Purpose of the Bill

The Family Assistance Legislation Amendment (Extend Family Assistance to ABSTUDY Secondary School Boarding Students Aged 16 and Over) Bill 2019 (the Bill) amends the A New Tax System (Family Assistance) Act 1999 (the FA Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the FA Admin Act) to extend eligibility for Family Tax Benefit (FTB) to the families of ABSTUDY secondary school students who are aged 16 or over and who are required to live away from home to attend school.

The amendments were announced as a 2019–20 budget measure and are expected to cost $36.4 million over the forward estimates.[1]

Background

ABSTUDY

The Aboriginal and Torres Strait Islander Study Assistance Scheme (ABSTUDY scheme) is aimed at addressing the educational disadvantages faced by Aboriginal and Torres Strait Islander people by ‘improving educational outcomes to a level equivalent to that of the Australian population in general’.[2]

The ABSTUDY scheme consists of a wide range of allowances grouped into seven ‘award’ categories.[3] ABSTUDY allowances include an income support payment, the Living Allowance, which is paid at a rate similar to Youth Allowance and supplementary allowances which cover additional costs such as fares, fees, the need to live away from home to study, and additional incidental costs. The allowances available depend on the specific award or awards an individual is eligible for.[4] For example, tertiary students are eligible for a different set of payments at a different rate to most secondary students. The ABSTUDY Living Allowance and some of the supplementary allowances are subject to means testing.

Where an ABSTUDY recipient is attending boarding school (or living in a hostel to attend school away from home), the payment is made directly to the school or hostel on the student’s behalf to help cover board and tuition.[5]

In their submission to the Senate Committee inquiry into the Bill, the Department of Social Services detailed the maximum payment rate available to an ABSTUDY student in secondary school who is approved to live away from home in order to study, replicated in Table 1.

Table 1: Maximum annual rate of ABSTUDY for young person aged under 22 years, living away from home

* Rates as at 1 January 2019.
**Includes Energy Supplement worth around $182 per annum (Department of Social Services source excludes Energy Supplement).

Source: Department of Social Services, Submission to the Senate Community Affairs Legislation Committee, Inquiry into the Family Assistance Legislation Amendment (Extend Family Assistance to ABSTUDY Secondary School Students Aged 16 and Over) Bill 2019, 16 August 2019, p. 4; Department of Human Services (DHS), A guide to Australian Government payments: 1 July–19 September 2019, DHS, Canberra, 2019, pp. 40–41.

The precursor of ABSTUDY, the Aboriginal Study Grants Scheme was introduced in 1969 as part of a Gorton Government ‘commitment to implement special measures to assist Australian Aboriginal and Torres Strait Islander people to achieve their educational, social and economic objectives through financial assistance to study’.[6] The grants scheme was initially limited to tertiary students. A scheme for secondary students was introduced from 1970 and the two were amalgamated into ABSTUDY in 1988.[7]

The policy intent of the ABSTUDY scheme is provided for in the ABSTUDY Policy Manual, which is approved by the Minister for Social Services.[8] The policy manual sets out the eligibility criteria, means tests, and the different allowances and benefits payable. The appropriation for these allowances is provided for in Part 4, Section 13 of the Indigenous Education (Targeted Assistance) Act 2000, which states: ‘ABSTUDY payments are to be made out of the Consolidated Revenue Fund, which is appropriated accordingly’. Arrangements for particular aspects such as debt recovery are covered by the Student Assistance Act 1973 and some parts of the policy manual refer to provisions of the Social Security Act 1991.

Number of ABSTUDY recipients

As at December 2018, there were 7,066 recipients of an ABSTUDY Living Allowance (and supplementary allowances) and 19,889 individuals who do not receive the Living Allowance but are in receipt of at least one other ABSTUDY allowance.[9]

Family Tax Benefit

The Family Tax Benefit Part A (FTB-A) and Family Tax Benefit Part B (FTB-B) are payments available from the Department of Human Services that are intended to help families with the cost of raising children.[10] FTB-A is paid per eligible child, with rates dependent on the age of the child. FTB-B is paid per family with the rate determined by the age of the youngest child in the family.

