Chapter 1


Chapter 1

Family Assistance and Other Legislation Amendment Bill 2011

The inquiry

1.1        On 2 June 2011 the Family Assistance and Other Legislation Amendment Bill 2011 (the Bill) was referred to the Community Affairs Legislation Committee for inquiry and report by 14 June 2011.

1.2        On 3 June 2011, the committee tabled an interim report stating:

In order to give proper consideration to this bill, the committee has agreed to present this interim report and intends to present the final report on Monday, 20 June 2011.[1]

1.3        The Bill was also referred to the House of Representatives Standing Committee on Social Policy and Legal Affairs on 2 June 2011 for inquiry and report. The House of Representatives committee report was tabled on 14 June 2011.[2]

1.4        In accordance with usual practice, the committee advertised the inquiry on its website and in The Australian. The committee also wrote to relevant organisations and associations inviting submissions. The committee received seven submissions (listed at Appendix 1) and held one public hearing in Canberra on 15 June 2011 (see Appendix 2). 

1.5        The committee notes the short period of time between referral of the Bill to the committee and lodgement of submissions. The committee appreciates the effort required to meet this timeframe, and thanks those organisations and individuals that made contributions to the committee's inquiry. The committee also thanks representatives of departments and agencies who made themselves available to the committee at short notice and out of hours to answer questions.

Overview of the Bill

1.6        On 2 June 2011, the Family Assistance and Other Legislation Amendment Bill 2011 (the Bill) was introduced into Parliament.

Main provisions of the Bill

1.7        The Bill would make various amendments to the A New Tax System (Family Assistance) Act 1999, the Paid Parental Leave Act 2010, the Social Security Act 1991, the Social Security (Administration) Act 1999 and the Aboriginal Land Rights (Northern Territory) Act 1976. 

Age of child for family tax benefit

1.8        The amendments to the A New Tax System (Family Assistance) Act 1999 in schedule 1 of the Bill would lower the maximum child age of eligibility for family tax benefit (FTB) Part A from 24 years old to 21 years old. This change would come into effect on 1 January 2012 and would 'align with the age at which a person becomes independent for the purposes of youth allowance'.[3]

1.9        These amendments are estimated to result in a total saving of $29.2 million over four years to 2014-15.[4]

Indexation

1.10      Other amendments to the A New Tax System (Family Assistance) Act 1999 would make changes to some indexation arrangements for family assistance income thresholds, FTB Part A and Part B supplements, and the paid parental leave (PPL) income limit.

1.11      Indexation would be paused until 1 July 2014 for the higher income free area for FTB Part A, the FTB Part B income limit and the baby bonus income limit.[5] The indexation of FTB Part A and Part B supplements would be paused for three years from 1 July 2011.[6]

1.12      The Paid Parental Leave Act 2010 provides that the income limit for PPL before 1 July 2012 is $150 000 and subject to indexation. The Bill seeks to postpone indexation of the PPL income limit until 1 July 2014.[7]

1.13      The indexation pause for the FTB Part A and Part B supplements is estimated to generate a saving to government of $803.1 million to 2014-2015.[8]

1.14      The indexation pauses for FTB income limits, the baby bonus income limit and the PPL income limit are expected to deliver total savings of approximately $1.19 billion to 2014-15.[9]

Assessing qualification for the disability support pension

1.15      The Bill would introduce changes to the existing future work capacity assessment, to commence on 3 September 2011, whereby people must 'provide evidence that they have tested their future capacity by participating in training or work-related activities' in order to qualify for the disability support pension (DSP).[10]

1.16      The new requirement to have actively participated in a program of support to find employment would not apply to people with a "severe impairment". A severe impairment is defined as an impairment 'of 20 points or more under the Impairment Tables, of which 20 points or more are under a single Impairment Table'.[11]

1.17      The work capacity assessment measure is estimated to generate savings of $622.7 million to 2014-2015.[12]

Extending the Cape York welfare reform trial

1.18      The Bill would extend the Cape York welfare reform trial by a further 12 months to 1 January 2013 by amending the Social Security (Administration) Act 1999.[13]

1.19      The welfare reform trial is a partnership between the communities of Aurukun, Coen, Hope Vale and Mossman Gorge, the Commonwealth Government, the Queensland Government and the Cape York Institute for Policy and Leadership.[14] A key feature of the trial is the management of an indigenous person's income (income management), as a result of a decision by the Family Responsibilities Commission[15] made before 1 January 2012.[16] The Bill would extend this date to enable income management to continue in Cape York for an additional year until 1 January 2013.[17]

1.20      Extension of the Cape York welfare reform trial is expected to have a total cost of $16.2 million to 2013-2014.[18]

Aboriginal Land Trusts

1.21      Schedule 5 of the Bill would amend the Aboriginal Land Rights (Northern Territory) Act 1976 to clarify that the Public Works Committee Act 1966 (the PWC Act) does not apply to Aboriginal Land Trusts.[19]

1.22      To date, Aboriginal Land Trusts have not in practice been considered to be Commonwealth authorities.[20] The Bill seeks to provide a legislative basis for this by clarifying that Aboriginal Land Trusts are not authorities of the Commonwealth Government for the purposes of the PWC Act.[21]

Issues regarding the Bill

1.23      The committee received submissions both in support of and in opposition to the amendments proposed in the Bill.

1.24      Some submitters were supportive of the amendments to pause indexation of the high income thresholds for the FTB, the baby bonus and PPL.[22]

1.25      However, these and other submitters and witnesses raised a number of issues regarding the Bill. These concerns included:

  • The effects of differing residency requirements on age-based eligibility for benefits;
  • The effects on the poorest families of the FTB supplement pauses;
  • the appropriateness of the future capacity for work test for people with a disability, including putting people with a disability on the Newstart allowance rather than the DSP;
  • the definition of a severe impairment and the requirement for a severe impairment to be scored as an impairment of 20 points from a single impairment table;
  • the implementation date of 3 September 2011; and
  • the lack of detail about what constitutes a program of support.

1.26      The committee did not receive any submissions discussing the proposed amendments in schedule 4 that would extend the Cape York welfare reform trial. For this reason, the committee chose not to examine this section of the Bill and does not discuss schedule 4 in this report.

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