at improving provider compliance for
ACFI claims were announced in the 2015–16
MYEFO, with savings estimated at $61.9 million over four years from 2015-16.[125]
It is now expected that the measures in Schedule 8 of this
Bill will result in savings of $80.5 million over five years from 2015–16.[126]
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 measures contained in Schedule 8 of the Bill
are compatible.[127]
Parliamentary Joint Committee on Human Rights
At the time of writing this Bills Digest, the Parliamentary
Joint Committee on Human Rights had not commented on the Bill.
As discussed in the section on previous committee
consideration above, although the Parliamentary Joint Committee on Human Rights
considered the Spring 2014 Bill and the Spring 2015 Bill it did not comment on
the aged care measures included in those Bills
Key issues and provisions
Part 1—Compliance
Aged care residents are appraised against the ACFI by
their aged care provider. This appraisal is sent to the Secretary, who then
determines the appropriate ACFI classification level for the resident. The ACFI
classification is important because it determines the amount of subsidy that the
provider will receive to care for the resident.[128]
When determining the classification level for a resident,
the Secretary must take into account the appraisal made by the provider, as
well as any other matters specified in the Classification Principles.[129]
For example, the Classification Principles specify that providers must complete
the Aged Care Funding Instrument (ACFI) Answer Appraisal Pack (the Appraisal
Pack) when appraising a resident, and that they must use the completed
Appraisal Pack when applying to the Secretary for classification of the
resident.[130]
Items 1 and 2 in Schedule 8 clarify and validate
the application of the Classification Principles. Item 1 inserts proposed
subsection 25-1(3A) into the Aged Care Act so that the
Classification Principles may require the Secretary to take into account the
manner in which care is provided and the qualifications of the person providing
the care. This is in keeping with the current Appraisal Pack, which specifies
that in order to contribute to an ACFI score, certain complex health care
procedures must be delivered by a registered nurse or allied health
professional in a specified manner.[131]
Item 2 is an application provision that operates so
that anything previously done under the Aged Care Act that would
otherwise be invalid because the Classification Principles required the
Secretary to take into account the manner in which care is provided and the
qualifications of the person providing the care, is taken to be as valid and
effective as it would have been if subsection 25-1(3A) (inserted by Item 1)
were in force. Taken together, items 1 and 2 appear to be retrospective
‘housekeeping’, designed to ensure that classification decisions made by the
Secretary prior to the commencement of these items are valid, even if the Aged
Care Act may not have contained sufficient authority for the making of
those decisions at the time they were made.[132]
The Explanatory Memorandum notes that it ‘is a long standing practice that
certain types of care must be provided by qualified health professionals for
providers to be eligible for the commensurate level of Commonwealth funding
under the ACFI.’[133]
Aged care providers may be suspended from appraising their
residents, or required to reappraise some or all of their residents, if the
Secretary is satisfied that the provider has given false, misleading or
inaccurate information in an appraisal relating to a classification that was
reviewed and changed by the Secretary.[134]
It has been reported in the media that since early 2013, five approved
providers have been required to reappraise all their residents after
substantial and repeated findings of incorrect ACFI claiming.[135]
Currently, the provider may only be suspended or required
to reappraise residents if they provide false, misleading or inaccurate information
for a second time after they have already had at least one classification of a
resident reviewed and changed. Items 4 and 8 repeal paragraphs
25-4(1)(c) and 27-3(1)(c) respectively to remove this ‘second chance’, meaning
that providers may be suspended from appraising their residents or required to
reappraise residents if they provide false, misleading or inaccurate
information in one appraisal that is subsequently reviewed and changed.
Item 11 inserts proposed subsections
27-3(3A)–27-3(3C) into the Aged Care Act to empower the Secretary to
require a provider to reappraise a resident if the Secretary reasonably
suspects that the resident’s care needs have significantly decreased.
Currently, if the Secretary reviews and changes a
resident’s classification, the changed classification can only be backdated for
a maximum of six months.[136]
Item 15 removes this six month limit, meaning that overpayments can be
recovered from the provider for the whole period that the inaccurate or incorrect
classification was in force.[137]
The Aged Care Act does not currently include civil
penalties for providers who make false, misleading or inaccurate ACFI claims. Item
17 inserts proposed Division 29A which introduces such
penalties. Under the proposed Division, the Secretary may issue a warning
notice relating to appraisals that have been reviewed and changed:
- on
one occasion if the provider gave false or misleading information in the
appraisal or
- on
two or more occasions if the appraisals were incorrect or inaccurate and the
changes made to the classifications are regarded as significant.
Once issued with a warning notice, the provider enters a warning
period for two years. If, during that period, the provider again has a
classification changed due to false or misleading information (on one occasion)
or incorrect or inaccurate appraisals (on two or more occasions), the provider
is liable for a civil penalty of up to 60 penalty units.[138]
The provider may receive a separate civil penalty for each classification that
the Secretary changes during the warning period.
The Secretary’s decision to change a resident’s
classification is a reviewable decision under the Aged Care Act.[139]
This means that providers can seek reconsideration by the Secretary of the
decision, and if dissatisfied with the reconsideration decision, review by the
Administrative Appeals Tribunal.[140]
Items 19 and 20 introduce an application fee specifically for providers
seeking a reconsideration of a decision to change the classification of a
resident. The fee is to be specified in the Classification Principles.
Part 2—Adviser and administrator panels
Providers may be able to avoid penalties for non-compliance
by appointing advisers or administrators in the following circumstances:
- aged
care providers may be suspended from appraising their residents if they have
been found to have given false, misleading or inaccurate information in
appraisals.[141]
The provider may be able to avoid such a suspension by agreeing to appoint an
adviser (approved by the Secretary) to assist with resident appraisals[142]
- aged
care providers who do not meet their responsibilities (relating to quality of
care, user rights and accountability) under the Aged Care Act may have
their approval as a provider of aged care suspended or revoked.[143]
The provider may be able to avoid this revocation if they agree to appoint an
adviser to help them comply with their care responsibilities, or an
administrator to help them comply with governance requirements.[144]
In this circumstance, the adviser or administrator must be drawn from a panel
managed by the Secretary, and their appointment by the provider must be
approved by the Commonwealth.[145]
Items 24 and 25 in Schedule 8 remove the requirement
for appraisal advisers to be approved by the Secretary.
Item 27 provides that the Classification Principles
may exclude a class of persons from being appointed as an adviser to assist
with ACFI appraisals.
Item 29 removes the requirement that an adviser or
administrator appointed to help a provider meet their responsibilities be
approved by the Commonwealth.
Item 32 repeals existing sections 66A-1, 66A-2 and
66A-3 which require the Secretary to maintain an administrator and an adviser
panel of people suited to help providers comply with their responsibilities. It
replaces this requirement with the provision that the Sanctions Principles may
exclude a class of persons from being appointed as an adviser or administrator.[146]
Part 3—Approved provider obligations
Approved providers are currently required to notify the
Secretary every time there is a change in any of the provider’s key personnel.[147]
Key personnel include executives and directors, managers and nursing managers.[148]
Items 34 to 37 remove the requirement to notify
changes to key personnel (unless they materially affect the provider’s
suitability to provide aged care).
Comment
Schedule 8 of the Bill implements measures to improve aged
care provider compliance when assessing residents for funding purposes. These
measures include imposing fines for false or incorrect claims and extending the
period in which overpayments can be recovered. The position that the Parliament
and key stakeholders will take on these measures is difficult to predict.
Schedule 8 also contains minor deregulatory measures that
could be considered ‘red tape reduction’, and which are unlikely to be
controversial.
Schedule 9—Dental
services
History of the Schedule
The Dental Benefits Amendment Bill 2016 (the first Bill) was
introduced into the House of Representatives on 5 May 2016, but lapsed at
the dissolution of second session of the 44th Parliament on 9 May 2016.[149]
The provisions in Schedule 9 to this Bill are in similar but
not equivalent terms to those in the first Bill. No Bills Digest was prepared
in relation to the first Bill.
Purpose of
the Schedule
The purpose of Schedule 9 is to amend the Dental
Benefits Act 2008 to repeal entitlement to dental benefits from 1
January 2017, and establish a framework to provide financial assistance to the
states and territories for the purpose of rendering dental services after 1
January 2017.
Commencement
The amendments in Schedule 9 to the Bill commence on the day
after Royal Assent.
Background
Dental health status
The latest report on dental and oral health from the
Australian Institute of Health and Welfare (AIHW) presents key statistics on
the dental health of the Australian population.[150] This report found that in
2010 a majority of six year olds (55 per cent) experienced dental decay while
for 12 year olds the rate was 48 per cent. Among adults, some 16 per cent
reported toothache in 2013, and 27 per cent reported feeling uncomfortable about
their dental appearance.[151]
Poor oral health impacts on overall health and wellbeing and
can lead to poor nutrition, discomfort and pain. If oral disease is left
untreated it can result in infection and even hospitalisation. Dental
conditions were the third leading cause of preventable hospitalisations in
2013–14, with more than 63,000 Australians hospitalised in 2013–14.[152]
In 2012–13, expenditure on dental services totalled $8.7
billion. The majority of this expenditure was paid for by individuals, who covered
58 per cent of this spending from out of their own pockets.[153]
Government funding of dental services
Historically, dental benefits were not included on the
Medicare Benefits Schedule (MBS), except for some oral and maxillofacial
surgery and treatment for cleft palate. Public dental services were largely the
responsibility of state and territory governments.
Efforts to improve access to affordable dental services by
national governments have been undertaken at various times. Generally, these
approaches have favoured funding either public dental schemes or subsidising
private dentistry. The Whitlam Government funded a Child School Dental Scheme.
In 1994, the Keating Government funded the states and territories to provide
public dental services to adult concession card holders under its Commonwealth
Dental Health Program (CDHP)—which was then closed by the Howard Government in
1996. In 2004, the Howard Government first introduced capped dental benefits
under Medicare for patients with chronic and complex conditions with its Allied
Health and Dental Care initiative. This was expanded and became known as the
Medicare Chronic Disease Dental Scheme (CDDS). In 2008, the Rudd Government
directed the CDDS be replaced by the Commonwealth Dental Health Scheme (similar
to the CDHP) and capped dental benefits under a new Teen Dental Plan.[154]
The Dental Benefits Act came into force in 2008. [155]
However, it was not until 2012 that the CDDS was closed due to opposition from
Coalition and Greens Senators in the Senate.[156]
In addition to these arrangements, the Government subsidises
the cost of dentistry through its rebate on private health insurance premiums.
Dental Benefits Act 2008
Under the Dental Benefits Act the Australian
Government provides means-tested benefits for dental services to eligible
patients. The Dental Benefits Act:
- establishes an entitlement to dental benefits
- provides for the issuing of vouchers for dental benefits
- provides for the payment of dental benefits
- establishes provisions to protect information and authorise its
disclosure
- creates offence provisions in relation to assignment of benefits
and the giving of false or misleading information
- gives the Minister for Health power to make rules by legislative
instrument, and
- provides for funds to be appropriated for dental benefits.
Broadly, the Dental Benefits Act is modelled on
provisions in the Health
Insurance Act 1973 which provides the framework for Medicare benefits.[157]
As noted, initially the Dental Benefits Act provided
dental benefits to eligible teenagers under the Teen Dental Plan. In January
2014 the Teen Dental Plan was replaced by the Child Dental Benefits Schedule
(CDBS). The CDBS provides eligible children aged between two and 17 years with
up to $1,000 in dental benefits for basic dental services over two calendar
years. These services include:
- dental examination
- x-rays
- cleaning
- fissure sealing
-
fillings
- root canal therapy
- extractions, and
-
partial dentures.[158]
In order to claim dental benefits, services must be provided
by dentists who are registered with the Dental Board of Australia and who have
obtained a Medicare provider number. Claims are processed by the Department of
Human Services (DHS).
Most services provided under the CDBS are delivered by
dentists in private practice, but public dental clinics run by state and
territory governments are able to provide services as well.
Eligibility
As noted, the CDBS provides a means-tested dental benefit in
the form of a voucher to eligible children. To be eligible children must be:
- eligible for Medicare
- aged between two and 17 years, and
- satisfy a means test.[159]
Children satisfy the means-test if they or their family is
in receipt of a government payment outlined in the table below.
Table 5:
CDBS eligibility in 2014 by government payment received
Source: Department of Health
(DoH), Report on the third review of the Dental Benefits Act
2008, DoH, Canberra, 17 December 2015.[160]
Utilisation and cost of CDBS
The Department of Health (DoH) estimates that in its first
year around 3.0 million children were notified they were eligible for the CDBS
but only 29.4 per cent accessed the scheme.[161]
Medicare data from DHS shows that in the 2015 calendar year, around 5 million
dental services were provided and $311.4 million in benefits were paid.[162]
In its first full year of operation (2014), $290.2 million in benefits was
paid.[163]
Most services provided under the CDBS are bulk billed, with
bulk billing rates generally above 90 per cent.[164]
The lower than forecast level of utilisation was raised as a
concern in the last review of the CDBS completed in 2015.[165]
National Partnership Agreements (NPAs) on dental services
The Rudd Government dental package included grants of
financial assistance to the states and territories for the delivery of public
dental services to low income adults under a National Partnership Agreement
(NPA) on adult public dental services.[166] Funding of $1.3 billion
over four years was announced at the Mid-Year Economic and Fiscal
Outlook 2012–13.[167]
In the 2014–15 Budget, the Abbott Government announced
funding under the NPA would be deferred for one year.[168]
In the 2015–16 Budget, the Government announced the existing agreement would be
replaced with a new one year NPA, with funding of $155 million for one year
provided.[169]
The Government indicated that future funding arrangements for public dental
services would be subject to further negotiations.[170]
In the 2016–17 Budget, the Turnbull Government announced the
establishment of a new Child and Adult Public Dental Service (caPDS) to replace
existing funding arrangements from 1 July 2016. The caPDS will be established
under a new five year NPA. The Budget allocated $1.7 billion over the first
four years of the scheme from 2016–17.[171]
As part of this measure, the Government announced the closure of the CDBS.
The caPDS is intended to provide expanded access to
state-run public dental services for all children under 18 as well as adult
concession card holders. Commonwealth funding will be calculated at 40 per cent
of the national efficient price (NEP) for dental services provided under the
scheme, until 2019–20.[172]
From 2019–20, growth in Commonwealth funding will be capped to the consumer
price index and population.
Legislation to abolish the CDBS and establish the caPDS was
introduced at the time of the budget, but failed to progress before Parliament
was dissolved.[173]
Policy position of non-government parties/independents
Labor criticised the closure of the CDBS at the time of the
budget, claiming it represented a funding cut of $1 billion.[174]
During the most recent Federal election campaign Labor continued to attack the decision,
but did not release a specific policy on dental care.[175]
The Greens, who supported the introduction of the CDBS and
want to see it expanded, have stated they would reject the plan.[176]
Their commitment to the CDBS was re-stated during the 2016 Federal election
campaign.[177]
Independent MP Andrew Wilkie also criticised the closure of
the CDBS and has called on the Health Minister to retain the scheme.[178]
The views of other cross-benchers and Independents have yet
to be identified.
Position of major interest groups
At the time of the budget, the announcement of the
establishment of the caPDS received a mixed response from stakeholders. The
Australian Healthcare and Hospitals Association (AHHA) endorsed the
Government’s commitment to support public dental services, but voiced concern
that the funding is ‘not as generous as suggested’ and warned it ‘won’t
underpin equitable access to care’. The National Oral Health Alliance (NOHA)
indicated it supported the move to legislate the scheme, but claimed the
funding ‘represents a cut, not an increase’. The Australian Dental Association
(ADA) has described the proposal as a ‘back of the envelope approach’ which
will leave many patients ‘high and dry’.[179]
While supporting enshrining funding in legislation, the ADA has warned that
‘patients from smaller states and regional and rural areas stand a real risk of
missing out on dental care under the Coalition’s caPDS’.[180]
Reaction to the specific provisions in this Bill is yet to
emerge. However, concerns may be raised over the capacity of the public dental
system to absorb additional demand. Waiting times for public dental services
can be long. In Victoria, wait times for general treatment are 12.6 months
(although emergencies are prioritised under a triage system).[181]
In addition, children have different dental needs compared
to adults. Services currently provided under the CDBS reflect this, with a
focus on prevention (44 per cent of services) and early diagnosis of dental
disease (37 per cent of services).[182]
It is not yet clear how the new NPA will ensure that public dental services
dedicate appropriate preventative and early diagnostic resources to meet the
needs of children, while maintaining existing services for adult concession
card holders.
Debate may also emerge over whether services provided under
the CDBS constitute a Medicare funded service, and are therefore subject to the
Prime Minister’s commitment to retain Medicare services in full.[183]
Financial implications
The cost of the new caPDS is to be offset by savings from
closing the CDBS and not proceeding with the existing NPA on public dental
services.[184]
The financial implications of the measure on the
underlying cash balance over the forward estimates are outlined in the
Explanatory Memorandum (EM). Over the period, savings of $52.4 million are
forecast:
Table 6: Savings
over the forward estimates provided in the EM
| No. |
Measure title |
2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
Total |
| 9 |
Dental services |
-4.1 |
95.0 |
50.5 |
32.9 |
-121.9 |
52.4 |
Source: Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016. [185]
These estimates appear to differ slightly from those
provided in the 2016–17 budget, with the greatest variance occurring in the
year 2016–17.
Table 7: Savings
over the forward estimates provided in the 2016–17 Budget
Source: Australian Government,
Budget measures: budget paper no. 2: 2016–17.[186]
The discrepancy in estimates amounts to around $35.1
million, or equivalent to the difference noted in the two 2016–17 year
estimates. The budget estimates were based on the assumption that the CDBS
would be closed from July 2016; a Bill to enact the measure had been introduced
in May 2016, but lapsed at dissolution of the Parliament before it could
progress. The provisions proposed in this Bill assume closure of the CDBS from
January 2017—six months later. This later closure date may explain the
discrepancy in the figures.
The total allocation to be made to the states and
territories under the National
Partnership on the child and adult public dental scheme is shown in
budget paper number three:
Table 8: Funding
allocation under the National Partnership on the child and adult public dental
scheme
Source: Australian Government,
Budget measures: budget paper no. 2: 2016–17.[187]
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 Schedule’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 Schedule 9 is compatible.[188]
Parliamentary Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights has not
considered Schedule 9 or the first Bill.
Key issues and provisions
Most of the proposed amendments in Schedule 9 are to the Dental Benefits Act.
Some minor amendments are proposed for the Age
Discrimination Act 2004 and the Human
Services (Medicare) Act 1973; the reader is advised to consult the
Explanatory Memorandum in relation to these. Only significant provisions are
discussed further below.
Item 3 of Schedule 9 to the Bill proposes to amend
the simplified outline of the Dental Benefits Act (existing section 3)
to clarify that it no longer provides a framework for dental benefits except
for those provided before
1 January 2017, and instead provides for grants of financial assistance to the
states and territories for dental services after this date.
Several proposed amendments limit the entitlement to a
dental benefit to services provided before 1 January 2017. Item 7
proposes to amend section 8 of the Dental Benefits Act, which provides a
simplified outline of Part 2 of the Act, including a description of how
Part 2 creates a basic entitlement to dental benefits. This statement will be
removed from section 8 and replaced with a statement that specifies that the
basic entitlement to a benefit only applies to a dental service provided before
1 January 2017. Similarly, item 10 proposes amendments to the current
section 10 of the Dental Benefits Act, dealing with payment of dental
benefits, to specify that payments of dental benefits will only be made for
services rendered before 1 January 2017.
Currently, dental benefits are provided through the issuing
of a voucher to eligible children, as specified in Part 4 of the Dental
Benefits Act. Items 16 to 18 propose amendments to Part 4 that
specify that these vouchers cannot be issued after 31 December 2016, and that a
voucher issued for the calendar year starting 1 January 2016 will
cease to have effect at the end of 31 December 2016.
According to the Health Minister, Sussan Ley the closure of
the CDBS is required because ‘it is an inherently inefficient use of taxpayers'
money’.[189]
Item 5 of Schedule 9 to the Bill proposes significant
provisions relating to establishing a framework to provide capped grants of assistance
to the states and territories for the provision of dental services rendered on
or after 1 January 2017 through proposed Part 1A–Grants of financial
assistance. Notably, proposed section 7E in this part provides that
the Commonwealth may enter into written agreements with the jurisdictions to
provide grants of assistance in relation to dental services.
It is important to note that previous agreements on dental
funding for the states and territories have been entered into without such
provisions having been enacted. The Explanatory Memorandum is silent as to why
it has become necessary or preferable to now legislate such provisions.
However, the Health Minister Sussan Ley offered this explanation when she
introduced the first Bill at the time of the budget:
As
well as providing record levels of funding, the Bill for the first time ever
puts Commonwealth payments to the states for dental services on a legislative
basis. This will give states the long-term certainty they need to invest in
infrastructure and ensure that Australia has a high-quality public dental
service into the future.[190]
She noted that this approach appears to have found favour
with at least one state health Minister:
As
one state health minister said to me: the fact that we are legislating and
locking in the structure of a truly public scheme now and into the future gives
them—that state health minister—the confidence to build the infrastructure to
deliver what, as I said, is the best possible use of taxpayers' money in
targeting the oral health of Australians where they need it most.[191]
As noted above, a number of stakeholders have also welcomed
legislating for dental funding agreements.
Proposed section 7G of
the Dental Benefits Act
specifies that grants of financial assistance will be subject to a cap. For
2016–17 the cap is to be set at $175.0 million, for 2017–18 it will be set at
$415.6 million and for 2018–19 it will be set at $420.2 million.[192]
From 2019–20 onwards, the cap will be determined through a specified formula.
Significantly, proposed subsection 7G(2) allows the Minister, by
legislative instrument, to specify a lesser amount for the 2016–17 year.
According to the Explanatory Memorandum, this is considered necessary to ensure
that the total quantum of funding for dental services does not exceed the
Government’s planned expenditure for the year.[193]
Total spending on the CDBS between July and December 2016 will not be known
until after the passage of this legislation, so this provision allows for an
adjustment if needed.