To be eligible for FTB-A, an individual must meet residence requirements, care requirements, immunisation and health check requirements, and an income test. Individuals must meet the same residence and care requirements to be eligible for FTB-B but a different income test applies.[11]

FTB child

To be eligible for FTB-A or FTB-B a person must have an eligible FTB child. An eligible FTB child must meet several criteria including all of the following:

• they are in the individual’s care
• they are an Australian resident, a Special Category Visa holder (New Zealander) or living with the individual
• they not meet any exception rules and
• if care is shared, they must be in the individual’s care for at least 35 per cent of the relevant care period.[12]

A child cannot be considered an FTB child if they are receiving a social security pension or benefit (such as Youth Allowance) or someone is receiving such a payment on their behalf.[13]

Interaction with ABSTUDY

To be considered an FTB child, a child aged 16 or over cannot be receiving a prescribed education payment.[14] A prescribed education payment means one of the following payments:

• the means tested components of the ABSTUDY scheme including:
  • living allowance,
  • the additional amount of Group 2 school fees allowance that is subject to the parental income test
• the Veterans' Children Education Scheme (under the Veterans Entitlements Act 1986)
• the scheme to provide education and training under the Military Rehabilitation and Compensation Act 2004 and
• the Post-Graduate Awards Scheme.[15]

This effectively means that the current eligibility criteria do not allow for FTB to be paid in respect of a secondary school student aged 16 or over who is receiving an ABSTUDY Living Allowance (or Group 2 school fees allowance subject to the parental income test).

The Bill proposes to amend these eligibility criteria so that recipients of an ABSTUDY Living Allowance (or Group school fees allowance subject to the parental income test) will be considered an FTB child where they are a secondary school student aged 16 or over who is required to live away from home to attend school (see further discussion under ‘Key issues and provisions’ section below). Recipients of a means tested component of ABSTUDY who are aged 16 or over and are not required to live away from home to attend school will continue to be ineligible to be considered a FTB child under the Bill’s proposal.

Improving Year 12 attainment rates of Indigenous students

The Government’s rationale for extending FTB to ABSTUDY recipients aged 16 and over who are living away from home is to support more Indigenous students to complete Year 12. In his second reading speech for the Bill, Minister for Communications, Cyber Safety and the Arts Paul Fletcher stated:

Under current arrangements, once an ABSTUDY boarding student turns 16 they no longer receive family tax benefit. This can create a perverse incentive for families to retain family tax benefit by removing their child from boarding school. This is not aligned with supporting Indigenous students completing year 12.

Many remote communities have no local secondary school, so boarding is frequently the only option for children to attend secondary school. However, Aboriginal and Torres Strait Islander boarding students are disproportionately dropping out of boarding education around the age of 16. Data from the Department of Human Services shows that the number of ABSTUDY boarding students drops by approximately 60 per cent between the ages of 15 and 17.[16]

Halving the gap in Year 12 attainment between Indigenous and non-Indigenous people by 2020 is one of the Closing the Gap targets adopted by the Council of Australian Governments in the 2008 National Indigenous Reform Agreement.[17] The Closing the Gap Report 2019 reported that this target was on track to be met. In major cities, the proportion of Indigenous people aged 20–24 who had completed Year 12 or an equivalent has increased from 59 per cent in 2006 to 74 per cent in 2016.[18] In remote and very remote areas, the Year 12 attainment rate had increased from 23 per cent in 2006 to 43 per cent in 2016.[19] Nationally, the rate of year 12 attainment by Indigenous people has increased from 47 per cent in 2006 to 65 per cent in 2016. The non-Indigenous Year 12 attainment rate was 89 per cent in 2016, however, the gap between Indigenous and non-Indigenous has reduced from 36 percentage points in 2006 to 24 percentage points in 2016.[20]

In a report published in 2018, the Australian Institute of Health and Welfare (AIHW) examined the key drivers of change underpinning progress in meeting the Closing the Gap targets.[21] The report included data from the National Indigenous and Torres Strait Islander Social Survey on what types of assistance Indigenous secondary school students aged 15–19 reported would help them complete Year 12. Of students from remote areas, 76.1 per cent reported that support from family, friends and school would help while only around 15.0 per cent considered that subsidies or grants to help affordability would assist in completing Year 12.[22] Details on the kind of support from family that would help were not detailed but it is arguable that additional financial support to families would allow them to provide further support to their children.

The AIHW found that prior school achievement, socio-economic status and aspirations to complete school were the key drivers of Year 12 attainment. It also noted that changes in school policy, such as recent changes to state and territory minimum school-leaving ages are likely to have contributed to increased rates of year 12 attainment.[23]

ABSTUDY students attending boarding schools

In 2015, more than 5,700 secondary students received ABSTUDY Away from Home payments with around 75 per cent these students from Queensland, the Northern Territory and Western Australia.[24] Of these students, 5,200 had their ABSTUDY allowances paid directly to a boarding school or residence on their behalf. Around 77 per cent of ABSTUDY Away from Home students were attending non-government schools within their home state or territory.[25]

All students (including non-Indigenous students) aged 16 or over who are required to live away from home for study may be eligible for Youth Allowance.[26] Youth Allowance is paid at a similar rate to the ABSTUDY Living Allowance but does not provide access to the same range of additional supplements as ABSTUDY.[27] The family of a student receiving Youth Allowance would not be eligible for FTB (see ‘FTB child’ section above).