Proposed section 7H of the Dental Benefits Act
specifies the indexation factor that will apply to grants from
1 July 2019. The amount of the grants will be based on the previous year’s
funding cap, multiplied by the growth in the consumer price index since the
previous December quarter as specified in proposed section 7H, multiplied by a
population growth factor as specified in proposed section 7J.
Proposed section 7L of the Dental Benefits Act
specifies that a review of new Part 1A must be conducted before 31 December
2020 and be presented to Parliament, and specifies the composition of the panel
that is to conduct the review.
Schedule 11—Student start-up scholarships
History of the amendment
Schedule 11 of the Bill proposes to remove the
‘grandfathering arrangements’ for the Student Start-up Scholarship (the SSS),
thereby terminating it.[194]
The proposal to remove these arrangements was first announced as a 2014–15
budget measure, modifying the previous Labor Government’s 2013–14 budget
measure to establish an income-contingent loan for full-time higher education
students (the Student Start-up Loan (SSL)) which would replace the SSS.[195]
However, contrary to the 2014–15 budget measure, the
subsequent Labor 2013-14 Budget Savings (Measures No. 2) Act 2015, which
established the SSL, included grandfathering arrangements for the SSS.[196]
This meant that existing SSS recipients at the time of the SSL’s implementation
retained their scholarship.
The following ‘Background’ section, which includes a brief
history of the SSS and legislative attempts to replace it with the SSL,
explains the history of the grandfathering arrangements more fully.
Purpose of the Schedule
The purpose of Schedule 11 of the Bill is to amend the Social
Security Act 1991 (the SS Act), the Social
Security (Administration) Act 1999 (the SS Admin Act) and the Student
Assistance Act 1973 (the SA Act) to remove the grandfathering
arrangements for current recipients of the Student Start-up Scholarship (SSS).[197]
If enacted, the measure will terminate the SSS.
Commencement
The measure will take effect from 1 July 2017 if
the Act receives Royal Assent before 1 January 2017. If the Act
receives Royal Assent on or after 1 January 2017, the measure will
take effect from the first 1 January or 1 July to occur after the day
the Act receives Royal Assent.
Background
The SSS was implemented in 2010 by the Social Security and Other Legislation Amendment (Income Support for
Students) Act 2010
in response to the recommendations of the Bradley
Review of Higher Education.[198] As introduced, the SSS was automatically provided to eligible
recipients of Youth Allowance, Austudy and ABSTUDY Living Allowance, to assist
with the costs of study while undertaking an approved higher education course.
When introduced it was worth $2,254 per year (paid in two instalments).[199]
The 2016 rate is $2,050.[200]
The original proposal to replace the SSS with an income
contingent loan (the SSL) was a 2013–14 budget measure introduced by the
Gillard Government as one of a set of measures to offset the costs of the then
proposed new school funding system.[201]
The measure was to apply only to new recipients of Youth Allowance, Austudy and
ABSTUDY and existing recipients would continue to receive the SSS (referred to
as the grandfathering arrangements).
It was not until 2015 that the Coalition
Government, after several attempts, was able to get legislation passed—the Labor
2013-14 Budget Savings (Measures No. 2) Act 2015 (the Act)—to implement the SSL.[202] As
mentioned previously, the Government included a proposal in the 2014–15 Budget
to alter Labor’s original design for the SSL by removing the grandfathering
arrangements for existing SSS recipients. However, the Act, contrary to
the budget measure, retained the arrangements.
The SSL, which was implemented from
1 January 2016, is a voluntary income-contingent loan
repayable under the same arrangements as Higher Education Loan Programme (HELP)
debts. Similar to the SSS, it is available to eligible full-time students in
higher education who receive Youth Allowance, Austudy or ABSTUDY Living
Allowance. The SSL also provides the same annual amount (currently $2,050) as
the SSS.[203]
Removing the grandfathering arrangements
Schedule 11 of the Bill proposes to revert to the intent
of the Government’s 2014–15 budget measure by removing the grandfathering
arrangements for the SSS and thereby effectively terminating the SSS. This will
mean that existing SSS recipients will forgo their scholarship. However, they
may be eligible to apply for an SSL.[204]
The Government estimates about 80,000 existing SSS recipients will be affected
should the measure be implemented from 1 July 2017.[205]
At the time of writing this Bills Digest, there does not
appear to be any responses by the Opposition, other non‑government
parties, independents or sectoral interests, to this latest proposal regarding
the SSS. The Government is assuming that Labor has ‘implicitly supported’ the
measure.[206]
This may be because Labor first proposed and then supported the final establishment
of the SSL. However, Labor’s support was for an SSL that included
grandfathering arrangements for the SSS, which they had originally devised.
Therefore, as no recent statements on the issue appear to have been made,
Labor’s support for the measure cannot be confirmed.
The Greens’ support for the measure is also uncertain
given their 2016 election commitment to advocate for the reinstatement of the
SSS as a grant.[207]
Financial implications
It is estimated that the measures in Schedule 11 of the Bill
will have the following impact on the underlying cash balance over the forward
estimates:
Table 9: Impact over the forward estimates ($m)
| 2017–18 |
2018–19 |
2019–20 |
Total |
| 146.7 |
92.6 |
58.7 |
298.1 |
Source: Correction
to the Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016.
Note: these estimates correct those provided in the
Explanatory Memorandum.[208]
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 compatibility of Schedule 11 of the Bill 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 Schedule is compatible.[209]
At the time of writing this Bills Digest, the
Parliamentary Joint Committee on Human Rights had not commented on the Bill.
Key provisions
- items
1 to 12 of Schedule 11 propose amendments to the SS Act.
These amendments are the substantive part of the Schedule and their effect is
to repeal the SSS—in particular by repealing references to a scholarship-entitled
person
- items
13 to 19 of Schedule 11 propose consequential amendments to the SS
Admin Act by removing references to the SSS
- items
20 to 23 of Schedule 11 to the Bill make consequential amendments to
the SA Act, including those provisions in section 7D relating to
the ABSTUDY Student Start-up Loan
- item
24 of Schedule 11 proposes a number of ‘application and saving
provisions’ in relation to the SSS which continue to apply in spite of the
repeal of the SSS. It is also proposed that debt, claims and payment rules will
continue to apply to previous SSS holders.
The Explanatory Memorandum to the Bill provides detailed
information about the Schedule’s provisions.[210]
Schedule 12 Interest charge
Purpose of the Schedule
The purpose of this Schedule is to:
- provide for a new interest charge scheme for debts that arise
under the A New Tax System (Family Assistance) (Administration) Act 1999[211] (Family
Assistance Administration Act), Paid Parental Leave Act 2010[212], Social
Security Act 1991[213]
and Student Assistance Act 1973[214]
-
retain the existing penalty interest scheme for debts that arise
under the Veterans’ Entitlements Act 1986[215] while setting the rate of
interest independently from the Social Security Act (and allowing the
Minister to change this rate by legislative instrument).
Commencement
Schedule 12 will commence on 1 January 2017 if the Act
receives the Royal Assent before that day. If the Act receives the Royal Assent
on or after 1 January 2017 the Schedule will commence the 28th day after the
Act receives the Royal Assent.
Background
History of
the Schedule
The provisions in this Schedule (with minor differences)
were introduced into the 44th Parliament on 2 March 2016 in the Social
Services Legislation Amendment (Interest Charge) Bill 2016.[216]
That Bill had passed the House of Representatives and was before the Senate
when Parliament was prorogued. The Bill lapsed on prorogation of Parliament.
The Family Assistance Administration Act, Paid
Parental Leave Act, Social Security Act, and Veterans’
Entitlements Act all include provisions that allow the Commonwealth to
charge interest on debts. These interest charge schemes are similar to the
scheme proposed in this Schedule but set the rate of interest in a different
way.
Why impose an interest charge
on debt?
There are at least three reasons governments charge
interest on debts like underpayments of tax liabilities and overpayments of
income support or family assistance:
- compensation for the time value of money: delaying payment
imposes a cost on government. This cost includes the cost of government
borrowing. An interest charge designed to compensate government for the time
value of money is typically based on the yield from Treasury notes plus a small
uplift (to cover administration).[217]
- incentive to encourage prompt repayment: if the interest charge
on debts to government is lower than that for consumer credit, debtors may have
little incentive to negotiate a repayment agreement. To encourage debtors to
enter an agreement, governments need to set the interest charge above the rate
financial institutions charge for credit cards and similar products. If the
rationale is to encourage debtors to enter into and abide by a repayment
agreement there is no reason to charge interest once the debtor enters into an
agreement or it is clear they are unable to repay
- deterrent/punishment: governments can also use an interest
charge to encourage income support recipients and taxpayers to accurately
report their income and meet other obligations and avoid incurring a debt. If
the primary rationale is deterrence or punishment government would not charge
if the debt was primarily the result of administrative error by government
rather than action or inaction by the debtor.
Previous interest charge
schemes Penalty interest applied to student assistance payments
In 1991 the Government introduced an interest charge of 20
per cent per year for debts under the Student Assistance Act. This was
combined with a flat late payment charge of $100.[218]
The Australian Democrats unsuccessfully tried to prevent
the Government from introducing the 20 per cent interest charge by moving to
disallow an amendment to the Austudy Regulations. Senator Sowada of the
Democrats argued that amount was punitive and not linked to market rates of
interest. In response to claims that the Australian Taxation Office (ATO)
charged similar rates of interest on debts, the Senator noted that the
Government was seeking to amend the tax laws to reduce the level of interest.[219]Penalty
interest applied to payments under the Social Security Act
In 1993 the Government introduced a Bill to apply an
interest charge of 20 per cent per year for debts under the Social Security
Act. Described as ‘penalty interest’ the new charge replaced an existing
scheme that charged $15 plus 10 per cent of the debt to a maximum of $515.
During Committee hearings, an official from the Department of Social Security
(DSS) explained that the interest charge was an incentive to encourage prompt
repayment:
The charge is intended purely as an incentive to get clients
who otherwise refuse to talk sensibly to us about repayment of debts to do so,
and it will have application only in those cases where we find clients who for
one reason or another are not prepared to deal sensibly with us. It will not
apply, for example, where we establish that the person does not have the
capacity to repay.[220]
Opposition and minor party Senators on the Committee
queried why the rate was so high and how it compared with interest charges by
other government agencies. DSS acknowledged that the ATO had moved to an
interest charge based on Treasury note yields combined with a fixed penalty (an
arrangement that separated the interest element of the charge from the penalty
element). DSS argued that the ATO system was ‘unnecessarily complex’ and went
on to explain:
A penalty interest rate set at 20% per annum on the balance
outstanding from time to time would be consistent with the rate applied by DEET
[to AUSTUDY debts] and not significantly different overall from the ATO. It
also ensures that debts to the Commonwealth are not afforded a lower priority
that other liabilities such as Bankcard and other commercial debts. Most
importantly, it acts as an incentive to non-client debtors to negotiate an
arrangement with the Department and it will not apply to debtors who cannot
afford to repay their debt.[221]
Penalty interest applied to family assistance paymentsIn
2000 the Government introduced Family Tax Benefit Parts A and B and Child Care
Benefit as part of a simplification of family assistance payments. The new payments
were created by A New Tax System (Family Assistance) Act 1999 (Family
Assistance Act).[222]
The Government incorporated the Social Security Act’s penalty
interest arrangements into the Family Assistance (Administration Act.[223]Penalty interest extended to payments under the Veterans’
Entitlements Act
In 2001 the Family and Community Services and Veterans’
Affairs Legislation Amendment (Debt Recovery) Act 2001 extended the
arrangements for charging interest to payments made under the Veterans’
Entitlements Act 1986.[224]A consistent approach to penalty interest across payment
types
With the Family and Community Services and Veterans’
Affairs Legislation Amendment (Debt Recovery) Act 2001 the Government
applied the same penalty interest arrangements across the three main social
welfare payment types:
- income support payments under the Social Security Act
- family assistance payments under the Family Assistance Act
and
- veterans’ payments under the Veterans’ Entitlements Act.
Penalty interest rate reduced
to three per cent
Each of the three Acts set the interest rate at 20 per
cent per year but allowed the Minister to determine a lower rate by legislative
instrument. During debate on the Family and Community Services and Veterans’
Affairs Legislation Amendment (Debt Recovery) Act 2001 then Minister for
Family and Community Services, Jocelyn Newman, announced:
The government proposes to reduce the interest charge from
the current punitive 20 per cent—that is the current legislated rate—to the
lower deeming rate of 3.5 per cent.[225]
In July 2001 the then Minister for Family and Community
Services, Amanda Vanstone, reduced the rate of penalty interest from 20 per
cent to three per cent (the ‘below threshold’ or ‘lower’ deeming rate at the
time).[226]
This was done through determinations under the Social Security Act and
the Family Assistance Administration Act.[227]
Penalty interest not applied
after 2005
According to the Explanatory Memorandum for the Social
Services Legislation Amendment (Interest Charge) Bill 2016, Centrelink has not
applied interest charges on debt since 2005.[228]
No
interest charged on debts due to administrative error
During its passage through the Parliament the Family and
Community Services and Veterans’ Affairs Legislation Amendment (Debt Recovery)
Bill 2000 was amended to ensure that interest would not be charged on debts
that were incurred due to administrative error. Labor Party Senator Chris Evans
gave the following reasons for moving these amendments:
Labor has moved these amendments in fairness to those who have
been inflicted with a debt, thanks to the administrative bungle of someone
else. These people have not sought in any way to gain a benefit to which they
were not entitled. They have done no wrong and have received payments in good
faith. We think there is quite a difference in terms of the way they ought to
be handled and that to apply some of the interest and administrative charges on
these people is quite unfair. Whilst Labor has subsequent amendments to deal
with administrative debts, we believe those who receive debts through no fault
of their own should be given broader latitude to repay than those who receive a
debt due to their own actions. We believe it is most unfair that the government
would contemplate penalising those who have not done any wrong and are in fact
the victims of another person's oversight or error.[229]
Recent attempt to introduce
new interest charge scheme for student assistance debts
In 2013 and 2014 the Coalition Government attempted to
create a new interest charge scheme, similar to the one proposed in the current
Schedule, through amendments to the Social Security Act and the Student
Assistance Act. The measure had been announced by the previous Labor
Government in the 2012–13 Mid‑Year Economic and Fiscal Outlook (MYEFO).[230]
In his second reading speech for the first Bill which
included these interest charge provisions, then Minister for Social Services
Kevin Andrews said that the Bill would ‘allow for an interest charge to be
applied to certain debts incurred by recipients of Austudy payment, fares
allowance, youth allowance for full-time students and apprentices, and ABSTUDY
living allowance’.[231]
However, the Bill also allowed the Minister to extend the measure to debts
incurred by recipients of other social security payments through a legislative
instrument. The Senate Standing Committee for the Scrutiny of Bills questioned
why the Government was attempting to deal with an important matter of policy
through a statutory instrument rather than through primary legislation.[232]
The proposed
measure was initially included in the Social Services and Other Legislation
Amendment Bill 2013 but the relevant Schedule was removed prior to that Bill
being passed.[233]
The measure was reintroduced in the Social Services and Other Legislation
Amendment (Student Measures) Bill 2014[234]
That Bill was not passed and lapsed at prorogation of the Parliament on 15
April 2016. The measure was also included in the Labor 2013-14 Budget Savings
(Measures No. 2) Bill 2015 but the relevant Schedule was removed prior to the
Bill being passed.[235]
Committee consideration
Senate Community Affairs
Legislation Committee
The Social Services Legislation Amendment (Interest
Charge) Bill 2016 was referred to the Senate Community Affairs Legislation
Committee for inquiry and report by 20 June 2016. The inquiry lapsed on
dissolution of Parliament.[236]
Policy position of
non-government parties/independents
There was no significant comment on the equivalent
provisions in the earlier Social Services Legislation Amendment (Interest
Charge) Bill 2016 from non-government parties or independents. The Labor Party
indicated that it would reserve coming to a final position on the Bill until
after the Senate inquiry had reported.[237]
Position of major interest
groups
Two interest groups made submissions on the Social
Services Legislation Amendment (Interest Charge) Bill 2016: the National
Welfare Rights Network (NWRN) and the National Council for Single Mothers and
their Children (NCSMC).
The NWRN had a number of concerns about the proposed
interest charge. They argued that instead of applying only to debtors who are
deliberately trying to evade their obligations, it would also affect vulnerable
debtors who are not fully aware of their rights and obligations. NWRN
recommended that any new Bill ‘should restrict the application of the interest
charge to situations where the Secretary is satisfied that the former payment
recipient has persistently and deliberately failed to enter into a repayment
arrangement.’[238]
The NCSMC made three recommendations:
- recipients should have their debit automatically waived if it is
‘due to the interactions and the failings of the Child Support scheme and/or
the Australian Taxation Office’
- recipients should have their debt waived if it is due to
administrative error by the Department of Human Services
- debt recovery should be a negotiated process that takes the
debtor’s financial capacity to repay into account. If the recipient is in
financial hardship or housing stress repayments should be suspended.[239]
Financial implications
According to the Explanatory Memorandum, the Schedule’s
impact on the underlying cash balance over the forward estimates is $387
million.[240]
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 Schedule 12 of the Bill is compatible.[241]Parliamentary
Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights examined
the earlier Social Services Legislation Amendment (Interest Charge) Bill 2016
and did not raise any concerns.[242]
Key provisions and issues
The new interest charge scheme has the same aims as the
existing scheme—to encourage people with social welfare debts to enter into a
repayment arrangement. Like the existing scheme it would apply to people who
are not currently receiving a payment. Debtors can avoid the interest charge if
they enter into a repayment agreement and make repayments.
Unlike the existing scheme, the new scheme does not have
an administrative charge in addition to the penalty interest charge.
Key provisions
Only applies to debtors not
currently receiving a social welfare payment
When a debtor is receiving a social welfare payment there
is no need to give the person an incentive to enter into a repayment plan since
the Government can recoup the debt by making deductions from the debtor’s
payments.
Schedule 12 contains provisions that exempt people
currently receiving payments from the interest charge. These provisions are
included in amendments to the Family Assistance Administration Act (proposed
section 78D, inserted by Item 3 of Schedule 12), Paid
Parental Leave Act (proposed section 178 at item 20), Social
Security Act (proposed section 1229E at item 35) and Student
Assistance Act (proposed section 41D at item 43).
Debtors will be given an
opportunity to avoid the interest charge
The aim of the interest charge scheme is not to punish
recipients for acquiring a debt but to encourage them to enter into an
arrangement to repay the debt (as well as encouraging them to abide by the
arrangement).
Schedule 12 contains provisions that mean a person can
avoid paying an interest charge if they enter into and make a payment under an
arrangement for repayment of the debt. Debtors will receive a notice giving
them 28 days to enter into an arrangement to repay. They will be liable to pay
an interest charge if they have not either paid the debt or entered into an
arrangement to pay the debt by the end of that period. Equivalent provisions
are proposed to be inserted into the following acts:
- Family Assistance Administration Act, proposed section
78 at item 3
- Social Security Act, proposed section 1229A at
item 35
- Student Assistance Act, proposed section 41 at
item 43
- Paid Parental Leave Act, proposed section 174 at
item 20.
Debtors will also be liable to pay an interest charge if
they fail to comply with or terminate a repayment arrangement:
- Family Assistance Administration Act, proposed section
78A at item 3
- Social Security Act, proposed section 1229B at
item 35
- Student Assistance Act, proposed section 41A at
item 43
- Paid Parental Leave Act, proposed section 175 at
item 20.
Secretary can exempt a
person from interest charge
Schedule 12 inserts provisions which enable the Secretary
to make a determination to exempt a person from the interest charge:
- Family Assistance Administration Act, proposed section
78E at item 3
- Social Security Act, proposed section 1229F at
item 35
- Student Assistance Act, proposed section 41E at
item 43
- Paid Parental Leave Act, proposed section 179 at
item 20.
The new scheme removes the
$50 administrative charge
The existing scheme for payments under the Social
Security Act, Family Assistance Act, Paid Parental Leave Act
and the Veterans’ Entitlements Act includes an administrative charge of
$50 when a person first becomes liable to pay interest. Under the new scheme
there will be no administrative charge under the Social Security Act and
Family Assistance Act (the existing scheme will continue to apply to
payments under the Veterans’ Entitlements Act).
The existing sections in the Social Security Act
(section 1229AB), Family Assistance Administration Act
(section 78B) and Paid Parental Leave Act (section 179) that
provide for the administrative charge are replaced by proposed sections that do
not contain such a charge. (See items 3, 20 and 35 of Schedule
12). The Student Assistance Act does not currently provide for an
administrative charge.
Rate of interest
The proposed interest charge is set in the same way as the
General Interest Charge in the Taxation Administration Act 1953 (section
8AAD).[243]
It is based on the 90-day Bank Accepted Bill rate (approximately two per cent)
plus an additional seven per cent.[244]
See:
- Family Assistance Administration Act, proposed section
78C at item 3
- Social Security Act, proposed section 1229D at
item 35
- Student Assistance Act, proposed section 41C at
item 43
- Paid Parental Leave Act, proposed section 177 at
item 20.
Issues
No explanation of the need
for a new scheme
While the Explanatory Memorandum explains the need for an
interest charge, it does not explain why the Government has not applied an
interest charge under the existing scheme since 2005 or why the existing scheme
ought to be replaced. The Explanatory Memorandum draws attention to only one
problem with the existing scheme—the rate of interest:
The interest rate is determined by the Minister in a
legislative instrument. The most recent determination by the Minister set the
interest rate at three per cent per year. The initial rate of 20 per cent was
considered too high and resulted in a rapidly increasing debt base and
financial hardship for debtors. The subsequent rate of three per cent was too
low and did not provide an incentive for debtors to enter into payment
arrangements, and administrative costs outweighed recovery of debts. The
interest charge scheme has not been applied since 2005.[245]
As the Explanatory Memorandum itself makes clear, the
Minister is able to vary the interest rate between zero and 20 per cent without
amending the Act. It is unclear why, if the current penalty interest
rate is not suitable, the Minister has not simply set a different rate via
legislative instrument.