Forrest Review recommendation to provide FTB during school vacations

The issue of further financial assistance for Indigenous secondary school students attending boarding school was raised in the 2014 report, Creating Parity, by businessman Andrew Forrest (Forrest Review). The report recommended the Government provide ‘families with children at boarding schools access to base rate FTB payments during school vacations and ABSTUDY payments for the school term until they finish Year 12 in recognition of the costs parents incur during the vacation periods’.[28]

While this recommendation of the Forrest Review differs from the measure proposed by the Bill, it highlights an issue with the financial resources available to the families of boarding students.

Funding for boarding school students

A 2017 report by the Department of Prime Minister and Cabinet, the Study Away Review, listed the main sources of Australian Government support for Aboriginal and Torres Strait Islander boarding school students as being:

• recurrent school funding—not Indigenous-specific nor boarding-specific, but funding models that include a loading to support Aboriginal and Torres Strait Islander students
• ABSTUDY—for travel, school fees and boarding costs
• Indigenous Advancement Strategy Children and Schooling program—which provides scholarships and education support.[29]

State and territory governments also have schemes to assist students with travel, boarding and education costs. Non-government schools may also provide scholarships, discounted fees or other assistance to Aboriginal and Torres Strait Islander students.

The Study Away Review did not provide a figure on the percentage of government funding for boarding students provided by the Australian Government. The report cited an estimate by KPMG in 2016 that the Australian Government contributed 74 per cent of funding for boarding service delivery in Northern Territory Indigenous boarding schools, with ABSTUDY the primary mechanism for delivering this funding.[30]

The costs of providing boarding accommodation and schooling for Indigenous students, and how these costs are met, has been an ongoing issue for many years.[31] Many schools which provide boarding facilities hold that current funding amounts from government are inadequate, and that the funding models fail to recognise the additional support needs for Aboriginal and Torres Strait Islander children from remote areas. The Study Away Review found that boarding schools incur significant costs:

• addressing and managing remote Aboriginal and Torres Strait Islander students’ ongoing physical and mental health needs
• training staff in trauma informed practices and cultural awareness
• employing extra staff to manage ABSTUDY administration
• employing staff to undertake community outreach activities, and
• providing additional student mentoring and one on one tutoring.[32]

The 2016 report by KPMG for the Northern Territory Government on non-government Indigenous boarding schools found:

... funding provided by the Australian and Northern Territory governments for the provision of boarding facilities in a school-based setting is insufficient to meet the current costs associated with delivery of the current level of service provided by the seven subject schools assessed.[33]

The report found that schools were meeting shortfalls by directing funding intended for academic education towards the costs of operating boarding facilities. That is, using components of boarding students’ ABSTUDY payments intended for schooling costs to subsidise the costs of boarding.[34]

In regards to in-school and accommodation support, the Study Away Review found that ‘funding is not designed to recognise the additional support needs of many remote Aboriginal and Torres Strait Islander students’.[35] The report stated that there was a ‘clear need’ for:

... recognition of the additional costs required both in school and in boarding to effectively support Aboriginal and Torres Strait Islander boarders from remote and very remote regions of Australia and articulation of where funding and policy responsibility for this lies.[36]

The report did not provide any recommendations to change the level or design of ABSTUDY payments for boarders, or to provide access to other payments (such as FTB).

The 2017 report on the Inquiry into Educational Opportunities for Aboriginal and Torres Strait Islander Students by the House of Representatives Standing Committee on Indigenous Affairs found similar issues with funding for boarding schools and a need for a further review of ABSTUDY. The Committee recommended the Government review how ABSTUDY is calculated and administered; review private organisations that provide scholarship programs to Indigenous students to attend independent boarding schools to ensure programs provide value for money, are equitable, and support a wide range of students of varying backgrounds and abilities; require that boarding facilities receiving federal funding (such as ABSTUDY) meet the standards set out in the National Indigenous Boarding Strategy; and increase funding to these facilities, via ABSTUDY, to ensure the standards can be met.[37] The report did not make any recommendations with regards to access to FTB. At the time of writing, the Government had not issued a response to the inquiry.