New scheme does not apply
to payments under the Veterans’ Entitlements Act
Since 2001 payments under the Veterans’ Entitlements
Act have been subject to the same interest charge scheme as payments under
the Family Assistance Act and Social Security Act. The changes
proposed in Schedule 12 will mean that the Veterans’ Entitlements Act
will keep the existing scheme while a new scheme is applied to payments under
other Acts.
Under section 205AAE of the Veterans’ Entitlements Act,
‘the penalty interest rate is the rate in force from time to time under section
1229B of the Social Security Act.’[246]
Existing section 1229B provides for a penalty interest rate of 20 per cent or a
lower rate determined by the Minister using a legislative instrument. The
current rate is three per cent.
Item 35 of Schedule 12 replaces existing section
1229B of the Social Security Act. So as to retain the current interest
charge scheme in the Veterans’ Entitlements Act, item 45 of
Schedule 12 replaces existing section 205AAE Veterans’ Entitlements Act
with proposed section 205AAE, which provides that the penalty interest
rate is three per cent per year unless the Minister determines another
percentage in a legislative instrument.
The Explanatory Memorandum does not explain why the new
interest charge scheme will not apply to payments under the Veterans’ Entitlements
Act.
Veterans receiving
compensation payments under Military Rehabilitation and Compensation Act 2004
The version of this measure set out in the Social Services
Legislation Amendment (Interest Charge) Bill 2016 exempted veterans receiving
compensation under the Military Rehabilitation and Compensation Act 2004
from the interest charge.[247]
Under the measure in this Schedule these veterans will be subject to the
interest charge.
Treatment of
debt incurred due to administrative error
The current interest charge scheme provides that interest
is not charged on debts that are incurred due to administrative error (except
under the Student Assistance Act).[248]
The amendments in Schedule 12 to the Bill alter this position.
For instance, item 35 of Schedule 12 to the Bill
repeals and replaces sections 1229A–1229C of the Social Security Act.
Importantly the effect is to repeal existing subsection 1229A(2A).[249]
That subsection provides that a person is not liable to pay interest on a debt,
or the proportion of a debt, that was incurred because of an administrative
error made by the Commonwealth or an agent of the Commonwealth. Proposed
section 1229A does not include an equivalent provision. This will affect
recipients whose debts are not entirely due to administrative error insofar as
interest will be payable where as currently it is not. This means that a
protection which currently exists will be extinguished.
Some might argue that the current protection under the Social
Security Act (section 1237A), the Family Assistance Administration Act
(section 97) and the Student Assistance Act (section 43B) that the
Secretary must waive the right to recover the proportion of a debt that is
attributable solely to an administrative error by the Commonwealth and was
received by the person in good faith is sufficient.
However the requirement that the debt is solely due to
administrative error and received in good faith sets the bar high. According to
the Department of Social Service’s Guide to Social Security Law:
The requirement that part of the debt must have arisen
'solely' from administrative error means that there must have been no other
factors that caused the debt to arise or contributed to the debt arising. The
part of the debt must have arisen as a result of administrative error alone.[250]
As a 2009 report by the National Welfare Rights Network
explains: ‘the balance of risk rests almost entirely with the client because
any slight contributory error on their part makes them liable to repay the
debt.’[251]
Under the new scheme, the Minister can provide for exemptions from the interest
charge using a statutory instrument.[252]
The amendments in Schedule 12 to the Bill are directly
targeted to a class of persons. Those persons who are no longer in receipt of
benefit, have not entered into a debt agreement or have not adhered to the
terms of the debt agreement will have interest charged to their outstanding
debts. This class of persons will be directly affected by the repeal of
existing subsection 1229A(2A) of the Social Security Act.
Schedule 14—Parental leave payments
History of the measure
The measure was announced in the 2015–16 Mid-Year Economic
and Fiscal Outlook.[253]
The Social Services Legislation Amendment (Consistent Treatment of Parental
Leave Payments) Bill 2016 (the first Bill), was introduced into the House of
Representatives on 16 March 2016. However, the first Bill lapsed when the
Parliament was prorogued on 15 April 2016.[254]
A Bills Digest was not prepared for the first Bill.
The amendments in Schedule 14 of this Bill are in similar
but not equivalent terms to those in the first Bill.
Purpose of
the Schedule
The purpose of Schedule 14 is to amend the Social
Security Act 1991 (the SS Act), the Veterans’
Entitlements Act 1986 (the VE Act), and the Paid
Parental Leave Act 2010 (the PPL Act) to include Parental Leave
Pay[255]
(PLP) and Dad and Partner Pay[256]
(DAPP) payments in the income test for income support payments (such as
pensions and allowances).
Commencement
The amendments in Schedule 14 of the Bill commence on the
first 1 January, 1 April, 1 July or 1 October that occurs after Royal Assent.
Background
Paid Parental Leave Scheme
The Australian Government’s Paid Parental Leave (PPL) Scheme
provides for the payment of PLP to eligible primary carers in the first years
after the birth or adoption of a child. PLP is paid for a particular period
(the PPL period) for up to 18 weeks at the rate of the national minimum wage
(currently $672.60 per week).[257]
To be eligible, claimants must have incomes of $150,000 per annum or less in
the year prior to the birth or adoption of the child.[258] They must also have worked
at least one day a week for at least ten of the 13 months before the birth or
adoption of the child.[259]
PLP is a government payment but is generally paid through
the recipient’s employer. PLP is taxable income and does not include
superannuation contributions. Working fathers or partners may be eligible for
DAPP, a separate two-week payment, paid at the national minimum wage.[260]
There were 158,974 families who started receiving PLP in
2014–15.[261]
There were also 70,785 fathers or partners who received DAPP in 2014–15.[262]
Estimated actual expenditure on PLP in 2014–15 was $1.9 billion and was
expected to decrease to $1.6 billion in 2016–17.[263] Estimated actual
expenditure on DAPP in 2015–16 was $100.8 million, rising to $105.3
million in 2016–17.[264]
Baby Bonus and newborn payments
Prior to January 2011, when the PPL scheme was introduced,
the main form of financial assistance offered by the Australian Government
specifically for newborns was the Baby Bonus. The Baby Bonus (known as
Maternity Payment when first introduced in July 2004) was initially a non-means
tested, lump sum payment to the parents of newborn or newly-adopted children.[265] From 1
January 2009 an income test was applied to the Baby Bonus, limiting eligibility
for the payment to families whose combined, adjusted, taxable income was
expected to be $75,000 in the six months following the birth (including
stillbirth) or adoption.[266]
At the same time, the payment switched from being paid as a lump sum to most
families to being paid in mandatory fortnightly instalments.
The Baby Bonus was initially paid at a rate of $3,000 and
indexed to the Consumer Price Index twice each year (in March and September).[267] An ad
hoc increase to $4,000 occurred on 1 July 2006.[268] On 1 July 2008 another ad
hoc increase lifted the rate to $5,000 and indexation was changed so that it
only occurred once each year on 1 July.[269]
On 1 July 2012 indexation was frozen for three years and, on 1 September 2012,
the rate was reduced to $5,000.[270]
On 1 July 2013 a new rate structure was introduced with $5,000 payable for a
parent’s first child and multiple births, and $3,000 for second, and subsequent,
children.[271]
When the PPL scheme commenced on 1 January 2011 parents
eligible for PLP and Baby Bonus could only receive one of the payments.
Generally, PLP offered a higher rate of payment. However, due to the taxable
nature of PLP and the fact that it was treated as income under the income tests
for family assistance payments, there were certain situations in which an
individual would be better off receiving the Baby Bonus rather than PLP. This
would arise mainly in situations where an individual loses more through increased
tax liabilities and lower family assistance payments than they would otherwise
gain through the higher rate of PLP.
On 1 March 2014 the Baby Bonus was abolished and replaced
with two new supplementary amounts paid with Family Tax Benefit Part A (FTB-A)—the
Newborn Upfront Payment and the Newborn Supplement.[272] Family Tax Benefit is paid
to families with dependent children aged up to 19 years who meet an income
test—it is the Australian Government’s main form of financial assistance for
families with dependent children. The Newborn Upfront Payment is a lump sum
payment paid to a parent or carer of a newborn child, a newly adopted child or
a child entrusted into their care, who is eligible for FTB-A and not in receipt
of PLP.[273]
It was initially worth $500 and indexed once a year on 1 July (the rate for
2016–17 is $532). The Newborn Supplement is an amount paid in instalments for
up to 13 weeks to new parents or carers who are eligible for FTB-A and not in
receipt of PLP.
When first introduced, the total amount of Newborn
Supplement for a firstborn or first child adopted/entrusted into care was
around $1,500 ($115.50 per week) and $500 ($38.50 per week) for subsequent
children. As such, the new payments offered $3,000 less than the Baby Bonus
offered for first children and $2,000 less than the Baby Bonus offered for
second and subsequent children. The current total rate of the Newborn
Supplement for first children is $1,595.23 and for second and subsequent
children it is $532.35.[274]
The Newborn Upfront Payment’s current payment rate is $532.00.[275]
Impact of PLP and DAPP on other payments
PLP and DAPP are taxable income and can affect means-tested
social welfare benefits such as family assistance and some social security
payments.
The income test for family assistance payments—including
Family Tax Benefit, Child Care Benefit and Child Care Rebate—assesses adjusted
taxable income and this includes PLP and DAPP.[276]
The income test for social security payments such as
Parenting Payment, Disability Support Pension and Newstart Allowance assesses a
broader range of income than the family assistance income test but currently
excludes PLP and DAPP from assessment for most payments covered by the SS
Act.[277]
PLP and DAPP are also excluded from the income test for veterans’ payments
under the VE Act and the Farm Household Allowance under the Farm
Household Support Act 2014.
PLP and DAPP are included in some income tests for some
social security payments, specifically:
- the
parental income tests for Youth Allowance and ABSTUDY as these tests assess
adjusted taxable income
- the
Carer Payment income test for care receivers
- the
income test for the Commonwealth Seniors Health Card (including for veterans)
and low income Health Care Card and
- the
means test for the Additional Boarding Allowance under the Assistance for
Isolated Children Scheme.[278]
PLP and DAPP are also included in income assessments for the
purpose of determining child support payments.[279]
Why were PLP and DAPP excluded from the income tests?
In his second reading speech for the first Bill, the
Minister for Social Services explained why a decision had been made to exclude
PLP and DAPP from the income tests for most social security payments:
This situation arose because, when government funded paid
parental leave was first introduced, the non-taxable baby bonus was valued at
$5,294 such that a family could potentially be better off receiving both the
baby bonus and an additional income support payment rather than receiving paid
parental leave.
To ensure that the level of financial assistance available to
those choosing paid parental leave was worth more than the financial assistance
provided to those who chose the baby bonus, paid parental leave was at that
point in time excluded from being counted as income for income support
payments.
One of the objectives of paid parental leave is to encourage
workforce participation, and its value relative to welfare type payments is
important.
...
These interactions with other payments and the tax systems
mean that a family may have been better off at the time choosing the baby bonus
instead of PPL when they were also eligible for PPL.
In order to make this less likely, the decision at the time
was taken that PLP and DAPP would not count as income for income support
payments.[280]
As such, the main purpose of the exclusion was to encourage
parents to take PLP rather than Baby Bonus.
Rationale for the change
As the Baby Bonus has been abolished, and the PLP rate is
now much higher than the combined Newborn Upfront Payment and Newborn
Supplement, there is now a strong financial incentive for parents to choose PLP
over the Family Tax Benefit supplementary amounts without the need for income
test concessions. As the Minister explained in relation to the previous Bill:
As the baby bonus has subsequently been abolished and the
newborn supplement has been introduced, along with the increase in the PLP rate
which is now worth $11,826 over 18 weeks, the original rationale for the
exclusion no longer exists.[281]
Policy position of non-government parties/independents
The Australian Labor Party (Labor) has not stated a position
on the measure in this Schedule. Labor has been opposed to the Coalition
Government’s broader changes to the PPL scheme which would limit the amount of
PLP a person is eligible for if they are also entitled to employer-provided
paid parental leave.[282]
Labor promised to reverse these broader changes in the 2016 Federal Election.[283]
At the time of writing, the other non-government parties and
independents had not stated a position on the measure in the Schedule.
Position of major interest groups
The main community sector groups have not commented in
detail on this measure. In its submission to the Senate Economics Committee
inquiry into the Bill, the National Welfare Rights Network stated that it was
not opposed to the measure.[284]
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.
According to the Statement, Schedule 14 engages the right to social security
under Article 9 of the International Covenant on Economic, Social and
Cultural Rights (ICESCR), the right to equality and
non-discrimination under Article 3 of the ICESCR, and the right to work
and maternity leave under Article 7 of the ICESCR. The Government
considers that the Schedule is compatible and that where it may limit certain
human rights, those limitations are ‘reasonable, necessary and proportionate’.[285]
Note that the number given for the financial implications of
the Schedule in the Statement of Compatibility indicates that the Government
has re-used the Statement prepared for the first Bill which did not include the
changes to DAPP which are part of the amendments in this Schedule.[286]
Financial implications
According to the Explanatory Memorandum to the Bill, the
measures in Schedule 14 are expected to provide savings of $133.7 million over
the forward estimates.[287]
Key issues
By removing the income test exemption for PLP and DAPP
payments, a relatively small number of income support payment recipients will
have their payments reduced as a result of receiving paid parental leave.
According to the Government, an estimated 11,000 income support payment
recipients who receive PLP or DAPP will be affected: 5,000 will experience a
reduction in income support while 6,000 will lose eligibility for income
support altogether.[288]
For most income support payments, income at a rate
equivalent to the National Minimum Wage would preclude eligibility under the
income test. Those in receipt of Parenting Payment Single or a pension payment
will most likely be those who can still receive a reduced income support
payment while receiving PLP as these payments have a more generous income test.
While the rationale for the income test exemption no longer
stands, removing it will have a significant impact on the financial resources
of new parents. This measure will deliver savings to Government at the expense
of reduced assistance to new parents on low incomes.
Key provisions
Item 2 of Schedule 14 repeals paragraphs 8(8)(d) and
(da) of the SS Act so that instalments of PLP and DAPP are no longer
included in the list of amounts excluded from the social security income test (section
8 of the SS Act sets out income test definitions for the purpose of
social security law). Item 1 is consequential to item 2 and adds proposed
paragraphs 8(1A)(h) and (i) to the SS Act so that PLP and DAPP,
while being considered income for the purposes of the income test, are not to
be treated as employment income. Employment income can be treated
differently under some components of the income test for some payments (such as
the pension Work Bonus).[289]
Item 3 makes similar amendments to those in item 2
but for the VE Act.
Item 5 inserts a definition of income support
payment into section 6 of the PPL Act, stating that is has the
same meaning as in section 23 of the SS Act.[290]
Item 7 inserts proposed section 69A into the PPL
Act so that deductions can be made to an instalment of PLP to offset
possible overpayments of any income support payment payable to the same
person—that is, where an instalment of PLP that is to be paid to a person will
result in an income support payment already paid to the same person being
considered an overpayment, then the PLP instalment can be reduced by an amount
equal to what the overpayment would be. This provision will allow the
Department of Human Services to minimise the number of overpayments made to
recipients of both income support and PLP and, therefore, reduce the need to
raise debts against individuals. Item 12 inserts proposed section
115EI to allow for the same arrangement for DAPP.
Item 9 inserts proposed subsection 101(3A) into
the PPL Act so employer determinations cannot be made in respect of a
person if they are receiving an income support payment. Item 10 inserts proposed
item 2A into the table at subsection 108(1) of the PPL Act so that
employer determinations must be revoked where a person is in receipt of an
income support payment. An employer determination means that instalments of PLP
are made via the employer.[291]
These amendments mean that the Department of Human Services will be the
paymaster for a PLP recipient who is receiving income support payments.[292] The
Statement of Compatibility with Human Rights states that this ‘will ensure that
PLP payments to income support recipients are paid promptly and not delayed
because of the timing of the employer’s payroll’.[293] The Explanatory Memorandum
states that the amendments will ensure that the Department of Human Services
can make the deductions provided for by item 7. While the provisions
allows for simpler administrative processes for the Department of Human
Services, they will sever the link between employer and employee (for those
also in receipt of income support). This link was considered an important
component of the scheme when introduced, to ensure mothers would remain
connected to work and their careers.[294]
Schedule
15—Fringe benefits
Purpose of the Measure
The income tests for Family Assistance and Youth Allowance
(also ABSTUDY and Assistance for Isolated Children) take account of fringe
benefits when assessing the income of families.[295]
This also applies to the income test for Paid Parental Leave and Dad and
Partner Pay. The value of fringe benefits is also used when assessing
eligibility for a low income superannuation contribution payment, a net medical
expenses offset, the dependant (invalid and carer) tax offset and the tax rebate
for low income aged persons and pensioners.
Schedule 15 proposes to amend the A New Tax System
(Family Assistance) Act 1999[296]
(the FA Act), the Income Tax Assessment Act 1936[297]
(ITAA 1936) and the Social Security Act 1991[298]
(the SS Act) to change the measure of those fringe benefits for some
claimants from an ‘adjusted’ to a ‘gross’ value.
The adjusted value that is currently used is the grossed
up value of the benefit reduced by the current Fringe Benefit Tax rate (49 per
cent for the year ending 31 March 2017). This value would continue to be used
for employees who receive fringe benefits from public benevolent institutions,
health promotion charities and some hospitals and public ambulance services. These
employees are estimated to make up 65 per cent of employees receiving
reportable fringe benefits.[299]
Other employees who receive fringe benefits would have the gross value used.
Commencement
The amendments in Schedule 15 will commence on
the first 1 January or 1 July to occur after Royal Assent.
Background
The value of some employer provided fringe benefits have
been included as income in the income tests for family assistance and the
parental income tests for certain youth payments since January 1994. The
present arrangement where the adjusted value of fringe benefits was used in
these income tests goes back to July 2000 for Family Tax Benefit and January
2001 for Youth Allowance. The adoption of this method reflected changes in the
provisions of the Fringe Benefits Tax as part of the New Tax System reform
package.[300]
One of those reforms was the inclusion on the group
certificates of employees of the grossed up value of fringe benefits received.
The non-grossed up amount (now known as the adjusted amount) could then be
calculated and used in the calculation of adjusted taxable income for assessing
eligibility for Family Tax Benefit and Youth Allowance. This new approach was
part of a broader reform of Fringe Benefit Tax that was going ‘to make the
system fairer for all taxpayers’.[301]
In 2006, as part of reforms to the child support scheme,
legislative changes were made to the definition of reportable fringe benefits
for the income tests for family assistance payments. This change was intended
to align the adjusted taxable income definitions used for family assistance
payments with that for child support assessments.[302]
As a result of the amendments, the income tests for family assistance would
assess gross reportable fringe benefits from 1 July 2008, not the adjusted
amount.[303]
Before this amendment commenced, it was reversed by the Labor Government amid
concerns about the adverse impact of the measure on employees of charitable
organisations and the not-for-profit sector.[304]
Many charities and not-for-profit organisations make use of a fringe benefits tax
exemption to offer salary packaging arrangements to their staff.
Financial implications
According to the Explanatory Memorandum to the Bill, the
measure in Schedule 15 is estimated to save $132.1 million over the period
2015-16 to 2019-20.[305]
Position of
major interest groups
The National Welfare Rights Network (NWRN) commented on the
change in its submission to the Senate Economics Committee inquiry into the
Bill. The NWRN stated that it was not opposed to the Bill in the absence of
more extensive reforms of fringe benefit arrangements:
[the measure will] improve equity in the treatment of some
similarly placed families by disregarding differences in how their income is
received. It also avoids past concerns about the impact on the community sector
workforce. However, it does so at the expense of treating some families with
similar financial means differently, on the basis of whether they are employed
by a not-for-profit organisation or not.
A preferable and more principled overall outcome would be
adequate funding of community sector organisations and other not for profit
organisations, followed by more comprehensive reform of Fringe Benefits Tax
arrangements. In the absence of this, the NWRN does not oppose this measure.[306]
Key issues
The changes proposed by Schedule 15 will reduce the value of
some payments to families who receive income in the form of fringe benefits but
will protect employees of public benevolent institutions, health promotion
charities and some hospitals and public ambulance services that make up the
majority of those who receive reportable fringe benefits. The exemption for
this group addresses the main issue raised when a similar measure was almost
implemented in 2008.
Key provisions
Item 1 of Schedule 15 repeals clause 4 of Schedule
3 of the FA Act which contains the present definition of the adjusted
fringe benefits total. The item substitutes a proposed clause 4
containing the new definition of adjusted fringe benefits total to alter the calculation
of ‘adjusted fringe benefits total’ so that the gross (rather than adjusted net
value) of reportable fringe benefits is used.
The current definition for adjusted fringe benefits total
is the reportable fringe benefits total[307]
reduced by the current Fringe Benefit Tax rate (49 per cent for the year ending
31 March 2017). So, for example, the adjusted fringe benefit total would be the
reportable fringe benefits total multiplied by (1-FBT rate) or 51 per cent.[308]
Under the proposed definition, the value of the adjusted
fringe benefits total would be taken from the gross value of reportable fringe
benefits, except in the case of fringe benefits that are provided by an
employer described in section 57A of the Fringe Benefit
Tax Assessment Act 1986.
The present treatment of people who receive fringe
benefits from public benevolent institutions, health promotion charities and
some hospitals and public ambulance services is maintained under proposed
clause 4. They are people employed by
employers described in section 57A of the Fringe Benefits Tax Assessment Act.
The fringe benefits to be assessed for this group are defined by section 135Q
of that Act.
Item 2 repeals the definition of ‘adjusted fringe
benefits total’ in subsection 6(1) of the ITAA 1936 and substitutes a
new definition that refers to the meaning given by proposed clause 4 of
Schedule 3 of the FA Act.
Schedule 16—Carer Allowance
Purpose of
the Schedule
Schedule 16 amends the Social
Security (Administration) Act 1999[309]
(the SS Admin Act) to remove backdating provisions for Carer Allowance.
The measure was announced in the 2016–17 Budget as part of
the National Disability Insurance Scheme (NDIS) Savings Fund measure.[310]
The changes are expected to provide $108.6 million in savings over four
years.[311]
Commencement
This Schedule will commence on the later of 1 January 2017
or the day after the Act receives the Royal Assent.
Background
Carer Allowance is an income supplement for people
providing daily care to someone with a disability or medical condition or who
is frail aged.[312]
It is a non-means test payment and can be paid in addition to the means tested
income support payment for carers—Carer Payment—or other income support payments.
The current rate of Carer Allowance is $123.50 per fortnight. A person
receiving Carer Allowance on 1 July for a care-receiver aged under 16 years is
also eligible for a $1,000 lump sum Child Disability Assistance payment.[313]
A separate payment, the Carer Supplement, worth $600, can be paid to recipients
of Carer Allowance for each person being cared for—it is paid annually in July.[314]
Currently, payments of Carer Allowance may be backdated
from the day of claim up to 12 weeks to the day of qualification or, if a claim
is made more than 12 weeks after the day of qualification, the payment can be
backdated 12 weeks prior to the day the claim was made.[315]
The day of qualification is the day the person meets the qualification criteria
(which primarily relate to the disability of the care-receiver and the level of
care provided by the carer).[316]
Backdating means that a person is considered to have been entitled to a payment
earlier than their claim date, and can receive a lump sum payment to cover any
payment in arrears.
For Carer Allowance claimed in respect of an adult
care-receiver, these backdating provisions only apply where the adult’s
disability is due to an acute event.[317]
For Carer Allowance claimed in respect of a child care-receiver, the backdating
provisions will not apply where the claimant’s qualification is based on them
being qualified for Carer Payment (a carer providing care for a child under 16
years in receipt of Carer Payment receives Carer Allowance automatically).[318]
For most other social security payments, payments start on
the day a claim is made or the day the person becomes qualified for a payment.
Backdating provisions for other payments generally only apply in specific
circumstances, such as where a person’s partner has made a claim for a payment
at an earlier date, following childbirth, where the claimant was incapacitated,
or following the death of a partner.[319]
Origins of
the backdating provisions
Carer Allowance has its origins in the Handicapped Child
Allowance (HCA) introduced in 1974.[320]
The HCA was replaced by the Child Disability Allowance (CDA) from November 1987
and the CDA was replaced by Carer Allowance as part of the 1998 Staying at Home
– Care and Support for Older Australians package.[321]
Carer Allowance also replaced a separate payment for those caring for adults
with disability, the Domiciliary Nursing Care Benefit. Carer Allowance
commenced from July 1999.[322]
Both the HCA and CDA allowed for backdating start dates of
up to 12 months. The main justification for this arrangement was that it could
take a long period of time for very young children to be diagnosed with a
disability or medical condition, and to understand the severity of any
condition and their care requirements.[323]
Also, the backdating provisions provided relief to those who did not lodge
their claims in a timely manner—claims for financial support would not
necessarily be a priority for many parents caring for children with a
disability or medical condition and many may not have been aware of the
existence of these payments.[324]
The Howard Government announced in the 1996–97 Budget that
it intended to reduce the backdating provisions for the CDA from 12 months down
to three months but the measure was not implemented.[325]
In the 1997–98 Budget, the Government proposed reducing the backdating
provisions for CDA from 12 months down to six months (again this was not
implemented).[326]
When Carer Allowance was introduced in 1999, Carer Allowance
for those caring for children allowed for backdating up to 12 months while
Carer Allowance for those caring for an adult allowed for backdating up to six
months (this was an improvement on the Domiciliary Nursing Care Benefit which
did not allow for backdating).[327]
2006
changes
In the 2005–06 Budget, the Howard Government announced
that it would reduce the backdating provisions for Carer Allowance down to
three months for carers of both children and adults.[328]
The measure was contentious at the time and the Government-chaired Senate
Community Affairs Legislation Committee recommended that the Bill implementing
the measure be amended to allow a discretion for the backdating of Carer
Allowance for periods in excess of three months where it would have been
unreasonable for the claimant to have made an earlier claim or where a failure
to backdate would occasion significant financial hardship.[329]
The Australian Labor Party (Labor) moved amendments in the Senate to give
effect to this recommendation and allow for discretionary backdating extensions
(up to an addition 14 weeks or 26 weeks in total) for a broad range of reasons.[330]
The Australian Greens and Australian Democrats also moved amendments to remove
the changes to backdating arrangements. The amendments were negatived and the
Bill passed without amendment.[331]
Rationale
for the change
The budget papers state that removing the measure is about
‘aligning’ the backdating arrangements for Carer Allowance claims with other
social security payments.[332]
Evidence provided by the Department of Social Services at Senate Budget
Estimates suggested that the backdating provisions are no longer necessary:
It is unusual, across the social security system, to have
backdating of this nature. It is a bit historical. It actually originates from
when child disability allowance was the payment, prior to carer allowance being
introduced. Backdating was argued to be necessary. The rationale was that it
had a very strong diagnostic basis and some families took some time to get a
diagnosis for their child that would qualify them for child disability
allowance. Now that we have tools that look at the impact on functioning and
the care load rather than taking a diagnostic specific approach, there is not
the same need for a diagnosis in order to qualify for carer allowance.[333]
Policy
position of non-government parties/independents
At the time of writing, non-government parties and
independents had not stated their positions on the measure proposed by this
Schedule.
Position of
major interest groups
Carers
Australia
In its submission to the Senate Economics Legislation
Committee’s inquiry into the Bill, Carers Australia recommended that the
measure not proceed. Carers Australia argued that the current backdating
provisions recognise the fact that it can be difficult for new carers to come
to terms with their role, and that it can take a long time for carers to
understand the financial impact of their responsibilities and to navigate the
supports available to them (such as Carer Allowance):
It is hard to over-dramatise the devastating effect of the
combined shock of someone you love suddenly becoming disabled or incurring a
debilitating illness – having to deal with their pain and suffering and the
loss of life chances – accompanied by the sudden loss of income; especially at
a time when extra expenses are incurred as a result of having to adjust to the
tragedy.
Families who find themselves in this situation are unlikely
initially to have clarity around how this tragedy will impact upon them and the
person they care for.
...
They may never have given any thought to income support and
may initially have no idea that there is such a thing as a Carer Payment or
Carer Allowance or what steps they would need to go through to apply for these
payments. Unlocking the mysteries of Centrelink, let alone subjecting
themselves to the onerous processes of finding their way through its complex
and time-consuming requirements, is unlikely to be the first thing on their
minds.
The capacity to be reimbursed for even a comparatively modest
amount of the extra costs carers have incurred can make a real difference when
they have finally reached the point of understanding that they are entitled to
financial assistance.[334]
Australian
Council of Social Service
The Australian Council of Social Service (ACOSS) also raised
concerns with the Bill in its submission to the Senate Economics Committee
inquiry, particularly the ‘potential impact on low-income carers who experience
financial disadvantage because of a loss of employment income when they take on
a caring role’.[335]
ACOSS stated that a distributional analysis of the impact of the change should
be undertaken before it is considered.[336]
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. According to
the Statement, Schedule 16 engages with the right to social security under
Article 9 of the International Covenant on Economic, Social and Cultural
Rights. The Government considers that the Bill is compatible as, to the
extent that there is a reduction in the period Carer Allowance is payable, the
reduction ‘is reasonable, necessary and proportionate to achieving a legitimate
aim’.[337]
According to the Government, the aims of the measure are to ensure the social
security system remains sustainable and targeted to those recipients with the
greatest need, and to align the commencement dates for Carer Allowance with
other social security payments.[338]
Key issues
Schedule 16 will remove the current backdating provisions
for payment of Carer Allowance, meaning that some carers will no longer be able
to receive a lump sum payment in respect of a period up to 12 weeks prior to
their date of contact with Centrelink. The earliest date of effect for a grant
of Carer Allowance will be the date a claim is lodged or the date of first
contact with Centrelink.
The Government expects that around 40,000 of the 120,000
new claimants of Carer Allowance each year will be affected by the measure.[339]
As noted above, officials from the Department of Social
Services have argued that the backdating provisions are no longer necessary as
eligibility for Carer Allowance is no longer based on a specific diagnosis, but
on the impact of a disability or medical condition on a care-receiver’s
functioning and on the ‘care load’. As such, there is not the same delay in
determining eligibility for payment. However, the other rationales for the
backdating provisions remain: it may take some time for a carer to realise the
full extent of their role and responsibilities; seeking out financial support
may not be a key priority for carers following birth or an event giving rise to
caring responsibilities, and knowledge of Carer Allowance (and the need to
contact Centrelink) may not be widespread. Such issues were raised in relation
to the 2006 changes and were the primary focus of the Senate Community Affairs
Legislation Committee’s report in 2006.[340]
Provisions
Item 1 repeals clauses 16 and 17 of Schedule 2 of
the SS Admin Act. These clauses set out special provisions for
determining the start day for payments of Carer Allowance, allowing for
payments to be backdated to the day a person becomes qualified for Carer
Allowance (if a claim is made within 12 weeks of becoming qualified) or
12 weeks prior to the date of claim (if the person makes a claim more than
12 week after they become qualified for Carer Allowance).
Schedule
20—Psychiatric confinement
History of the schedule
The Social Services Legislation Amendment Bill 2015 (the
first Bill) was introduced into the House of Representatives on 25 March 2015.[341] The
first Bill had passed the House of Representatives and was before the Senate
when the Parliament was prorogued on 15 April 2016. The Bill lapsed on
prorogation of Parliament.
The provisions of Schedule 20 of the Budget Savings
(Omnibus) Bill 2016 (this Bill) which was introduced into the House of
Representatives on 31 August 2016 are in equivalent terms to the first Bill. A
Bills Digest was prepared in respect of the first Bill.[342] The material in this Bills
Digest has been sourced from that earlier Bills Digest.
Purpose of the schedule
The purpose of this schedule is to amend the Social Security Act 1991
(the 1991 Act) so that people who are undergoing psychiatric confinement
because they have been charged with a serious offence cannot receive social
security payments except during a period when they are being integrated back
into the community.
Background
In some circumstances a person suffering from mental
impairment can be held in psychiatric confinement after being charged with an
offence even though they have not been convicted. This can happen when they are
found unfit to stand trial because of mental impairment or are found not guilty
because of mental impairment. People in this group are referred to as forensic
patients.
Mental impairment is a broad category that covers
psychiatric impairment due to mental disorders such as schizophrenia and
bipolar disorder as well as intellectual disability, acquired brain injury and
other conditions that impair mental functioning.[343]
Forensic patients are usually released from custody through
a staged process. For example, before the court considers discharging them into
the community, forensic patients from Victoria’s Thomas Embling Hospital
generally undertake an 18 to 24 month program of graduated supported leave.[344]
Currently people in psychiatric confinement because they
have been charged with an offence can receive payments such as Disability
Support Pension (DSP) if they are undertaking a course of rehabilitation. A
2014 report in The Daily Telegraph referred to this as a ‘loophole’.[345]
Under section 1158 of the 1991 Act:
An instalment of a social security pension, a social security
benefit, a parenting payment, a carer allowance, a mobility allowance or a
pensioner education supplement is not payable to a person in respect of a day
on which the person is:
(a) in gaol; or
(b) undergoing psychiatric confinement because the person has
been charged with an offence.
Psychiatric confinement is defined by subsection 23(8) of
the 1991 Act to include ‘confinement in a psychiatric section of a
hospital, and any other place where persons with psychiatric disabilities are,
from time to time, confined.’ However, subsection 23(9) states: ‘The
confinement of a person in a psychiatric institution during a period when the
person is undertaking a course of rehabilitation is not to be taken to be
psychiatric confinement.’ The Social Security Act 1947 (the 1947 Act)
contained a similar subsection that referred to people ‘undertaking a course of
rehabilitation’.[346]
This was introduced in a 1986 amendment. Neither the 1947 Act nor the 1991
Act made a distinction between serious and non-serious offences.
In administering the 1991 Act the Department of
Social Security (which was subsequently renamed Centrelink) interpreted the
term ‘course of rehabilitation’ narrowly. However, in a series of cases where
income support recipients challenged this interpretation in the Administrative
Appeals Tribunal (AAT), a broader interpretation has been developed. In a 2002
case the Federal Court upheld a broad interpretation (see discussion below).[347]
Centrelink responded by incorporating the broader interpretation into its
guidelines.
Recent media coverage — the
Toki case
This issue attracted little public attention until recently.
In March 2014 The Daily Telegraph’s Geoff Chambers reported that
convicted murderer Martin Toki had applied for, and received, a DSP while being
held at Long Bay prison hospital.[348]
Centrelink cancelled his payment after discovering that he was serving a 22
year sentence for murdering his de facto wife in 2001. The case attracted media
attention when Toki unsuccessfully appealed the cancellation decision in the
AAT, but was not required to repay the money as the AAT characterised the
payments as an administrative error by Centrelink.[349]
AAT senior member Jill Toohey found that Toki was not
eligible for DSP. According to the 1991 Act a person who is in gaol
cannot receive DSP (or other pension or social security benefits). However, she
acknowledged that some people being held as ‘forensic patients’ could receive
payments such as DSP.
According to The Daily Telegraph, then Human Services
Minister Marise Payne asked ‘the department to investigate this urgently with a
view to determining if there are further cases of similar payments that require
immediate review’.[350]
While Toki was ineligible for DSP because he was serving a
sentence after being convicted of an offence, the case drew attention to the
fact that some people charged with serious offences could legitimately receive
income support payments while they were held in psychiatric confinement. Their
eligibility would in part depend on whether they were undertaking a course of
rehabilitation.
The Government’s rationale for
the measure
The provisions of Schedule 20 implement a savings measure
announced in the Government’s 2014–15 Mid-Year Economic and Fiscal Outlook
(MYEFO):
The Government will achieve savings of $29.5 million over
four years from 2014–15 by ceasing payment of social security benefits to
people who are incarcerated or confined in a psychiatric institution under
state or territory law due to serious criminal charges because they were
considered unfit to stand trial or were not convicted due to mental impairment.
This will ensure the same social security treatment of people in the criminal
justice system whether they reside in a psychiatric or penal institution.[351]
Officers of the Department of Social Services (DSS)
explained a rationale for the measure in response to questions in Senate
Estimates hearings. According to Cath Halbert, manager of the Payments Policy
Group:
Currently under the Social Security Act, you cannot be paid
income support payments if you are in jail because you have been charged and
convicted; or if you are in jail because you have been charged and you are on
remand; or if you have been charged and you are in psychiatric confinement but
either have been unable to plead because you are unfit to plead or you have had
a conviction but it has not been recorded by dint of mental impairment. So that
is established policy in the Social Security Act now.
However,
there is an exception for psychiatric confinement, that if you are undergoing a
course of rehabilitation you are considered not to be in psychiatric
confinement. I can go into that a little. In 2003 [sic] a Federal Court case
significantly broadened the definition of ‘course of rehabilitation’ such that
almost anybody who had been charged
and who was in
psychiatric confinement could be paid income support payments. That was not the
original intention of the measure. In this case I guess the government has
decided to reinstate the original intention of the measure for people who have
been charged with serious crimes.[352]
Then Social Services Minister, Scott Morrison, reiterated
this rationale in the second reading speech to the first Bill in which he
referred to the Federal Court case and stated: ‘This essentially represents a
return to the original policy intention for people in these circumstances—that
a person cannot access social security payments while in psychiatric
confinement as a result of criminal charges.’[353]
The original policy intent
The policy originates with a 1985 amendment to the 1947
Act. Prior to the amendment there was a general rule that a person could
not receive an income support payment if they were imprisoned in connection
with their conviction for an offence. The amendment extended that rule to
people who were confined in a psychiatric institution after having been charged
with an offence.[354]
The following year the bar on payments to people in
psychiatric confinement was modified by another amendment that added a new
subsection. According to the Explanatory Memorandum for that Bill, the new
subsection:
... would modify the effect of the bar on payment of an income
support payment under the Principal Act to a person confined in a psychiatric
institution after being charged with an offence. The new provision would not
apply the bar to such a person who was undertaking a course of rehabilitation.
The modification would also apply retrospectively, so that persons adversely
affected by the current bar could be restored to their previous position.[355]
This exception to the bar on payment of income support was
carried over into subsection 23(9) of the 1991 Act when the 1947 Act
was rewritten and then repealed. According to the subsection:
The confinement of a person in a psychiatric institution
during a period when the person is undertaking a course of rehabilitation is
not to be taken to be psychiatric confinement.[356]
In 1999 the AAT considered the meaning of ‘course of
rehabilitation’ in Re Fairbrother.[357]
In making his decision, Deputy President Blow noted that neither the
Explanatory Memorandum nor the second reading speech were of any use in
determining the meaning. However, he concluded that ‘Parliament had in mind a
formal course of rehabilitation with a finite duration, a structure, a
beginning and an end’.[358]
In two later cases the AAT rejected Deputy President Blow’s
interpretation of the term ‘course of rehabilitation’. In Re Pardo
Senior Member John Handley rejected the claim that a course of rehabilitation
must have a finite duration. Instead, he found a period in which a person
undertakes a course of rehabilitation ‘will of course involve a structure and a
beginning and an end but all of which may be flexible and may need to be
reviewed from time to time.’[359]
In Re Franks Senior Member Keith Beddoe applied this reasoning when he
found that Cyril Franks was undertaking a course of rehabilitation and was
entitled to DSP.[360]
Franks had been receiving DSP when he was charged with an
indictable offence and found unfit to plead. He was transferred to a
psychiatric hospital with criminal proceedings against him deferred while he
remained unfit to stand trial. After Centrelink suspended his payment he
successfully appealed to the Social Security Appeals Tribunal (SSAT). The
Secretary of the Department of Family and Community Services then appealed to
the AAT arguing that Franks was not undertaking a course of rehabilitation.
The Department then took the issue to the Federal Court
where Justice Richard Cooper set aside the SSAT’s decision without reaching a
view about the meaning of ‘course of rehabilitation’.[361] Franks responded by
appealing the decision in the Federal Court. This appeal was successful.
In this appeal the Federal Court returned again to the issue
of how to interpret the term ‘course of rehabilitation’ finding that, depending
on the circumstances of the case, ‘a
planned series of activities that may include medical and other treatments
directed towards improving the person’s physical, mental and/or social
functioning’ could be a ‘course of rehabilitation’.[362]
Committee consideration
Senate Community Affairs
Legislation Committee
The first Bill was referred to the Senate Community Affairs
Legislation Committee (the Community Affairs Committee). The Community Affairs
Committee reported in June 2015.
The Community Affairs Committee’s report recommended that:
- the [first] Bill be passed and
-
the Department continue with its proposed consultation on the
definition of a 'period of integration’.[363]
The Labor Senators’ dissenting report recommended that the
first Bill not proceed and discussed concerns about the policy rationale, the
definition of serious offence, the financial impact of the Bill, its impact on
clinical service delivery and reintegration, consultation and the definition of
a ‘period of reintegration’.[364]
The Australian Greens’ dissenting report recommended that
the first Bill not be passed and:
...
That the Federal Government continues to work with its state
and territory counterparts to establish an alternative method of sharing the
costs of gradual reintegration into the community and reflects the intention of
both the Social Security Act and the UN Convention on the Rights of
Persons with Disabilities.
...
That if the Bill is to pass, the definition of serious
offence should be improved so as to clarify that it refers only to harm to
others (not self-harm) and references to property offences should be removed.
...
That if the Bill is to pass, a robust appeal right is
established and access to that right is clearly explained in Easy English
documents, so as to ensure that a ruling on whether the charges constitute a
serious offence can be appealed, not merely on administrative grounds but also
on evidentiary ones.[365]
Details of the inquiry are at the inquiry
webpage.[366]
Parliamentary Joint Committee
on Human Rights
As required under Part 3 of the Human
Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government assessed
the first Bill for compatibility with the human rights and freedoms recognised
or declared in the international instruments listed in section 3 of that Act.
The Government considered that the first Bill was compatible.[367] The Government has also
assessed Schedule 20 of the current Bill for compatibility with the Human
Rights (Parliamentary Scrutiny) Act and considers the Schedule to be
compatible.[368]
In its Twenty-second Report of the 44th Parliament
the Human Rights Committee found the statement of compatibility for the first
Bill inadequate and requested the Minister provide further information
regarding the justification for the measures in the Bill, which otherwise might
be seen to have contravened the right to social security protected by Article 9
of the International Covenant on Economic, Social and Cultural Rights (ICESCR).[369] The
Committee explained that this right ‘recognises the importance of adequate
social benefits in reducing the effects of poverty and plays an important role
in realising many other economic, social and cultural rights, particularly the
right to an adequate standard of living and the right to health.’ The Human
Rights Committee also observed that ‘[u]nder Article 2(1) of ICESCR, Australia
has certain obligations in relation to the right to social security. These
include:
-
the immediate obligation to satisfy
certain minimum aspects of the right;
- the obligation not to unjustifiably
take any backwards steps that might affect the right;
-
the obligation to ensure the right
is made available in a non-discriminatory way; and
- the obligation to take reasonable
measures within its available resources to progressively secure broader
enjoyment of the right.[370]
In the light of these requirements the Human Rights
Committee found that the Minister had not provided sufficient information to
justify the provisions in the first Bill, which limited the right to social
security, and in particular the Human Rights Committee asked for further
information regarding:
- whether the proposed changes are
aimed at achieving a legitimate objective;
- whether there is a rational
connection between the limitation and that objective; and
- whether the limitation is a
reasonable and proportionate measure for the achievement of that objective.[371]
The
Minister responded arguing that the measure is legitimate because it is the
responsibility of the states and territories, not the Australian Government, to
provide for the basic needs of people in psychiatric confinement. He reiterated
the Government’s position that this measure restores the original policy intent
that most people who are undergoing psychiatric confinement as a result of
being charged with an offence are not eligible to receive social security
payments and that the measure contributes to the sustainability of the social
security system. He argued that is not intended to be punitive but is a recognition
that people in psychiatric confinement have a reduced need for social security
payments because their basic needs are met the states and territories.