2018–19 ABSTUDY budget measures

The 2018–19 Budget included a $38.1 million package of changes to provide additional assistance to ABSTUDY secondary student recipients in recognition of the 50th anniversary of ABSTUDY (in 2019).[38] The package included:

• combining the boarding supplement rate with the Living Allowance at the Away from Home rate for all ABSTUDY recipients under 16 years of age—increasing payment rates by around $5,258.60 per year for almost 1,900 students
• implementing new travel arrangements for secondary students receiving Fares Allowance with increased trips and greater flexibility for students travelling to or from locations other than home and school
• providing more frequent payments to boarding providers to support students who move to a new school or boarding arrangement and encourage providers to ensure continued attendance
• streamlining the ABSTUDY approval process for secondary school scholarships
• no longer applying the maintenance (child support) income test to some ABSTUDY awards.[39]

Most of the measures in the package did not require legislation in order to be implemented. The changes relating to the maintenance income test were made via the Social Services Legislation Amendment (Student Reform) Act 2018.[40]

Committee consideration

Senate Community Affairs Legislation Committee

The Bill was referred to the Senate Community Affairs Legislation Committee for inquiry and report by 5 September 2019.[41] Details of the inquiry are at the inquiry homepage.[42]

The Committee recommended the Bill be passed.[43]

The Committee noted the strong support from stakeholders for the intent of the Bill. The Committee also noted some concerns from stakeholders regarding issues with the ABSTUDY system that were not directly related to the Bill—such as families facing difficulties in accessing assistance, and boarding schools concerned that funding did not meet the costs of supporting students.[44]

Senate Standing Committee for the Scrutiny of Bills

At the time of writing the Senate Standing Committee for the Scrutiny of Bills was yet to consider the Bill.

Policy position of non-government parties/independents

Australian Greens and Australian Labor Party senators made joint additional comments to the Senate Community Affairs Committee report. They supported the recommendation that the Bill be passed.[45] The Greens and Labor senators noted issues identified by submitters regarding flaws in the ABSTUDY system. In their additional comments, the senators recommended the Government undertake a wider review into the ABSTUDY scheme.[46]

At the time of writing, other non-government parties and independents had not stated a position on the Bill.

Position of major interest groups

In their joint submission to the Senate Community Affairs Legislation Committee inquiry, the Association of Heads of Independent Schools of Australia and the Australian Boarding Schools Association stated their support for the Bill.[47]

In their submission to the inquiry, the Haileybury Rendall School, an independent school in Darwin with 75 boarders (of which 72 are Indigenous children), stated that the extension of FTB to ABSTUDY secondary school students aged 16 and over who study away from home ‘would be appropriate if a significant portion of this was to come to schools to cover the costs of boarding and the education of students’.[48] The submission stated that boarders aged under 16 whose families were receiving FTB were not contributing any of these payments to the school:

In an environment where Aboriginal and Torres Strait boarding facilities and associated schools are running at significant loss, which has been confirmed by the aforementioned KPMG Report, and is likely to be confirmed by the Grant Thornton Australia report, it seems inappropriate to direct additional funds to the families through FTB when it is unlikely to be used for part of the intended purpose. The purpose being that FTB supports families through assisting with the ongoing costs of their children's daily incidentals while they are away at school.

HRS [Haileybury Rendall School] believes that in the absence of adequate funding for boarding and education of remote Aboriginal and Torres Strait boarders then the limited resources available should be predominantly directed to the schools and boarding facilities supporting and educating the children so that the money is used for its intended purpose. This is likely to have the most positive outcome for Aboriginal and Torres Strait Islander students.[49]

Indigenous Education & Boarding Australia supports the measure stating:

The loss of Family Tax Benefit Part A benefits to Indigenous families when their child turns 16 years old has created an unintended exit point for students to be withdrawn from boarding schools as families cannot afford the loss of household income. This denies many students from remote Australia the opportunity to complete their education.[50]

In their submission to the Senate Committee inquiry into the Bill, the Independent Schools Council of Australia stated that they supported the intent of the Bill ‘as it addresses a significant area of need for Indigenous families and students who seek to further their education by attending boarding school away from their home’.[51] However, the submission also argued that current ABSTUDY funding for boarding students was inadequate.[52]

The Isolated Children’s Parents’ Association of Australia stated their support for the Bill in their submission to the Senate Committee inquiry.[53] The Association encouraged the ‘further expansion of support and assistance made available to all geographically isolated students for whom boarding is the only practical option for face-to-face secondary schooling’.[54]

Financial implications

According to the Explanatory Memorandum, the changes proposed by the Bill will cost $36.4 million over the forward estimates.[55]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[56]

Parliamentary Joint Committee on Human Rights

At the time of writing the Parliamentary Joint Committee on Human Rights was yet to consider the Bill.