The Minister also stated:
The Government recognises that the transition of these
vulnerable people from psychiatric confinement back into the community is not
as straightforward as for those who have been imprisoned. It is for this reason
that the Bill allows for a Legislative Instrument to be made to set out
circumstances in which a person can be taken to be in a period of integration
back into the community. During this period, the person will not be taken to be
undergoing psychiatric confinement and as a result, they may be eligible to
receive social security payments, particularly where the person has a degree of
autonomy. The Government believes that this goes some way to support the
original intent of the psychiatric confinement provisions in the Act, and is a
reasonable and proportionate way to address this issue.[372]
This point is also made in the Explanatory Memorandum for
the schedule.[373]
The Committee was not persuaded by the Minister’s arguments. In its response
the Committee stated:
... the committee considers that the Bill, which would result
in certain individuals in psychiatric confinement losing existing entitlements
to social security, may be incompatible with the right to social security. The
committee recommends that the Bill be amended to set out the circumstances in
which a person will be considered to be undertaking integration back to the
community and, as such, eligible for social security.[374]
Position of
major interest groups
Submissions from interest groups were critical of the first
Bill, arguing that it should not proceed in its current form. Interest groups
expressed a number of common concerns. These are outlined below.
Policy intent
The Victorian Institute of Forensic Mental Health challenges
the idea that policymakers intended to exclude most forensic patients from
income support payments before 2002:
... forensic patients have remained eligible for social
security payments throughout the various legislative changes, with the
exception of a fifteen month period in 1985/6. However, the 1986 amendments
applied retrospectively, so in effect forensic patients had full entitlement to
social security payments up until 1985 after which time the payment of social
security was limited to forensic patients who were undertaking a course of
rehabilitation. This remains the position to date.[375]
Forensic patients should not
be treated in the same way as those convicted of a crime
According to the National Mental Health Commission ‘The Bill
fails to recognise the significant difference in legal status between those
convicted of a criminal offence, and those who are not convicted due to mental
illness or intellectual disability.’[376]
Many submissions made the same point and noted that the
purpose of psychiatric confinement is care, rehabilitation and the protection
of the community rather than punishment and deterrence.[377] In its submission the
Victorian Government noted its concern:
... that the Bill discriminates against people who have been
found by a court to have no criminal responsibility for their offending
behaviour because of mental impairment. It is a well established sentencing
principle that persons who are not morally culpable for their offending
behaviour should not be punished.[378]
Discrimination against people
with a mental impairment
Along with a number of other submissions, Mental Health
Australia’s submission argued that ‘The Bill should not proceed in its current
state, as it further entrenches systemic discrimination against people with a
mental illness.’[379]
The National Mental Health Commission argued that in one
respect, the [first] Bill treats forensic patients less favourably than people
convicted of an offence:
Under
proposed subsection 23(9D), the Bill proposes to remove a person’s access to
social security payments even during periods of leave outside the psychiatric
institution, if this is not taken to be a period of integration back into the
community. No such provisions exist for people found guilty of an offence who
are on periodic detention – they instead receive social security
payments for any days outside detention. The Commission is concerned that this
provision, in its present form, appears to discriminate against persons with a
mental illness or intellectual disability.[380]
Distinction between serious
and non-serious crimes is not relevant
A number of submissions argued that the distinction between
serious and non-serious crimes is not relevant to eligibility for income
support. According to the National Mental Health Commission:
The
nature of the offence with which a person was charged – but not convicted –
should not define whether they are taken to be in psychiatric confinement or
undertaking a course of rehabilitation, nor should it be relevant to whether
they have access to social security payments.[381]
The South Australian Public Advocate argued that
distinguishing between people charged with serious crimes and those charged
with non-serious crimes undermines the Government’s argument that state and
territory governments should be responsible for the cost of supporting forensic
patients.[382]
Impact on rehabilitation and
reintegration
Many submissions argued that the proposed measure would have
a negative impact on rehabilitation and reintegration.
According to the National Mental Health Commission, ‘The
practical effect of removing access to social security payments would be
detrimental to rehabilitation and recovery for people with a mental illness ...’[383]
Professor Dan Howard SC, President of the NSW Mental Health
Review Tribunal argues that, if passed, the proposal will ‘have a seriously
detrimental impact upon the wellbeing and therapeutic progress of this group of
forensic patients, who are one of the most vulnerable (and most poorly
understood) groups in our society’. He noted that NSW has over 400 forensic
patients (the largest number of any Australian jurisdiction) and that the
majority have been charged with offences that would fall within the Bill’s
definition of ‘serious offence’.[384]
A submission by the Victorian Government argues that the
first Bill would limit the effectiveness of a highly successful model of
rehabilitation that involves a gradual release into the community.[385]
Explaining how income support helps people move from confinement back into the
community, one Victorian patient said ‘In order to be discharged we need to
have housing, many of us rent houses prior to discharge and would not be able
to fund renting a home without the pension.’[386]
Need for consultation with
states and territories
In some cases when forensic patients have been receiving
income support, state and territory government institutions have taken a share
of the payment as a fee. Matthew Butt of the Welfare Rights Network has raised
concerns that suddenly removing a source of funding may affect the quality of
care available to those in psychiatric confinement. He argued that there needs
to be more consultation with experts and state and territory governments.[387] The
National Mental Health Commission raised similar concerns. The Commission
acknowledged:
... that
there may be worthwhile policy and budgetary questions to explore about the
adequacy of current funding arrangements, in which rehabilitation is subsidised
by those undertaking a course of rehabilitation (using Commonwealth social
security payments) rather than States or Territories. However, moving to alter
the situation rapidly (as per the Bill) could
result in significant funding shortfalls that would impact on a person’s
rehabilitation and place greater financial burden on the individual’s family
and support people. Practical discussions between the Commonwealth and the
States and Territories should be undertaken before such provisions are put into
effect.[388]
Financial implications
According to the Explanatory Memorandum for this Bill, the
Government expects the amendments to the 1991 Act in Schedule 20 to
produce savings of $37.8 million over the forward estimates as set out in the
table below
Table 10:
Savings over the forward estimates
| 2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
Total |
| 0.0 |
4.2 |
9.6 |
11.1 |
12.9 |
37.8 |
Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016,
p. 6.
Key issues and provisions
Meaning of ‘course of
rehabilitation’
According to departmental officers (see background above),
the Federal Court interpreted the term ‘course of rehabilitation’ in a broader
way than the drafters intended.[389]
The amendments in Schedule 20 do not attempt to impose a narrower
interpretation and allow the Federal Court’s interpretation to stand, instead
creating specific provisions that will preclude those charged with a ‘serious
offence’ from payment of DSP.
The term ‘course of rehabilitation’ appears currently in
section 23(9) of the 1991 Act, which states: ‘The confinement of a
person in a psychiatric institution during a period when the person is
undertaking a course of rehabilitation is not to be taken to be psychiatric
confinement.’[390]
The amendments in Schedule 20 propose the insertion of an exception to this
‘course of rehabilitation’ provision in the case of serious offenders, rather
than more generally narrowing the meaning of ‘course of rehabilitation’.
Introduction of a distinction
between serious and non-serious offences
The amendments to the 1991 Act in Schedule 20
introduce a distinction between serious and non-serious offences. Proposed
subsection 23(9A), at item 6 of Schedule 20, states that subsection
23(9) does not apply to a person whose confinement in a psychiatric institution
is because they have been charged with a serious offence.
Proposed subsections 23(9E) and 23(9F) of the 1991
Act in Schedule 20 provide a definition of ‘serious offence’.
The distinction between serious and non-serious offences
appears to be a new addition to the 1991 Act not directly related to the
original policy intent.
Meaning of serious offence
Proposed subsection 23(9E) provides that an offence
is a serious offence if it is murder or attempted murder, manslaughter or rape
or attempted rape.
Proposed subsection 23(9F) of the 1991 Act
further provides that an offence is also a serious offence if it is an offence
against the law of the Commonwealth or a state or territory, punishable by
imprisonment for life or for a period, or maximum period, of at least seven
years, and if the conduct constituting the offence involves:
- loss of life or serious risk of loss of life
- serious personal injury or serious risk of serious personal
injury or
-
serious damage to property in circumstances endangering the
safety of a person.
The additional offences which would be included by proposed
subsection 23(9F) of the 1991 Act have been criticised as being too
broad and for possibly including property damage offences in which the offender
was the only person injured or at risk, or in instances of arson where there
may have been no awareness of any danger to other people.[391]
By way of comparison, the term ‘serious offence’ is used in
many other pieces of legislation. The term is defined differently in many
instances and is adapted according to the circumstances.
For example, under the Proceeds of Crime Act 2002
(Cth) a ‘serious offence’ is defined as an offence which is punishable by three
years or more imprisonment and various other offences defined in section 338.[392]
Generally the offence in question must be a financial crime under the Criminal
Code Act 1995 or involve a financial benefit or loss of at least
$10,000.
Under the Criminal Code Act 1995, a serious offence
is variously defined as one which, for example, attracts a penalty of at least
12 months, two years or five years imprisonment.[393]
Under the Migration Act 1958, a ‘serious Australian
offence’ means an offence against a law in force in Australia, where the
offence is punishable by imprisonment for life or not less than three years,
and involves violence against a person; is a serious drug offence; involves
serious damage to property; or is one of certain offences relating to
immigration detention.[394]
Finally, the Telecommunications (Interception and Access)
Act 1979 defines serious offences as offences involving murder, kidnapping,
terrorism and other higher level offences under the Criminal Code, as
well as offences punishable by imprisonment
for life or at least seven years and which
involve harm or risk of harm to a person, or arson, trafficking, fraud or
corruption.[395]
The definitions in proposed subsection 23(9E) and proposed
paragraph 23(9F)(a) may thus be considered to fall within the higher range
of seriousness of offences covered by the term elsewhere. However, as noted by
National Welfare Rights Network, the phrasing of subparagraphs 23(F)(b)(i) to
(iii) expands the scope of the term to include offences in which the
endangerment or harm to a person may be ancillary to the offender’s behaviour.
[396] This broadening of
scope is mitigated by the requirement in proposed paragraph 23(9F)(a)
that such offences be punishable by imprisonment for life or a maximum term of
at least seven years.
The criticisms regarding the possible inclusion of an
offence such as arson, or other damage in in circumstances in which no other
person was put at risk, should also be considered in light of the seriousness
with which Australian jurisdictions consider such offences.[397]
Overall, however, arguments about the appropriate boundaries
for ‘serious’ and ‘non-serious’ offences would seem to miss the key criticism
of the schedule, which focuses on the principle that the offender in all these
cases has not been found guilty of any criminal offence due to their
psychiatric condition. Thus distinctions between serious and non-serious offences
are immaterial, since none of the offenders can be regarded as ‘morally
culpable’, however serious the offence. The offences were performed by a person
who has been found incapable of bearing guilt on the grounds of their
psychiatric condition and they do not, therefore, possess the requisite degree
of moral culpability, however much the charge itself may reflect a distinction
between serious and non-serious offences.
Period of integration back
into the community
The amendments in Schedule 20 allow a person confined in a
psychiatric institution because they have been charged with a serious offence
to receive income support payments during ‘a period of integration back into
the community.’ It does this in proposed subsections 23(9B) and 23(9C)
of the 1991 Act which provide that a period of integration back into the
community is not taken to be psychiatric confinement.
The amendments in Schedule 20 do not define ‘a period of
integration back into the community’ but provide for the Minister to determine whether
a period is a period of integration into the community through a legislative
instrument. The Department of Social Services has been consulting with state
governments about how they integrate people back into the community.[398] The
previously discussed need to justify any ‘backward step’ in relation to the
right to social security will be made more difficult in the case of
arrangements to be made by legislative instrument, which would preclude
consideration of the precise arrangements by the Human Rights Committee.
The Explanatory Memorandum notes that ‘(i)t is appropriate
for a period of integration back into the community to be worked out in
accordance with a legislative instrument to enable the relevant factors to be
set out with the necessary detail and to allow for modification of the period
over time’.[399]
However, the National Welfare Rights Network noted in respect of the first Bill
that this definition affects basic income support qualifications and believes
that, as a result, the main criteria for such periods should be set out in
legislation.[400]
Responsibilities of the
states/territories and the Commonwealth
One of the effects of the 2002 Federal Court decision in Franks
v Secretary, Department of Family and Community Services was to
shift responsibility for supporting certain people in psychiatric confinement
away from state and territory governments towards the Commonwealth. When people
in psychiatric confinement receive income support payments, state and territory
governments may be able to capture some of this income by charging
accommodation fees.[401]
A consequence of the amendments in Schedule 20 of this Bill may therefore be
that state and territory governments experience some reduction in the income
derived from payments which would no longer be provided to persons undergoing
psychiatric confinement because they have been charged with a serious offence.
In his second reading speech for the first Bill, Minister
Morrison stated: ‘it is the relevant state or territory government that is
responsible for taking care of a person's needs while in psychiatric
confinement, including funding their treatment and rehabilitation.’ However he
also acknowledged that ‘a social security payment will continue to be payable
to a person who is undergoing psychiatric confinement because the person has
been charged with an offence that is not a serious offence, if a person is
undertaking a course of rehabilitation’.[402]
While the amendments in Schedule 20 push responsibility for
support back towards state and territory governments, they do not directly
enforce the principle that the care of people in psychiatric confinement is a
state and territory responsibility.
Concluding comments
Allowing people in psychiatric confinement to receive income
support payments after they have been charged with a serious offence is a
politically sensitive issue. On a number of occasions the issue has attracted
critical media attention.
In 2002 The Age’s Padraic Murphy reported:
Some of Victoria's most dangerous individuals are building
financial nest eggs worth up to $50,000 from fortnightly disability pensions
being paid to them in the state's highest security hospital for the criminally
insane.
... A spokesman for the federal Health and Community Services
Minister, Amanda Vanstone, said there were about 400 forensic psychiatric
patients receiving pension benefits nationwide.
He said the minister was considering a review of the
legislation.
"Successive
governments have tried to tighten the rules in this area, but have consistently
met with resistance. It's another example why the disability support pension
needs to be looked at under welfare reform," the spokesman said.[403]
On the other hand cutting the DSP to psychiatric patients
can also be a sensitive issue, with headlines such as ‘[w]arnings as welfare
cut for mentally-ill’ provoking concern amongst other sections of the
community.[404]
The stated intent of the amendments in Schedule 20 is to
return to the original policy intent for people who have been charged with a
serious offence, whereby prior to the 2002 Federal Court decision, people who
had been in psychiatric confinement after being charged with criminal offences
were not able to access social security payments.
The amendments in Schedule 20 define the term ‘serious
offence’ but have been criticised [in respect of the first Bill] for drawing an
arbitrary distinction between serious and non-serious offences for the purposes
of restricting social security payments.
The Government has asserted that it is appropriate to
withhold payments in these circumstances because ‘(w)hile the person is
undergoing psychiatric confinement, the relevant state or territory government
is responsible for taking care of their needs, including funding their
treatment and rehabilitation’.[405]
Interest groups have argued that income support payments
help a vulnerable group of patients to rehabilitate while in detention and to
build up modest savings that help them reintegrate with the community on
release.
Schedule
21—Closing carbon tax compensation to new welfare recipients
Purpose of the measure
The purpose of Schedule 21 is to amend the A New Tax
System (Family Assistance) Act 1999[406]
(the FA Act), the Social Security Act 1991[407] (the SS Act),
the Social Security (Administration) Act 1999[408] (the SS Admin Act),
the Farm Household Support Act 2014,[409]
the Veterans’ Entitlements Act 1986[410]
(the VE Act), and the Military Rehabilitation and Compensation Act
2004[411]
(the MRC Act) to close two payments introduced as part of the Clean
Energy Household Assistance package to new recipients. The two payments are:
- the
Energy Supplement (previously known as the Clean Energy Supplement) and
- the
Single Income Family Supplement (SIFS).
The Energy Supplement will be closed to all new recipients
from 20 March 2017. Those who become eligible for the Energy Supplement after
20 September 2016 will only receive the payment until 20 March 2017, at which
point they will no longer be deemed eligible. Those eligible for the Energy
Supplement prior to 20 September 2016 will continue to receive the
payment as long as they remain continuously eligible for an income support
payment or eligible concession card.
The SIFS will close to new recipients from 1 July 2017.
Those eligible for the SIFS on 30 June 2017 will be entitled to the payment for
the 2016–17 financial year and will continue to receive the payment in later
years as long as they remain continuously eligible.
The amendments proposed in Schedule 21 were announced in the
2016–17 Budget and are expected to save $1.4 billion over the forward estimates
period.[412]
Some of these savings are intended to be directed towards the proposed National
Disability Insurance Scheme (NDIS) Savings Fund—a special account which will
collect underspends and identified budget savings to help meet the Australian
Government’s contribution to the NDIS from 2019–20.[413]
Commencement
The amendments in Parts 1–6 of Schedule 21 commence on 20
March 2017. The amendments in Part 7 of Schedule 21 commence on 1 July 2017.
Nature of the Energy Supplement
The Energy Supplement is paid to all recipients of social
security income support payments (such as the Age Pension and Newstart
Allowance), to recipients of Family Tax Benefit, to recipients of veterans’
payments (such as the Service Pension, Disability Pension and War
Widow/Widower’s Pension), to recipients of the Farm Household Support Allowance
and to holders of a Commonwealth Seniors Health Card and some holders of a
Department of Veterans’ Affairs (DVA) Health Card – For All Conditions (Gold
Card). Rates of the Energy Supplement are based on the payment to which it is
attached and range from $91.25 per annum for Family Tax Benefit Part A (child
under 13 years) to $559.00 per annum for veterans receiving the Special Rate of
Disability Pension. The Energy Supplement is generally paid fortnightly with
the attached payment.
Background
The Energy Supplement was introduced from 2013 as part of
the Clean Energy Household Assistance Package—a package of payments and
supports intended to offset the impact of the carbon price on welfare recipients
and those on low incomes.[414]
Most other households received compensation at the same time through income tax
changes.[415]
Welfare recipients initially received a one-off lump sum payment, called the
Clean Energy Advance, in May or June 2012, prior to the carbon pricing scheme
commencing on 1 July 2012.[416]
The Clean Energy Supplement, as it was originally named, was intended as
ongoing support for increased costs arising from the carbon price. Then
Minister for Families, Housing, Community Services and Indigenous Affairs,
Jenny Macklin, stated the Government was ‘directing revenue raised from putting
a price on carbon to Australian families and pensioners through an increase to
their payments’.[417]
The increase in payments was intended to be ‘permanent and indexed, so that
payments keep pace with the cost of living now and into the future’, and ‘...
greater than the average expected price increase from putting a price on
carbon’.[418]
The value of the Clean Energy Supplement was set
at around 1.7 per cent of the basic rate of the payment to which it was
attached (the expected price impact of the carbon price—a 0.7 per cent
increase—plus an additional one per cent). As most welfare payments are
adjusted regularly in line with price movements, as measured by the Consumer Price
Index (CPI), special provisions were put in place for the adjustments that took
place immediately after the Clean Energy Supplement was introduced.[419] These provisions effectively removed the expected impact of the carbon
price (a 0.7 per cent increase in the CPI) from any CPI adjustment of the
payments the Clean Energy Supplement was attached to. This meant that this 0.7
per cent CPI impact of the carbon price was to be delivered via the Clean
Energy Supplement, not through the indexation of the attached payments. Taking
this adjustment into account, the Clean Energy Supplement was a 1.0 per cent
real increase in the value of most payment rates.
Abbott Government changes
During the 2013 election, the Coalition
committed to abolishing the carbon price while keeping the compensation
measures that formed part of the Household Assistance package.[420] However, after winning the election and repealing the carbon price in
2014, the Government made a number of changes to the package, including
renaming the Clean Energy Supplement the ‘Energy Supplement’, ceasing
indexation of the payment and abolishing some minor supplementary payments.[421]
Payment of the Energy Supplement
The Energy Supplement is generally paid together with the
regular payment it is attached to (usually fortnightly). However, pensioners,
allowance recipients and Family Tax Benefit recipients can elect to receive the
payment on a quarterly basis.[422]
Payments of the Energy Supplement to Commonwealth Seniors Health Card holders
and veterans’ Gold Card holders can only be made quarterly. Family Tax Benefit
recipients who choose to receive their payment as annual lump sum will receive
the Energy Supplement on an annual basis.
For means tested payments such as pensions, allowances and
Family Tax Benefit, it is included in the rate that can be reduced under any
applicable income or assets test.
Current payment rates
There are over a hundred different rates of Energy
Supplement, reflecting the array of different rates for the payments the Energy
Supplement is attached to.[423]
The table below presents a sample of some of the current payment rates:
Table 11: Selected Energy Supplement payment rates
| Primary payment |
Fortnightly
Energy Supplement rate |
Annual Energy
Supplement rate |
| Single pension |
$14.10 |
$366.60 |
| Partnered pension (each) |
$10.60 |
$275.60 |
| Single allowance, no children |
$8.80 |
$228.80 |
| Single allowance, with dependent children |
$9.50 |
$247.00 |
| Partnered allowance (each) |
$7.90 |
$205.40 |
| Parenting Payment (single) |
$12.00 |
$312.00 |
| Youth Allowance, 18+, at home |
$4.60 |
$119.60 |
| Youth Allowance, 18+, away from home |
$7.00 |
$182.00 |
| Family Tax Benefit Part A (child under 13 years) |
$3.51 |
$91.25 |
| Family Tax Benefit Part A (child 13–19) |
$4.49 |
$116.80 |
| Family Tax Benefit Part B (youngest under five
years) |
$2.81 |
$73.00 |
| Family Tax Benefit Part B (youngest 5–18) |
$1.97 |
$51.10 |
| Veterans’ Disability Pension |
Special rate -
$21.50
Intermediate rate -
$14.50
Extreme Disablement
Rate - $11.80
General rate - $7.70 |
Special rate -
$559.00
Intermediate rate -
$377.00
Extreme Disablement
Rate - $306.80
General rate -
$200.20 |
Sources: Department of Social Services (DSS), ‘5.1.10.20 ES – current rates’, Guide to social security law,
version 1.224, released 15 August 2016, DSS website; DSS, ‘3.1.1.25 Current ES rates’, Family assistance guide,
version 1.188, released 15 August 2016, DSS website; Department of Veterans’
Affairs (DVA), ‘Rate of Energy Supplement’, Compensation and support policy
library, DVA website.
Nature of the Single Income Family Supplement
The Single Income Family Supplement (SIFS) is paid to single
income families who did not receive the same level of compensation as
dual-income families from the income tax cuts that were introduced as part of
the carbon price compensation package. It is an annual lump-sum payment worth
$300 per annum.[424]
To be eligible for the SIFS, a person must have a qualifying
child and the main income earner in the family must have a taxable income of between
$68,000 and $150,000 per annum. If there is a second earner in the family,
their income must be below $18,000.
The maximum payment rate of the SIFS is $300. The rate can
be affected by the income of the main income earner and any secondary income earner.
The SIFS rate is zero if the main earner’s taxable income is $68,000 or below.
If the main income earner’s income is above this threshold, the SIFS rate is
worked out by applying one or both of the following income tests:
- for
each dollar of the main income earner’s taxable income over $68,000 per annum,
their SIFS rate increases by $0.025 until the maximum rate of $300 is reached
(at $80,000 per annum). The maximum rate is paid for income between $80,000 and
$120,000. For each dollar of the main earner’s income over $120,000, their SIFS
rates decrease by $0.01 until it is reduced to zero (at $150,000 per annum)
- for
couple families, where the SIFS rate is greater than zero after applying the
main earner income test, a secondary income earner test applies. If the second
income earner’s annual taxable income exceeds $16,000 then the SIFS rate is
reduced by $0.15 for each dollar over $16,000. If the SIFS rate was $300 under
the main earner’s income test, then it would be reduced to zero if the second
earner’s income was $18,000 or over.[425]
Families in receipt of Family Tax Benefit are automatically
assessed for eligibility for the SIFS as part of the Family Tax Benefit
reconciliation process at the end of each financial year. Other individuals who
may be eligible need to submit a claim for the payment.
Rationale for closing off carbon tax compensation
In his second reading speech for the Bill, Treasurer Scott
Morrison stated:
Carbon
tax compensation will be closed to new welfare recipients as we will no longer compensate
people for a tax that no longer exists and that this government abolished.[426]
In his media release on the budget measures, Minister for
Social Services Christian Porter stated:
The
carbon tax compensation measures were introduced to make up for the expected
cost on individuals and to mitigate what would otherwise have been long-term
electricity price increases under Labor's carbon tax which has since been
abolished. The compensation for long-term electricity price increases is no
longer necessary for new entrants to the welfare system.[427]
In both cases, the Ministers did not state why current
recipients would continue to receive the compensation payments, or why other
components of the compensation package would remain (such as the income tax
cuts).
This rationale also runs counter to the Coalition’s 2013
Election commitment to keep the compensation measures, despite removing the
carbon price.
Policy position of non-government parties
Australian Labor Party
In Labor’s Fiscal Plan, released prior to the 2016
Election, the Australia Labor Party (ALP) states that, while it had included
the 2016–17 budget measure to close off the carbon price compensation in its
assessment of the fiscal impact of its election policies, it had not taken a
definitive position on the policy:
The
Opposition has not been given the opportunity to properly scrutinise the
Government’s removal of the clean energy supplement or seek advice from the
Department on its effects. In government, Labor will seek further advice on the
impacts of this measure. Labor has already confirmed that we will conduct an
independent review of the adequacy of the Newstart Allowance—to ensure it can
keep people out of poverty while also helping people into work.[428]
At the time of writing, the ALP had not announced a position
on the particular measure. Concern has been expressed about the measures from
senior frontbenchers, including Shadow Minister for Infrastructure and
Transport, Cities and Tourism, Anthony Albanese, who said that the ALP should
be ‘very cautious about voting for anything that hurts some of the most
underprivileged people in our community’.[429]
Australian Greens
The Australian Greens have stated that they oppose the
measures proposed in Schedule 21 of the Bill.[430]
Minor parties and independents
At the time of writing, other minor parties and independents
had not stated their position on the amendments set out on Schedule 21.
Position of major interest groups
A large group of community sector organisations and peak
bodies have stated their opposition to the measures in Schedule 21 and called
on the Government to retain the Energy Supplement. The Australian Council of
Social Service (ACOSS), National Welfare Rights Network, People with Disability
Australia, Carers Australia, Australian Youth Affairs Coalition, Jobs
Australia, National Council of Single Mothers and their Children, Australian
Unemployed Workers’ Union and the Welfare Rights Centre have written a joint
letter to the Prime Minister and the Leader of the Opposition calling on them
to maintain the Energy Supplement:
As
organisations representing people who rely on social security payments, we urge
you to withdraw this proposal to remove the Energy Supplement which will plunge
people further below the poverty line. Whatever its original purpose, this is
money that people in poverty need every fortnight for their most basic living
costs, as well as those of their children.[431]
A separate open letter criticising the measures was signed
by a group of prominent academics, community group leaders, lawyers, former
politicians, writers and union leaders including former Leader of the Liberal
Party John Hewson and former Western Australia Premier Carmen Lawrence. The
letter focuses on the impact of the removal of the Energy Supplement on
Newstart Allowance recipients and states:
A
government that plans to give more to the richest Australians while cutting
support for people below the poverty line will only further entrench inequality
in Australia. We urge the Prime Minister and all political leaders not to cut
Newstart.[432]
Statement of compatibility with Human Rights
The Statement of Compatibility with Human Rights for
Schedule 21 can be found at page 285 of the Explanatory Memorandum to the Bill.[433]
According to the Statement, the Schedule engages the right
to social security under Article 9 of the International Covenant on
Economic, Social and Cultural Rights, and the right to an adequate standard
of living under Article 11. It also engages the rights of the child in Article
26 of the Convention on the Rights of the Child. While limiting these
rights for some individuals (those no longer eligible for the Energy Supplement
or the SIFS), the Statement holds that these limitations are ‘reasonable,
necessary and proportionate and people are otherwise provided for’.[434]
Key issues
Who will be affected?
The Government expects around 2.2 million new payment
recipients will be affected by the closure of the Energy Supplement to new
recipients over the forward estimates (it is unclear if this number includes
those in receipt of veterans’ payments or eligible cardholders).[435] Around
6.5 million people will continue to receive the Energy Supplement under the
grandfathering provisions.[436]
Newstart Allowance recipients are likely to be one of the main payment
recipient categories affected as there is a large turnover in the number of
recipients on this payment—in the period between 1 April 2014 and 31 March
2015, there were 418,071 entries onto Newstart Allowance and 261,772 exits.[437] Many Newstart
Allowance recipients will move on and off the payment as they move to and from
short-term employment. Those that are currently in receipt of an eligible
payment who exit income support on or after 20 September 2016, even for a brief
period, would no longer be eligible for the Energy Supplement.
The Government expects around 113,000 families will lose
eligibility for the SIFS in the three years from 1 July 2017.[438]
The adequacy of allowance payment rates
The focus of most commentary on the measures in Schedule 21
has been on the impact on new Newstart Allowance recipients.[439] This is partly because
Newstart Allowance recipients are likely to be one of the most affected groups
(see section above) but mainly because of an ongoing debate over whether
allowance payment rates are adequate and should be subject to rate cuts.
As the Parliamentary Library noted in its 2013 Briefing
Book for the 44th Parliament, there is widespread agreement that allowance
payments are too low.[440]
A Coalition-chaired Senate committee inquiry found in 2012 that the payment
rate for allowances was inadequate and impeded income support recipient’s
ability to meet their basic costs of living.[441]
In a recent report on solving government budget deficits,
consulting firm KPMG recommended an increase in the Newstart Allowance rate.
The report states: ‘Due to political rhetoric, payments for those who are
unemployed have fallen behind other payments, to the point that it is commonly
recognised that Newstart is inadequate, and significantly so’.[442] It argued four reasons why
Newstart should be increased:
- it
is difficult to deal with budget expenditure issues when there is a clear
inadequacy in a particular area—ignoring an area of obvious need reduces the
political capital needed to deal with other areas in the system
- the
low level of Newstart is forming a barrier to work—the rate needs to be
sufficient to allow for the unemployed to actively seek work
- the
low rate of Newstart creates a perverse incentive to seek access to higher-rate
payments such as the Disability Support Pension and
- the
low rate has the effect of locking people into jobs for fear they would not
survive on income support and cannot risk moving jobs—the low safety net may
act as disincentive to take risks.[443]
Despite the concern from welfare, community and business
groups at the low-rate of allowance payments, and a long-running campaign to
increase rates, the Government is instead reducing the level of assistance
provided to these payment recipients by closing off the Energy Supplement. New
allowance payment recipients will not only be receiving $120–$250 less per year
(depending on their age and family circumstances); they will also miss out on
the Income Support Bonus, a lump sum payment paid twice annually to allowance,
student assistance and Parenting Payment recipients. The Income Support Bonus,
worth $185.60 per year for each member of a couple and $223.00 per year for
singles, will be abolished for all recipients from 20 September 2016.[444]
Amendments were made to remove this small supplementary payment at the time the
minerals resource rent tax (mining tax) was repealed in 2014.[445]
Indexation issue means many worse off than had the carbon
price compensation never been introduced
As noted in the ‘Background’ section, at the time the Energy
Supplement commenced, special indexation arrangements effectively
removed the expected impact of the carbon price (a 0.7 per cent increase in the
CPI) from any CPI adjustment of the payments to which the Clean Energy
Supplement was attached. This meant that this 0.7 per cent CPI impact of the
carbon price was delivered via the Clean Energy Supplement, not through the
indexation of the attached payments. As such, the basic payment rate of many of
the attached payments was not increased by as much as they would have, had the
Energy Supplement not being introduced—and this has had a flow-on effect where
subsequent rate adjustments have been based on a lower base rate.
The consequence of this is that many of the
new payment recipients not eligible for the Energy Supplement will be worse-off
than had the Energy Supplement never been introduced—the basic rate of their
payment will be lower than the basic rate of payment would have been without
the 2013 indexation arrangements. This issue affects those payments indexed to
CPI-only: primarily allowance payments, Parenting Payment Partnered, some
transitional-rate pensions and Family Tax Benefit. Most pensions and Parenting
Payment Single are not affected in the same way as a result of a different
indexation process. Pensions are indexed to both CPI and another index, the
Pensioner and Beneficiary Living Cost Index (PBLCI), and are also benchmarked
to a percentage of Male Total Average Weekly Earnings (MTAWE). Parenting
Payment Single is indexed to CPI and benchmarked to a percentage of MTAWE. In
2013, these payments were adjusted according to the MTAWE benchmark rather than
CPI indexation. As a result, they were not affected by the 0.7 per cent CPI
adjustment.
Former policy analyst with the Department of Social Security
(and successor departments), David Plunkett, has illustrated the immediate
impact of 2013 indexation adjustment in his submission to the Senate Economics
Committee inquiry into the Bill. The chart below shows Newstart Allowance rates
in March 2013: the first column shows the rate prior to indexation, the second
column shows the rate if normal CPI-indexation had occurred, and the third
shows the actual rate with the two Clean Energy Supplement components (the 0.7
per cent inflation component deducted from the normal CPI indexation and the
additional one per cent component):
Figure 1: Impact of 2013 indexation adjustment on Newstart
Allowance rates
Source: D Plunkett, Submission to the Senate Economics Legislation
Committee, Inquiry into the Budget Savings (Omnibus) Bill 2016,
Attachment A, September 2016.
As can be seen, the rate after the normal indexation process
is higher than the actual rate on 20 March 2013 minus the Clean Energy
Supplement (comparing the second and third blue columns). With subsequent
indexation adjustments being based on this lower base rate, many payments are
now significantly lower than they would have been had normal indexation
occurred:
Table 12: Fortnightly payment rates compared to those if
Energy Supplement never introduced, as at 20 September 2016
| Payment |
Current rates without Energy Supplement |
Rates if Energy Supplement never introduced |
| Single Newstart Allowance, no children |
$528.70 |
$532.30 |
| Single Newstart allowance, with dependent children |
$571.90 |
$575.90 |
| Partnered Newstart allowance (each) |
$477.40 |
$480.60 |
| Youth Allowance, 18+, at home |
$285.20 |
$287.00 |
| Youth Allowance, 18+, away from home |
$433.20 |
$436.20 |
| Family Tax Benefit Part A (child under 13 years) |
$182.84 |
$184.24 |
| Family Tax Benefit Part A (child 13–19) |
$237.86 |
$239.54 |
| Family Tax Benefit Part B (youngest under five
years) |
$155.54 |
$156.66 |
| Family Tax Benefit Part B (youngest 5–18) |
$108.64 |
$109.34 |
Source: D Plunkett, Submission to the Senate Economics Legislation
Committee, Inquiry into the Budget Savings (Omnibus) Bill 2016,
Attachment C, September 2016.
The Table above shows that a single Newstart recipient will
be around $94 a year worse-off without the Energy Supplement, than if the
compensation payment had never been introduced and indexation had occurred as
normal.
Plunkett has argued that the effect of this indexation issue
combined with the loss of the Energy Supplement, means that new income support
recipients will be subject to a ‘double penalty’.[446] New recipients will not
only lose the 1.0 per cent compensation bonus that was a component of the Clean
Energy Supplement; they also lose the 0.7 per cent price increase component
that was deducted from the main payment rate.
Complexity of the social security system
By closing off the Energy Supplement to new recipients and
grandfathering existing recipients, the amendments in Schedule 21 will create
two-tiers of payment rates across the social security and family assistance system:
a pre-20 September 2016 tier and post-20 September 2016 tier. This will create
new complexities for the administration of the system in terms of determining
those eligible for the Energy Supplement as well as calculating rates under the
means tests.
Introducing new complexities into the system is at odds with
the Minister for Social Services’ statements about wanting to simplify the
system and reduce the number payments and supplements. In his second reading
speech for the Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2016, Minister Porter
referenced the 2015 report of the Reference Group on Welfare Reform (the
McClure Review)[447]
in promoting the alignment of different payment rates for young people and the
abolition of the Family Tax Benefit end-of-year supplements:
Aligning these two rates of payment, is in itself a much
needed part of the reform process to simplify payments where possible.
...
Crucially, these changes are consistent with the reform
recommendations of the McClure Review to reduce the number of supplements in
the system. McClure emphasised that there are far too many supplements—some 20
main payment types and 55 supplements.[448]
The amendments in Schedule 21 of the Bill increase the
complexity of the system by creating new categories of recipient ineligible for
the Energy Supplement across all of the main payment types.
Comment
The measures in Schedule 21 will deliver significant savings
which are to be directed towards the NDIS. Some of those in receipt of the
payments affected by the removal of the Energy Supplement and the SIFS will
also be beneficiaries of the NDIS. This raises the question as to whether the
services offered by the NDIS should be funded by the withdrawal of direct
financial support for people with disability and carers.
While the removal of carbon tax compensation runs counter to
the Coalition’s 2013 election commitments, it could be argued as justified
given the abolition of the carbon price. However, the measures go further than
trimming the compensation provided via the Household Assistance package and
will actually leave some welfare recipients worse-off than had the carbon price
never been introduced.
The removal of the Energy Supplement and the SIFS follows a
number of benefit cuts and reductions over the last three years including the
abolition of the Income Support Bonus and the Schoolkids Bonus and the proposed
removal of Family Tax Benefit supplements, the Pensioner Education Supplement
and the Education Entry Payment.[449]
Critics may argue that at a time of growing concern as to the adequacy of some
payments, the level of support offered by the social security system is being
slowly eroded.
Key provisions
Note that the item numbers in Schedule 21 of the Bill are
out of sync with the item numbers referred to in the Explanatory Memorandum to
the Bill. This Bills Digest refers to the item numbers which are specified in
Schedule 21 of the Bill.
Part 1—A New Tax System (Family Assistance) Act 1999
Items 1 and 2 insert a note to subsections 58(2) and
proposed subsections 58(2C) and (2D) respectively into the FA Act to
prevent the Energy Supplement being included in the Family Tax Benefit rate
calculation for approved care organisations (organisations providing
residential care to young people) from 20 March 2017 unless they were eligible
for Family Tax Benefit on 19 September 2016. Energy Supplement will also no
longer be included in the rate of Family Tax Benefit for approved care
organisations if they were entitled to Family Tax Benefit on 19 September 2016
but cease to be entitled on or after 20 September 2016 with the rate no longer
being included from 20 March 2017 or the date their entitlement to Family
Tax Benefit ceases (if after 20 March 2017).
Set out in Schedule 1 of the FA Act are a number of
different income tests used to determine the rate of Family Tax Benefit an
individual is entitled to. The income test used depends on the families’
circumstances and which test provides the highest rate. The main income tests
are known as Method 1, Method 2 and the maintenance income test (really a
component of Method 1 but applicable to those maintenance payments).
Item 8 adds proposed clause 6A at the end of Division
1 of Part 2 of Schedule 1 (the Family Tax Benefit Method 1 rate calculator)
to prevent the Energy Supplement being included in the Family Tax Benefit rate
calculation for individuals from 20 March 2017 unless they were entitled to
Family Tax Benefit on 19 September 2016 and they received a Family Tax Benefit
Part A per child rate (some individuals with less than 35 per cent care of a
child only qualify for Rent Assistance and not a per child rate of Family Tax
Benefit Part A). Energy Supplement will also no longer be included in the rate
of Family Tax Benefit for individuals if they were entitled to Family Tax
Benefit on 19 September 2016 but cease to be entitled on or after 20 September
2016, from 20 March 2017 or the date their entitlement to Family Tax
Benefit ceases (if after 20 March 2017).
Item–10 inserts proposed subclause 24HA(2)
into Schedule 1 of the FA Act so that the Energy Supplement is not to be
included in parts of the maintenance income test calculations where the Energy
Supplement would not be paid to that individual as a result of new clause 6A
(inserted by item 8).
Item 15 adds proposed clause 25C at the end of
Division 1 of Part 3 of Schedule 1 (the Family Tax Benefit Method 2 rate
calculator) to prevent the Energy Supplement being included in the Family Tax
Benefit rate calculation for individuals from 20 March 2017 unless they were
entitled to Family Tax Benefit on 19 September 2016 and they received
a Family Tax Benefit Part A per child rate. The Energy Supplement will also no
longer be included in the rate of Family Tax Benefit for individuals if they
were entitled to Family Tax Benefit on 19 September 2016 but cease to be
entitled on or after 20 September 2016, from 20 March 2017 or the date
their entitlement to Family Tax Benefit ceases (if after 20 March 2017).
Item 16–25 of Part 1 in Schedule 21 to the Bill makes
similar amendments to those above to prevent the Energy Supplement being
included in the Family Tax Benefit Part B rate calculation for those who become
entitled to Family Tax Benefit Part B on or after 20 September 2016, or those
who were entitled prior to this date but cease being entitled on or after 20
September 2016.
Part 2—Social Security Act 1991
Item 29 of Part 2 to Schedule 21 of the Bill inserts proposed
section 22 into Part 1.2—Definitions of the SS Act. New
section 22 defines when a person is considered to be a transitional
energy supplement person. A person is a transitional energy supplement
person if on 19 September 2016:
- they
are receiving an income support payment where the Energy Supplement was used to
work out the rate
- Energy
Supplement is payable to the person (under section 1061UA)
- they
are eligible to receive the Energy Supplement as a result of receiving a War
Widow/War Widower pension (under section 62B of the VE Act)
- they
are eligible to receive the Energy Supplement as holders of a Commonwealth
Seniors Health Card or Gold Care under the VE Act (section 118PA)
- they
are eligible to receive the Energy Supplement as a result of receiving a
payment under the Veterans’ Children Education Scheme or the Military
Rehabilitation and Compensation Act Education and Training Scheme
- the
person receives an Energy Supplement as a result of receiving a compensation
payment for the death of their partner under section 238A of the MRC Act or
- the
person is receiving an ABSTUDY living allowance.
A person ceases to be a transitional energy supplement
person, and may never again be one, if none of the above criteria apply
to a person on a day on or after 20 September 2016.
While War Widows/War Widowers pension recipients and
veterans’ service pensioners are included in the definition of transitional
energy supplement person (as a service pension is defined as an income support
payment), veterans’ Disability Pension recipients and the recipients of certain
payments under the MRC Act have been left out of this definition.
Instead, separate definitions of transitional energy supplement person
covering veterans’ Disability Pension recipients and certain MRC Act payments
will be inserted into the VE Act and the MRCA Act by amendments
in Parts 4 and 5 of Schedule 21, respectively.
Proposed subsections 22(3) to (6) of the SS Act
provide for certain individuals to continue to be considered as transitional
energy supplement persons, including those who have their payment rate
reduced to nil on or after 19 September 2016; those who have their payment
suspended on or after 19 September 2016; those who have an absence from
Australia longer than six weeks; those who move between being a Commonwealth
Seniors Health Card holder and being an income support payment recipient; and
those who make a claim or are provided with a Commonwealth Seniors Health Card
within a certain period of time after certain income support payments are
cancelled. Specific criteria apply in each situation for persons in these
situations to remain eligible for the Energy Supplement.
Proposed subsection 22(6), together with proposed
subsection 1061U(6) which is inserted by item 37 of Part 2 in
Schedule 21 of the Bill will ensure that those who have their pension payment
cancelled as a result of the new assets test provisions commencing on 1 January
2016, and who are therefore automatically issued with Commonwealth Seniors
Health Card, will continue to be eligible for an Energy Supplement paid with
the Commonwealth Seniors Health Card.[450]
Items 39–62, 64–67, 69–72, 74–80 and 82–83 amend
various rate calculators for social security payment so the Energy Supplement
is not added to the rate calculations for these payments from 20 March 2017
unless the person is a transitional energy supplement person on that day.