Key issues and provisions

Rationale

The Minister for Families and Social Services Anne Ruston stated that providing FTB to recipients of ABSTUDY aged over 16 and attending boarding school would ‘help close the gap in educational attainment’.[57]

Numbers affected

Introducing the Bill, the Minister for Communications, Cyber Safety and the Arts Paul Fletcher stated that the families of more than 2,000 students would benefit from the measure.[58] The Minister stated that, on average, these families would receive an additional $5,911 per year.[59]

Measure removes financial incentive to bring students home from boarding school

The current FTB eligibility criteria arguably create a financial incentive for families to bring their children home from boarding school when they turn 16. While a young person leaving boarding school would no longer be eligible for ABSTUDY allowances, these payments are usually directed towards the boarding school to cover the costs of their accommodation and schooling so the family would not experience the loss of payment.

Generally, FTB-A and FTB-B are not payable in respect of children aged 16 or over if they are not in full-time study in an approved course that would allow them to complete Year 12 or an equivalent level of education.[60] However, an exemption from the full-time study requirement can apply where:

• where there is no locally accessible approved course (including by distance education)
• the child is not qualified to undertake the course
• the individual lacks the capacity to undertake the course because they have a disability or
• special circumstances exist which make it unreasonable to require the child to undertake the course (can include medical, personal or family circumstances).[61]

For young people in remote areas, there may be no locally accessible approved secondary course, which may be why they attend boarding school. In such cases, their families would be able to claim FTB if they return home from boarding school—potentially offering a significant boost to their financial resources.

Minister Fletcher noted that there is a 60 per cent drop in the number of ABSTUDY boarding students between the ages of 15 and 17.[62] While the loss of FTB entitlements for families could be one of the reasons for this drop, it may only be a contributing factor. The Study Away Review noted that many remote Aboriginal and Torres Strait Islander students arrive at boarding school with untreated health issues, undiagnosed disabilities, emotional and behavioural difficulties and lower than average levels of mainstream educational attainment.[63] These non-financial factors can have ongoing effects on students’ education and school engagement. A submission to the Review from an Aboriginal Corporation in remote Queensland noted that the predominant age group affected by boarding school suspensions were aged 13–16.[64] The Review also noted some boarding schools choose to manage difficult behaviour through expulsions or long-term suspensions and that the rate of expulsions for which schools have sought ABSTUDY assistance to return students home has increased steadily since 2011.[65]

Key provisions

Section 22 of the FA Act sets out when an individual is considered an FTB child of another individual, which is a key eligibility criteria for receiving FTB-A and FTB-B (see discussion in ‘Background’ section above).

Section 22A provides for exceptions to the criteria set out in section 22, including the restriction on individuals aged 16 or more who are in receipt of a payment under a prescribed education scheme (such as ABSTUDY) being considered an FTB child. Item 2 of Schedule 1 of the Bill amends this restriction to provide an exception where proposed subsection 22A(2) applies.

Proposed subsection 22A(2) is inserted by item 3 and, in conjunction with item 2, allows for an individual aged 16 or over to be considered an FTB child of another individual where they are receiving payments under the ABSTUDY scheme and the payments are being made on the basis that the individual:

• is undertaking full-time study at a secondary school and
• is a student approved to live away from home under the rules of the ABSTUDY scheme and
• is boarding away from home for the purposes of attending school.

All other students aged 16 and over and in receipt of ABSTUDY (that is, non-boarding school students) will continue to be ineligible to be considered as an FTB child.

Items 4 and 5 make similar amendments to section 35 of the FA Act to provide for those individuals in the care of an approved care organisation who meet the same criteria set out under proposed subsection 22A(2) to be considered an FTB child. An approved care organisation is an organisation approved by the Secretary that coordinates or provides residential care to young people in Australia and which is approved to receive FTB for children in its care.[66]

Items 6 and 7 amend section 28B of the FA Admin Act so that an individual or an approved care organisation does not lose eligibility for FTB in respect of a child that claims ABSTUDY where the child:

• is undertaking full-time study at a secondary school and
• is a student approved to live away from home under the rules of the ABSTUDY scheme and
• is boarding away from home for the purposes of attending school.

Item 8 provides for when the amendments in the Bill will apply. The amendments will apply in relation to working out eligibility for FTB or making a claim for payments under a prescribed educational scheme on or after the commencement of the Bill.