The rate calculators apply to the following payments:
- Age
Pension, Disability Support Pension, Wife Pensions and Carer Payment (people
who are not blind) at section 1064
- Age
Pension and Disability Support Pension (blind people) at section 1065
- Bereavement
Allowance and Widow B Pension at section 1066
- Disability
Support Pension (people under 21 who are not blind) at section 1066A
- Disability
Support Pension (people under 21 who are blind) at section 1066B
- Youth
Allowance at section 1067G
- Austudy
Payment at section 1067L
- Widow
Allowance, Newstart Allowance, Sickness Allowance, Partner Allowance and Mature
Age Allowance at section 1068
- Parenting
Payment Single at section 1068A and
- Parenting
Payment Partnered at section 1068B.
Items 63, 68, 73 and 81 amend the partner income free
area provisions for Youth Allowance, Austudy Payment, Widow Allowance, Newstart
Allowance, Sickness Allowance, Partner Allowance, Mature Age Allowance and
Parenting Payment Partnered so the Energy Supplement is not included where the
person is not a transitional energy supplement person (unless their partner is
a transitional energy supplement person). The partner income free area is the
amount of income an income support recipient’s partner can have before the
recipient’s payment rate is reduced—the income free area is based on the
partner’s age, whether or not they receive a social security benefit, and the
rate of benefit that would be payable if they were in receipt a benefit.
Items 83 and 84 amend point 1068B-DB1 and point
1071-2A respectively to remove the Energy Supplement from the formula used
to calculate the allowable income limits for a Low Income Health Care Card.[451] These
amendments will lower the amount of allowable income a person can earn and
still qualify for the Health Care Card and will apply irrespective of whether
the person held a card prior to 20 March 2017 (the commencement date).
Part 3—Farm Household Support Act 2014
Items 86–89 in Part 3 of Schedule 21 to the Bill make
minor amendments and insert notes into the Farm Household Support Act 2014
to explain that some Farm Household Support Allowance recipients will not
receive the Energy Supplement (that is, those who are not transitional energy
supplement persons). The rates of Farm Household Support Allowance are tied to
the payment rates of Newstart Allowance and Youth Allowance in the SS Act
and are therefore affected by the amendments in Part 2 of Schedule 21.
Part 4—Veterans’ Entitlements Act 1986
Items 93–95 amend section 62A of the VE Act
which currently provides for the payment of the Energy Supplement to recipients
of the Disability Pension under the VE Act. Item 95 inserts
proposed subsections 62A(4) to (6) to define a transitional energy
supplement person as a person who on 19 September 2016 is in receipt of
the Energy Supplement as a veterans’ Disability Pension recipient, or as a
person eligible for permanent impairment payment under subsection 83A(1) of the
MRC Act, or as a person eligible for the Special Rate Disability Pension
under the MRC Act. Only those who meet the definition of transitional
energy supplement person under the VE Act or the SS Act can
receive the Energy Supplement after 20 March 2017. If a person ceases to meet
the definition of transitional energy supplement person they cannot regain the
status of being a transitional energy supplement person in accordance with proposed
subsection 62A(6) of the VE Act.
Item 98 inserts proposed subsection 62B(4) so
that a War Widow/War Widower pension recipient can be eligible for the Energy
Supplement after 20 March 2017 if they meet the definition of transitional
energy supplement person set out in section 22 of the SS Act (inserted
by item 29 in Part 2 of Schedule 21 to the Bill).
Items 105 and 106 amend section 118P of the VE Act
which sets out the eligibility for the Energy Supplement for holders of a
Commonwealth Seniors Health Card or a DVA Health Card All Conditions (Gold) to
prevent new cardholders after 20 March 2017 from receiving the Energy
Supplement; and to set out conditions where a person who claims or receives a
card after having another payment cancelled, or who moves from being a
cardholder to receiving an income support payment, can continue to receive the
Energy Supplement.
Items 112–118 (excluding item 116) in Part 4
of Schedule 21 to the Bill make amendments to the method statements for
determining payment rates for the Service Pension. Item 116 provides for
the Energy Supplement to not be included in the rate calculation process unless
the person is a transitional energy supplement person as defined under the SS
Act.
Part 5—Military Rehabilitation and Compensation Act 2004
The Explanatory Memorandum refers to item 118 inserting
a definition of income support payment into the MRC Act
(which would have the same meaning as in the SS Act), however, item
118 of this Schedule is an amendment to the VE Act (noted above) and
there is no item in the Bill providing for such an amendment to the MRC Act.
Item 120 of Part 5 of Schedule 21 to the Bill inserts
proposed subsections 83A(4), (5) and (6) into the MRC Act so that a
person in receipt of a permanent impairment payment under the MRC Act will
only be eligible for the Energy Supplement from 20 March 2017 if they are a transitional
energy supplement person. A transitional energy supplement person for
the purposes of this section of the MRC Act is defined in proposed
subsection 83A(5) as a person who is eligible for the Energy Supplement on
19 September 2016 in respect of a permanent impairment payment under the MRC
Act, a Special Rate of Disability Pension under the MRC Act or a
Disability Pension payable under the VE Act. A person who ceases to meet
the criteria to be a transitional energy supplement person after 19 September
2016 can never again become a transitional energy supplement person.
Item 122 inserts proposed subsections 209A(3), (4)
and (5) into the MRC Act so that a person in receipt of a Special
Rate Disability Pension under the MRC Act will only be eligible for the
Energy Supplement from 20 March 2017 if they are a transitional
energy supplement person. A transitional energy supplement person for
the purposes of this section of the MRC Act is defined in proposed
subsection 209A(4) as a person eligible for the Energy Supplement on 19
September 2016 in respect of a Special Rate Disability Pension, a permanent
impairment payment under the MRC Act or a Disability Pension under the VE
Act. A person who ceases to meet the criteria to be a transitional energy
supplement person after 19 September 2016 can never again become a transitional
energy supplement person.
Item 124 inserts proposed subsection 238A(4)
into the MRC Act so that a person in receipt of a compensation payment
as a wholly dependent partner under the MRC Act will only be eligible
for the Energy Supplement from 20 March 2017 if they are a transitional energy
supplement person as defined in section 22 of the SS Act (as inserted by
item 29 in Part 2 of schedule 21 to the Bill).
Part 6—Social Security Act 1991
The items in Part 6 make minor amendments to the SS Act
to prevent holders of the Commonwealth Seniors Health Card from accessing
Telephone Allowance. Telephone Allowance is paid to some income support payment
recipients to help with the costs of maintaining a telephone or internet connection.[452]
Currently, paragraph 1061R(d) of the SS Act prevents Telephone Allowance
being payable to a person where they are in receipt of the Energy Supplement.
These items ensure that these cardholders do not qualify for Telephone
Allowance with the closing of the Energy Supplement to new cardholders from 20
March 2017, and therefore maintain the current arrangements for this allowance.
Part 7—A New Tax System (Family Assistance) Act 1999
Part 7 of the Schedule makes amendments to the FA Act
to close the SIFS to new recipients from 1 July 2017.
Item 133 inserts proposed section 57GDA so
that an individual who is not eligible for the SIFS on the day before 1 July
2017 will not be eligible for the payment on or after 1 July 2017.
Schedule
22—Rates of R&D tax offset
History of
the measure
The provisions in Schedule 22 of the Bill are the third
attempt to amend the rates of tax offset available under the research and
development (R&D) tax incentive.
Prior to this Bill, the provisions were introduced as
Schedule 2 of the Tax and Superannuation Laws Amendment (2015 Measures No. 3)
Bill 2015 (TSLA Bill 2015).[453]
A Bills Digest was prepared for the TSLA Bill 2015.[454] Much of the information in
this discussion of Schedule 22 is sourced from that earlier Bills Digest. The
TSLA Bill 2015 was introduced in the House of Representatives on 27 May 2015
and lapsed when the Parliament was prorogued on 15 April 2016.
The TSLA Bill 2015 was introduced after identical provisions
were deleted from the Tax and Superannuation Laws Amendment (2014 Measures No.
5) Bill 2014 (2014 Bill) in amendments made by the Senate.[455] The measures in the 2014
Bill were first announced in the 2014-15 Budget on 13 May 2014.[456]
Purpose of the measure
Schedule 22 of the Bill amends the Income
Tax Assessment Act 1997 (the ITAA 1997) to reduce the rates of
tax offset available under the research and development (R&D) tax incentive
for the first $100 million of eligible expenditure by 1.5 percentage points.
The amendments in Schedule 22 will reduce the higher (refundable) rate of the
tax offset from 45 per cent to 43.5 per cent, and the lower (non-refundable)
rate from 40 per cent to 38.5 per cent.[457]
Commencement
The amendments in Schedule 22 to the Bill commence on the
first 1 January, 1 April, 1 July or 1 October to occur after Royal Assent.
Background
The current R&D tax incentive came into effect on 1
July 2011. The R&D tax incentive assists businesses to offset some of the
costs of doing R&D and aims to promote innovation. The program is
administered jointly by AusIndustry (on behalf of Innovation Australia) and the
Australian Taxation Office (ATO).[458] The R&D tax incentive replaced the previous
R&D tax concession.[459]
The R&D tax incentive operates by enabling companies
to receive a tax offset for eligible R&D expenditure, rather than claiming
R&D expenditure as a normal expense. A tax offset reduces the amount of
income tax payable, after calculating the basic income tax liability. If a
company claims an item under the R&D tax incentive, it cannot also claim it
as a normal business expense.
Because the rate of the offset (currently 40 or 45 per
cent) is greater than the company tax rate (currently 30 per cent), companies
have an additional incentive to engage in research and development.
If a tax offset exceeds the tax otherwise payable, the way
that the excess is treated depends on whether the tax offset is refundable or non-refundable.
A non-refundable offset that exceeds tax otherwise payable can be carried
forward to future income tax years. A refundable tax offset that exceeds tax
otherwise payable may be refunded to the entity (subject to certain rules).[460]
The amendments in Schedule 22 of the Bill reintroduce,
with minor modification, the provisions in the TSLA Bill 2015 relating to the
rate of tax offset available through the R&D tax incentive. The Schedule
modifies the application date from 1 July 2014 to 1 July 2016, and presents
revised estimates of the financial impact of the reduced tax offset. Of the 24
Schedules introduced as part of the Bill, Schedule 22 is amongst the three most
significant in terms of estimated financial impact.[461]
The R&D tax incentive is the primary mechanism by which
the Commonwealth seeks to promote innovation, which the Turnbull Government
identified as a strategic priority in its National Innovation and Science
Agenda (announced in December 2015). Innovation is seen as a strategic
imperative for Australia as it seeks to transition away from a resources-based
economy, and prepares for the challenges and opportunities of the 21st century.
Committee consideration
Senate Economics Legislation Committee
The Bill has been referred to the Senate Economics
Legislation Committee for inquiry and report by 13 September 2016. Details
of the inquiry are at the
inquiry webpage.
Senate Standing Committee for the Scrutiny of Bills
The TSLA Bill 2015 was considered by the Senate Standing
Committee for the Scrutiny of Bills but the Committee made no comment on the
Bill.[462]
Policy position of non-government parties/independents
As indicated earlier, the provisions of Schedule 22 to this
Bill were initially introduced as Schedule 3 of the 2014 Bill. Both Labor and
the Greens opposed the amendments to the R&D tax offset.[463]
According to the ALP policy document published before the
elections this year, however, Labor has not explicitly ruled out changes to the
R&D Tax incentive.[464]
Instead, it stated that it would have regard to the findings of a government
review ‘to consider whether there are more appropriate options to amend the
R&D Tax Incentive to achieve the same level of budget savings’.
Position of major interest groups
The position of the major interest groups were summarised in
the Digest for the TSLA Bill 2015 as follows:
RSM Bird Cameron wrote that while the reduction would reduce
government support for R&D, the reduction was not significant. A KPMG
summary noted that it was ‘disappointed’ with the cut in the 2015–16 financial
year, and that while the reduction in company tax rate would match the reduction
in the offset, that cut in company tax would be offset by the proposed paid
parental leave levy for companies with taxable income over $5 million. One
industry member commented that the reduction was ‘sending a clear message that
innovation is not a priority’.
In its submission to the inquiry on the previous Bill,
PricewaterhouseCoopers (PwC) expressed concern that the proposed changes to the
offset rates will give rise to undesirable and unintended consequences and
therefore diminish the support for research and development that the R&D
tax incentive currently provides.
Redarc Electronics stated that it was deeply concerned that
the R&D measures in the Bill are ‘ill-conceived and will adversely impact
on [the company’s] ability to utilise the benefits of the incentives in
furthering [its] R&D and its commercialisation’.[465]
There is nothing to suggest that these views have materially
changed since the publication of the earlier Bills Digest.
Financial implications
As indicated in the Explanatory Memorandum and the
Minister’s second reading speech, financial considerations, including a desire
to reduce the fiscal debt are the main reason for lowering the rates of the
R&D tax incentive. The financial implications of Schedule 22 are shown in
the table below:
Table 13:
Financial implications of Schedule 22
| Year |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
2019-20 |
Total |
| Rates of R&D Tax Offset |
0.0 |
0.0 |
160.0 |
210.0 |
230.0 |
600.0 |
Source: Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016, p. 6.
As stated earlier, of the 24 Schedules introduced overall as
part of the Bill, Schedule 22 is the third most significant in terms of
estimated financial impact.
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 Schedule 22 is compatible.[466]
Key issues and provisions
Items 1 –3 of Schedule 22 amend the Table in
subsection 355-100(1) of the ITAA 1997 to reduce the R&D tax
incentive rates. Item 1 of the Table provides that an R&D entity, to
which item 2 of the Table does not apply, is entitled to an R&D tax offset
of 45 per cent of the expenditure on eligible R&D activities, if its
aggregated turnover for an income year is less than $20 million. Item 1 of
Schedule 22 reduces this rate by 1.5 per cent to 43.5 per cent.
Item 2 of the Table in subsection 355-100(1) will apply to a company
where two or more exempt entities, irrespective of their relationship,
beneficially own interests in the company carrying more than 50 per cent of the
voting rights or rights to a distribution of income or capital. Item 2 of
Schedule 22 reduces the rate of R&D tax offset applying in these
circumstances by 1.5 per cent to 38.5 per cent.
Item 3 of the Table provides that in any other case, not covered by items
1 and 2, the R&D entity is entitled to a R&D tax offset of 40 per cent
of the expenditure on eligible R&D activities. Item 3 of Schedule
22 reduces this rate to 38.5 per cent.
There is also a note to the table which previously referred to the 45 per
cent rate. Item 4 of Schedule 22 revises this to 43.5 per cent.
Item 5 of Schedule 22 applies these rates to
assessments for income years commencing on or after 1 July 2016.
Schedule 24—Single appeal path under the
Military Rehabilitation and Compensation Act
History of the amendments
The amendments that are contained in Schedule 24 of the Bill
have a lengthy history.
As part of the 2015-16 Budget the Government announced that
it would achieve savings of $2.2 million over four years by ‘simplifying the
appeal process’ under the Military
Rehabilitation and Compensation Act 2004 (MRCA).[467]
In June 2015, the Government introduced the Veterans' Affairs Legislation
Amendment (2015 Budget Measures) Bill 2015[468]
(the first Bill) which, along with other amendments, proposed to create a
single review pathway for original determinations made under the MRCA by
removing the option for internal consideration by the Military Rehabilitation
and Compensation Commission (the Commission) and allowing only for review by
the Veterans Review Board (VRB).[469]
Although much of the first Bill was enacted, those provisions relating to a
single review pathway were not.
The second attempt to legislate the single appeals pathway
was contained in the Veterans’ Affairs Legislation Amendment (Single Appeal
Path) Bill 2016
(the second Bill).[470]
The second Bill was introduced into the House of Representatives on 11 February
2016. The second Bill lapsed on prorogation of the Parliament on 17 April 2016.
The amendments in Schedule 24 of this Bill are the third
attempt to introduce a single review pathway. The provisions are in equivalent
terms to those in the second Bill with the exception of a minor correction to
the drafting of proposed paragraph 357(6B)(a). A Bills Digest was
published in relation to the second Bill.[471]
The material in this Bills Digest is generally in the same terms as that
Digest, with additional comments in relation to the paragraph mentioned above.
Commencement
The provisions of Schedule 24 of the Bill commence on the
later of 1 January 2017 and the day after the Act receives Royal Assent.
Purpose
Schedule 24 of the Bill amends the MRCA to create a
single appeal path with respect to the review of original determinations made
under that Act. The provisions in Schedule 24 of the Bill will also extend the
circumstances in which the Administrative Appeals Tribunal (AAT) may award
costs to a claimant with respect to a review of a decision made by the
Veterans’ Review Board (VRB).
Background
Current military compensation
arrangements
Since Australia’s involvement in the First World War, a high
priority for successive Australian governments has been to ‘provide
compensation and related support to veterans and their dependants’.[472]
Compensation for members of the Australian Defence Force who suffer injury or
disease has been the subject of numerous changes since that time. This has
resulted in members being covered under different compensation statutes. For
instance, the provisions of the Safety,
Rehabilitation and Compensation Act 1988 (SRCA) and the Veterans’
Entitlements Act 1986 (VEA) apply to service before 1 July 2004.
Dependants of current or former ADF members who have died as a result of their
defence service may also be eligible for compensation payments.
In the early 2000s, the Government undertook to introduce a
more integrated approach to military compensation and consequently introduced
the MRCA, which provides rehabilitation and compensation
coverage for the following members of the ADF who served on or after 1 July
2004:
- all members of the Permanent Forces
- all members of the Reserve Forces
- Cadets and Officers, including instructors of Cadets
- persons who hold an honorary rank or appointment in the
ADF and who perform acts at the request or direction of the Defence Force
- persons who perform acts at the request or direction of
the Defence Force as an accredited representative of a registered charity
- persons who are receiving assistance under the Career
Transition Assistance Scheme (established under section 58B of the Defence Act 1903) and who perform acts in connection with the scheme and
- other people declared in writing by the Minister for
Defence to be members of the ADF.[473]
Military Rehabilitation and
Compensation Commission
The Military Rehabilitation and Compensation Commission (the
Commission) was established under section 361 of the MRCA. The
Commission’s main function is to make determinations with respect to
rehabilitation, compensation and other benefits for current and former members
of the ADF who suffered injury, disease, illness or death as a result of their
service in the ADF.[474]
The Commission manages claims made under both the MRCA and the SRCA.
Under section 345 of the MRCA, the Chief of the Defence Force also has
the power to make original determinations in relation to rehabilitation.
Review of determinations of
the Commission
Original determinations made by the Commission or the Chief
of the Defence Force involving claims arising under the MRCA are
currently subject to complex review arrangements. Under Chapter 8 of the MRCA,
an applicant wishing to appeal an original determination can either:
- seek internal reconsideration by the Commission[475]
or
- apply to have the decision reviewed by the VRB.[476]
If the applicant is dissatisfied with the reconsideration of
the decision by the Commission or the review conducted by the VRB, they can
appeal to the AAT for a final review.[477]
This complicated model arose out of inability amongst stakeholders to reach a
‘consensus on a single preferred model’ during the development of the MRCA.[478]
One of the major differences between the two appeal paths is
the time in which the applicant must lodge their application. Applications for
reconsideration by the Commission must be lodged within 30 days[479]
(with applications for subsequent review by the AAT lodged within 60 days[480]),
while applicants have 12 months in which to lodge an application with the VRB[481]
(with applications for subsequent review by the AAT lodged within three months[482]).
The appeal path chosen can also affect the level of legal aid funding an
applicant can access and when they can recover costs for legal expenses:
The two pathways provide different review processes...the VRB
path ‘can be seen as a lengthy and daunting process’ but the MRCC process does
not offer legal aid at the AAT. The AAT can award costs to successful claimants
who have chosen the MRCC reconsideration pathway but not to claimants who
pursued the VRB pathway (but claimants who sought review by the VRB can access
legal aid where it relates to operational service).[483]
Figure 2: Outline of current review arrangements
Source: DVA, Review
of military compensation arrangements, vol. 2, DVA, February 2011, p.
226.[484]
Note: Shaded boxes show the same path as available under the VEA.
Review of Military
Compensation Arrangements
On 8 April 2009, the then Minister for Veterans’ Affairs
announced a Review of Military Compensation Arrangements (the Review) to be
conducted by a Steering Committee (the Committee) chaired by Mr Ian Campbell
PSM.[485]
As part of its terms of reference, the Committee examined the current
reconsideration and review processes with respect to claims made under the MRCA.
Several submissions to the Review referred to the two appeal paths and were
generally of the view that the Commission pathway should be removed, with
appeals to be heard by the VRB.[486]
However, submitters also argued that internal reconsideration by the Commission
should be retained and included in the single appeal pathway.[487]
The Committee agreed, recommending that ‘a single appeal path should be
established that includes internal reconsideration, the VRB and then the AAT’.[488]
The Committee was of the view that such a pathway would ‘achieve more timely
reviews at a lower cost’.[489]
Submitters also focused on the current legal aid/costs
disparity.[490]
There was support for legal aid being available to all claimants appealing MRCA
decisions at the AAT, regardless of whether the decision was appealed from the
Commission or the VRB.[491]
Some submitters also raised concerns over the lack of costs orders available at
the AAT with respect to appeals from the VRB.[492]
Rationale for the changes
As stated above, the relevant amendments were introduced as
part of the 2015-16 Budget.[493]
When the first Bill[494]
was introduced, the Bills Digest prepared at the time noted that the proposed
amendments were inconsistent with what had been proposed by the Review:
The Explanatory Memorandum to the Bill claims that the
amendments give effect to the Review of Military Compensation Arrangements
recommendation for a single appeal process. However,
while implementing Recommendation 17.1 of the Review for a single appeal path,
the proposed amendments ignore Recommendation 17.2 for internal
reconsideration by the MRCC to be the first step in this review process. Instead, the proposed amendments will remove
internal reconsideration by the MRCC from the appeals process altogether so
that review by the VRB becomes the first tier of the single appeal pathway.[495]
Senate Foreign Affairs,
Defence and Trade Legislation Committee
The provisions of Schedule 2 of the first Bill (which
contained the proposed amendments relating to the single appeal path) were
referred to the Senate Foreign Affairs, Defence and Trade Legislation Committee
(the Senate Committee) for inquiry and report.[496]
One issue raised by submitters to the Senate Committee was
the removal of the option of internal consideration by the Commission.[497]
For example, Slater and Gordon Lawyers argued that it would be ‘fairer, quicker
and work better for injured veterans’ if the Government kept the internal
consideration process.[498]
In their response to the Review, both the Returned & Services League (RSL)
and the Australian Peacekeeper and Peacemaker Veterans’ Association also
supported retaining the internal reconsideration arrangement as part of the
appeal path.[499]
As part of the Senate Committee’s inquiry process, the Department of Veterans’
Affairs (DVA) clarified that ‘under the proposed single pathway, [the
Commission] will initiate an internal reconsideration under section 347 for all
claimants who have submitted an original determination to be reviewed by the
VRB’.[500]
The Senate Committee noted that the Explanatory Memorandum for the first Bill
had ‘inadvertently given rise to confusion and misunderstanding by legal firms
as to how the proposed single review pathway will operate in practice’.[501]
Other concerns raised by submitters included access to legal
representation, access to costs for matters appealed from the VRB to the AAT
and access to legal aid.[502]
The Senate Committee noted that since the Review had been published, the
National Partnership Agreement on Legal Assistance Services under the Council
of Australian Governments had commenced (the NPA).[503]
Under the NPA, ‘legal aid is now available irrespective of the type of service
rendered by the veteran’.[504]
Ultimately the Senate Committee recommended that the first
Bill be re-referred to the Committee for future consideration as it had ‘not
been able to finalise its position in relation to several of the contentious
issues raised in evidence’.[505]
Committee consideration
Senate Standing Committee for
the Selection of Bills
The Senate Standing Committee for the Selection of Bills
recommended that the second Bill not be referred to committee for inquiry and
report.[506]
At the time of writing this Digest, the current Bill has not been considered by
the Senate Selection of Bills Committee.
Senate Standing Committee for
the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills had
no comment on the second Bill in relation to the amendments which are contained
in Schedule 24 of this Bill.[507]
At the time of writing this Digest, the current Bill has not been considered by
the Scrutiny of Bills Committee.
Policy position of
non-government parties/independents
Labor Party
The Opposition announced that it would support the second
Bill.[508]
It opposed the Government’s previous attempt, in the first Bill, to introduce a
single appeal path due to concerns surrounding the removal of the internal
reconsideration process and the awarding of costs.[509]
During the debate on the first Bill, Labor argued that these issues warranted
further consideration and was successful in negotiating to have that Bill sent
to committee for inquiry and report.[510]
In announcing Labor’s support for the second Bill the Shadow
Minister for Veterans’ Affairs, David Feeney, remarked that the Committee
inquiry into the first Bill had led to significant improvements in terms of the
proposed measures:
... veterans will now be able to appeal determinations of the
VRB to the AAT, confident that, if successful, they can recover their costs. As
a consequence, the department has not engendered a system which shields itself
from scrutiny or the review of its determinations. This means that an enormous
disincentive to challenge the MRCC has been removed...
The introduction of a 28-day statutory reporting time frame
for the MRCC to consider new evidence provided by a claimant is an important
step in speeding up the time that it takes for a claimant to achieve justice
under the appeals system...The revised pathway also allows for an internal review
of an MRCC decision, as envisaged in the original 2011 military and
compensation inquiry.[511]
Senator Lambie
Senator Lambie strongly opposed the amendments contained in
the first Bill.[512]
She argued that the first Bill ‘strips veterans of appeal rights and gives DVA
more power to frustrate and deny claims without independent review of its
decisions’.[513]
In her dissenting comments to the Senate Committee report on the first Bill she
made the following points:
- the right to an internal review as the first step in the single
appeal pathway should be set out in the legislation[514]
- whilst the single appeal pathway is intended to be more
efficient, the Bill does not include any time frames for decision making by the
VRB. In addition, the Bill operates to deny a veteran access to the quicker
system of review which currently exists[515]
and
- the Bill should be amended to allow legal representatives to
appear in the VRB and to allow the recovery of costs for further medical
evidence and of legal costs incurred by a veteran in proceedings at the AAT for
a review of a determination of the VRB.[516]
Senator Xenophon
Senator Xenophon also refused to support the amendments
contained in the first Bill.[517]
He noted that he shared similar concerns to the Opposition with regards to the
removal of internal reconsideration by the Commission and inability of veterans
to access costs with respect to appeals to the AAT.[518]
Position of major interest
groups
Overall submitters have long been supportive of introducing
a single appeal path in order to remove some of the challenges that veterans
face in the current system.[519]
While the measures contained in the first Bill attracted some criticism from
stakeholders, especially with regards to the ability of veterans to claim
costs,[520]
the changes made by the Government following on from the Senate Committee
inquiry appear to have appeased most of these concerns. Both the National
President of the RSL, Rear Admiral Ken Doolan, and the National Spokesperson
for the Alliance of Defence Service Organisations, Colonel David Jamison
advised the Government and the Opposition that they supported the second Bill.[521]
As the amendments in Schedule 24 of this Bill are in
equivalent terms (with the exception of one paragraph) to the second Bill, this
Schedule is likely to be supported by stakeholders.
Financial implications
It is expected that the measures in Schedule 24 of this Bill
will have the following impact on the underlying cash balance over the forward
estimates ($m):
Table 14: Impact over the forward estimates
| 2015–16 |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
Total |
| -0.9 |
0.4 |
1.3 |
1.4 |
1.4 |
3.6 |
Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016,
item 24 in table, page 6,
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 compatibility of Schedule 24 of the Bill 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 Schedule is
compatible.[522]
Parliamentary Joint Committee on Human Rights
At the time of writing this Bills Digest, the Parliamentary
Joint Committee on Human Rights (Human Rights Committee) had not commented on
the Bill. However, the Human Rights Committee considered that the second Bill,
which is in equivalent terms to Schedule 24 of this Bill, did not raise any
human rights concerns.[523]
Key issues and provisions
Schedule 24 amends Chapter 8 of the MRCA, which deals
with the reconsideration and review of original determinations.[524]
The proposed amendments contained in Schedule 24 will:
- create a single appeal path by removing the ability of a claimant
to seek reconsideration of an original determination by the Commission. The
Commission will reconsider original determinations on its own initiative[525]
- ensure that all reviews are carried out by the VRB and
- allow the AAT to award costs in certain circumstances in relation
to matters which have been appealed from the VRB.
Single appeal path
Items 1–6 of Schedule 24 make a number of
consequential amendments to reflect the changes to the appeal arrangements.
Items 7 and 8 of Schedule 24 amend section 349
of the MRCA, which currently allows either the claimant or the Chief of
the Defence Force to apply to have a decision of the Commission (or the Chief
of the Defence Force where the claimant is making the application) reconsidered
by the Commission. Item 7 amends the heading of section 349 to
reflect that it will now only relate to applications initiated by the Chief of
the Defence Force with respect to decisions made by the Commission. Item 8
will remove any reference to a claimant being able to have a decision made by
the Commission reconsidered by the Commission.
Item 9 of Schedule 24 amends section 352 of the MRCA
which sets out when a claimant can apply to have an original determination
(made by either the Commission or the Chief of the Defence Force) reviewed by
the VRB. Item 9 repeals subsection 352(2) of the MRCA which
refers to the claimant being unable to have a decision reviewed by the VRB
where they have applied to have the decision reconsidered by the Commission.
Recovery of costs
Items 11 and 12 of Schedule 24 amend the MRCA
to allow for a claimant to recover either all or part of the costs in
relation to an AAT review of a determination by the VRB in certain
circumstances. In order to recover costs, the AAT must have either varied a
determination in favour of a claimant or set aside and substituted a decision
in favour of a claimant.[526]
Further, the claimant will not be allowed to recover costs
where:
- the claimant failed to provide a document to the VRB that the AAT
is satisfied would, if provided, have resulted in them receiving a favourable
outcome at that stage[527]
- the claimant was granted legal aid under a Commonwealth, state or
territory legal aid scheme or service for their matter at either the VRB or the
AAT.[528]
This provision has been the subject of a drafting correction to clarify that a
person will not be able to recover costs if they have received a legal aid grant
in relation to their case. However they will not be denied costs if they merely
received other forms of legal aid where their costs were not covered—for
example, if they received some advice from a legal aid commission or community
legal centre, but did not actually receive any coverage of their legal costs
through a legal aid grant
- the claimant failed to appear at their VRB review hearing and had
no reasonable excuse[529]
- the claimant failed to comply with a direction under subsection
148(4B) of the Veterans’ Entitlements Act[530] or
- the claimant failed to comply with a notice under section 330 of
the MRCA before the Commission made its original determination.[531]
This change responds to the view of the Law Council of
Australia, who submitted to the Committee inquiry into the first Bill that not
allowing veterans access to costs would have ‘serious implications for access
to justice’.[532]
The Government argues that these amendments ‘will ensure that claimants are not
encouraged to withhold information or fail to fully participate in the
processes of the Commission or the VRB’.[533]
It is worth noting that claimants will not be entitled to both costs and legal
aid.[534]
Commencement
Item 13 of Schedule 24 clarifies that the amendments
to the MRCA set out in the Bill only apply to original determinations
made on or after the commencement of the amendments.
[1]. Catholic
Health, Submission, no. 154, to the Senate Economics Legislation
Committee, Inquiry into the Budget Savings (Omnibus) Bill 2016,
7 September 2016.
[2]. S
Morrison, ‘Second
reading speech: Budget Savings (Omnibus) Bill’, House of
Representatives, Debates, 31 August 2016, p. 33.
[3]. K
Murphy, ‘Labor
says Coalition has lied and included additional cuts in ‘omnibus’ savings bill’,
Guardian, 30 August 2016.
[4]. The
Greens, ‘Save clean energy and kids’
dental care’, The Greens website.
[5]. Explanatory
Memorandum, Budget Savings (Omnibus) Bill 2016, pp. 5–6.
[6]. Explanatory
Memorandum, Budget Savings (Omnibus) Bill 2016, pp. 5–6; Correction
to the Explanatory Memorandum, Budget Savings (Omnibus) Bill 2016.
[7]. Australian
Government, Budget
measures: budget paper no. 2: 2014–15, pp. 77 and 85–6.
[8]. Parliament
of Australia, ‘Higher
Education and Research Reform Amendment Bill 2014 homepage’, Australian
Parliament website. C Ey, Higher
Education and Research Reform Amendment Bill 2014, Bills digest, 33,
2014–15, Parliamentary Library, Canberra, 2014.
[9]. Parliament
of Australia, ‘Higher
Education and Research Reform Bill 2014 homepage’, Australian Parliament
website. J Griffiths, Higher
Education and Research Reform Bill 2014, Bills digest. 69, 2014–15,
Parliamentary Library, Canberra, 2015.
[10]. S Birmingham (Minister for Education and Training), The challenge of world-class higher education: opening keynote address:
Times Higher Education (THE) World Academic Summit, University of Melbourne, speech, 1 October 2015.
[11]. Australian
Government, Budget
strategy and outlook: budget paper no. 1: 2016–17, p. 3-27.
[12]. Explanatory
Memorandum, Budget Savings (Omnibus) Bill 2016, pp. 23–34.
[13]. The
Statement of Compatibility with Human Rights for Schedules 1 to 3 can be found
at pages 32–34 of the
Explanatory Memorandum to the Bill.
[14]. Liberal
Party of Australia and the Nationals, The
Coalition’s plan for real action on employment participation, Coalition
policy document, Election 2010; Liberal Party of Australia and the Nationals, The
Coalition’s policy to increase employment participation, Coalition
policy document, Election 2013.
[15]. J
Hockey (Treasurer) and M Cormann (Minister for Finance), Mid-Year Economic
and Fiscal Outlook 2013-14, December 2013, p. 135; Parliament of
Australia, Social
Security Legislation Amendment (Increased Employment Participation) Bill 2014
homepage, Australian Parliament website.
[16]. Social Security
Legislation Amendment (Increased Employment Participation) Act 2014,
section 2.
[17]. Part
2.16A of the Social
Security Act 1991.
[18]. Explanatory
Memorandum, Social Security Legislation Amendment (Increased Employment
Participation) Bill 2014, p. 3.
[19]. Senate
Education and Employment Legislation Committee, Official
committee Hansard, 6 May 2016, p. 53.
[20]. Explanatory
Memorandum, Budget Savings (Omnibus) Bill 2016, p. 35.
[21]. Senate
Education and Employment Legislation Committee, Official
committee Hansard, 6 May 2016, p. 54; Australian Government, Portfolio
budget statements 2016–17: budget related paper no. 1.6: Employment Portfolio,
p. 22.
[22]. Ibid.
[23]. Australian Government, ‘Part 2:
expense measures’, Budget
measures: budget paper no. 2: 2016–17, p. 83.
[24]. Explanatory
Memorandum, Budget Savings (Omnibus) Bill 2016, p. 35.
[25]. M
Klapdor and M Thomas, Social
Security Legislation Amendment (Increased Employment Participation) Bill 2014,
Bills digest, 48, 2013–14, Parliamentary Library, Canberra, 18 March 2014.
[26]. Ibid.,
pp. 10–11.
[27]. Ibid.
[28]. Ibid.
[29]. Australian
Council of Social Service, ACOSS
employment proposals for 2015 Budget. The Employment Fund is a pool of
funds that can be accessed by employment service providers to assist job
seekers into paid employment. It is made up of a general account and a wage
subsidy account.
[30]. Australian Government, ‘Part 2:
expense measures’, Budget
measures: budget paper no. 2: 2016–17, p. 83.
[31]. The
Statement of Compatibility with Human Rights can be found at pages 40 to 43 of
the Explanatory
Memorandum to the Bill.
[32]. C Porter (Minister for Social Services), , Ensuring the Government lives within its means: a targeted welfare
safety net, media release, 3 May 2016.
[33]. The Medicare Levy Surcharge (MLS) is levied on Australian taxpayers who
do not have an appropriate level of private hospital insurance and who earn
above a certain income. It is designed to encourage individuals to take out
private hospital cover, and where possible, to use the private hospital system
to reduce demand on the public Medicare system. The MLS is payable in addition
to the Medicare levy. Source: Australian Taxation Office (ATO),
‘Medicare Levy Surcharge’, ATO website.
[34]. The private health insurance rebate is an amount the government
contributes towards the cost of a person’s private hospital health insurance
premiums. This rebate is income tested, which means a person’s eligibility to
receive it depends on their income. If a person has a higher income, their rebate
entitlement may be reduced, or they may not be entitled to any rebate at all. Source:
Australian Taxation Office (ATO), ‘Private Health Insurance Rebate’, ATO website.
[35]. A
Biggs, Private
Health Insurance Amendment Bill (no. 1) 2014, Bills digest, 38,
2014–15, Parliamentary Library, Canberra, 2014.
[36]. Lifetime
Health Cover (LHC) is a Government initiative designed to encourage people to
take out hospital insurance earlier in life and to maintain their cover. LHC
imposes a 2% loading on the cost of premiums for every year a person aged over
30 delays taking out private health insurance. Private Health Insurance Ombudsman
(PHIO), ‘Lifetime
Health Cover’, PHIO website.
[37]. Australian
Government, ‘Australian
Government Private Health Insurance Rebate’, PrivateHealth website.
[38]. Australian
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[295]. The
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[317]. An
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As they are
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[453]. Parliament
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[454]. L
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[455]. Parliament
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[456]. Australian
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[457]. Explanatory
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[458]. Australian
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[459]. For
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[460]. Australian
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[461]. Explanatory
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[462]. Senate
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[463]. See
L Nielson, Tax
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[464]. Australian
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[465]. L
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[466]. The
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[467]. Australian
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[468]. Parliament
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[469]. Ibid.
[470]. Parliament
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[471]. L
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[472]. Department
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[473]. DVA,
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[474]. DVA,
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[475]. MRCA,
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[476]. MRCA,
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[477]. MRCA,
subsection 354(1).
[478]. DVA,
Review
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paragraph 17.15, p. 224.
[479]. MRCA,
subsection 349(5).
[480]. Administrative
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section 355, table item 3.
[481]. MRCA,
paragraph 352(3)(c).
[482]. Administrative
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section 355, table item 3.
[483]. M
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[484]. DVA,
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[485]. A
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[486]. DVA,
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[487]. Ibid.
[488]. Ibid.,
pp. 221, 245.
[489]. Ibid.
[490]. Ibid.,
pp. 233–234.
[491]. Ibid.
[492]. Ibid.
[493]. Australian
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[494]. Parliament
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[495]. M
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[496]. Senate
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2015—Schedule 2, The Senate, Canberra, 25 September 2015.
[497]. Ibid,
pp. 9–10.
[498]. Slater
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Veterans' Affairs Legislation Amendment (2015 Budget Measures) Bill
2015—Schedule 2, 11 September 2015, p. 6.
[499]. M
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Affairs Legislation Amendment (2015 Budget Measures) Bill 2015, Bills
digest, 11, 2015–16, Parliamentary Library, Canberra, 2015, p. 9.
[500]. Senate
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into Veterans’ Affairs Legislation Amendment (2015 Budget Measures) Bill
2015—Schedule 2, The Senate, Canberra, 25 September 2015,p. 9.
[501]. Ibid.,
p. 18.
[502]. Ibid.,
p. 12–17.
[503]. Ibid.,
p. 18.
[504]. Ibid.,
p. 16.
[505]. Ibid.,
p. 18.
[506]. Senate
Standing Committee for the Selection of Bills, Report,
2, 2016, The Senate, 25 February 2016.
[507]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 2, 2016, The Senate, 24 February 2016, p. 88.
[508]. D
Feeney, ‘Second
reading speech: Veterans’ Affairs Legislation Amendment (Single Appeal Path)
Bill 2016’, House of Representatives, Debates, ,
2 March 2016, p. 2868.
[509]. J
McLucas, ‘Second
reading speech: Veterans’ Affairs Legislation Amendment (2015 Budget Measures)
Bill 2015’, Senate, Debates, 7 September 2015, p. 6015.
[510]. On
7 September 2015, following debate in the Senate, Schedule 2 of the Veterans’
Affairs Legislation Amendment (2015 Budget Measures) Bill 2015 was referred to
the Senate Foreign Affairs, Defence and Trade Legislation Committee (see above
discussion).
[511]. D
Feeney, ‘Second
reading speech: Veterans’ Affairs Legislation Amendment (Single Appeal Path)
Bill 2016’, House of Representatives, Debates,
2 March 2016p. 2870.
[512]. J
Lambie, ‘Second
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Bill 2015’, Senate, Debates, 7 September 2015, p. 6025.
[513]. Ibid.
[514]. J
Lambie, Dissenting report, Senate Foreign Affairs, Defence and Trade
Legislation Committee, Inquiry
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2015—Schedule 2, The Senate, Canberra, 2015, paragraph 1.12, p. 22.
[515]. Ibid.,
p. 22.
[516]. Ibid.,
p. 29.
[517]. N
Xenophon, ‘Second
reading speech: Veterans’ Affairs Legislation Amendment (2015 Budget Measures)
Bill 2015’, Senate, Debates, 7 September 2015, p. 6030.
[518]. Ibid.
[519]. DVA,
Review
of military compensation arrangements, vol. 2, DVA, February 2011, pp.
233–234.
[520]. Senate
Standing Committee on Foreign Affairs, Defence and Trade, Inquiry
into Veterans’ Affairs Legislation Amendment (2015 Budget Measures) Bill
2015—Schedule 2, The Senate, Canberra, 25 September 2015,p. 12–17.
[521]. D
Feeney, ‘Second
reading speech: Veterans’ Affairs Legislation Amendment (Single Appeal Path)
Bill 2016’, House of Representatives, Debates,
2 March 2016, p. 90.
[522]. The
Statement of Compatibility with Human Rights for Schedule 24 of the Bill can be
found at pages 399–402 of the Explanatory
Memorandum to the Bill.
[523]. Parliamentary
Joint Committee on Human Rights, Thirty-fourth
report of the 44th Parliament, February 2016, pp. 1–2.
[524]. Subsection
345(1) of the MRCA defines the term original determination.
Subsection 345(2) provides a list of determinations which are excluded from
that general definition.
[525]. MRCA,
subsection 347(1).
[526]. MRCA,
proposed subsections 357(6A) and (6B).
[527]. MRCA,
proposed subsection 357(6A). This only applies where the AAT is
satisfied that the claimant could have provided the document to the VRB
‘without unreasonable expense or inconvenience’: proposed paragraph
357(6A)(b).
[528]. MRCA,
proposed paragraph 357(6B)(a).
[529]. MRCA,
proposed paragraph 357(6B)(b).
[530]. MRCA,
proposed paragraph 357(6B)(c). Subsection 148(4B) of the Veterans’
Entitlements Act 1986 allows a registrar of the VRB to issue directions
to parties to a review, for example directing them to provide additional
information to the VRB.
[531]. MRCA,
proposed paragraph 357(6B)(d). Section 330 of the MRCA allows the
Commission to ask a person who has made a claim to provide additional
information or documents.
[532]. Law
Council of Australia, Submission
to Foreign Affairs, Defence and Trade Legislation Committee, Inquiry into
Veterans’ Affairs Legislation Amendment (2015 Budget Measures) Bill
2015—Schedule 2, 11 September 2015, p. 3.
[533]. Explanatory
Memorandum, Budget Savings (Omnibus) Bill 2016, p. 396.
[534]. MRCA,
proposed paragraph 357(6B)(a).
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