Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015

Bills Digest no. 106 2015–16

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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Dale Daniels
Social Policy Section
7 April 2016

 

Contents

Purpose of the Bill
Committee consideration
Policy position of non-government parties/independents
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions

 

Date introduced: 2 December 2015
House:  House of Representatives
Portfolio:  Social Services
Commencement:  Sections 1 to 3 upon Royal Assent; Schedules 1 to 3 and 5 to 9 on the day after Royal Assent; Schedule 4 on the 28th day after Royal Assent.

Purpose of the Bill

The purpose of the Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015 (the Bill) is to amend the Social Security Act 1991 (SS Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (FAA Act) to:

  • prevent people serving an income maintenance period receiving Special Benefit
  • provide for time limits for people who are not required to lodge tax returns to provide information about their adjusted taxable income so that entitlement reconciliation can occur
  • ensure that only one course of education can be taken into account when assessing the full-time study load for Youth Allowance (Student) or Austudy Payment
  • remove the need for an apprentice to have a Commonwealth Registration Number (CRN) to qualify for Youth Allowance or Austudy Payment
  • specify that a person is exempt from the Austudy Payment Assets Test only where their partner currently receives a pension, benefit or allowance or if their partner has at any time received a lump sum compensation payment under the Military Rehabilitation Compensation Act 2004
  • correct minor inconsistencies concerning abbreviations and cross references in provisions dealing with the indexation of Pharmaceutical Allowance (PhA)
  • ensure that only the maximum rate of Newstart Allowance and the Energy Supplement are used when calculating the amount of income that would be sufficient to prevent both members of a one-income couple receiving Newstart Allowance, for the purposes of assessing eligibility for a Health Care Card
  • repeal a delegation provision in the family assistance law which does not allow the Secretary of the Department of Social Services to delegate any of their powers to officers of the Department of Human Services  unless the Secretary of the Human Services Department has agreed and
  •   correct minor incorrect references in paragraph 8(8)(z) of the SS Act and repeal redundant clause 49 of Schedule 1A of the SS Act.

The Bill contains a number of measures which are unrelated to each other. Many of the measures are minor in nature. This Bills Digest discusses in detail only those amendments contained in Schedules 1–3 of the Bill.

Committee consideration

Senate Community Affairs Legislation Committee

The Bill was referred to the Senate Community Affairs Legislation Committee for inquiry and report by 10 March 2016.[1] The report recommended that the Bill should be passed.[2] The ALP and the Greens dissented from the main report.  Both parties recommended that Schedule 1 (Special Benefit) should not be passed.[3] The Greens also recommended that Schedule 3 (Study Load Assessment) should not be passed.[4]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills made no comment about the Bill.[5]

Policy position of non-government parties/independents

In the course of the second reading debate in the House of Representatives, Julie Collins indicated that the ALP would support all the measures in the Bill.[6] However, the ALP members of the Senate Community Affairs Legislation Committee recommended that Schedule 1 (Special benefit) should be omitted from the Bill.

Schedule 1 was also opposed by the Green members of the Committee, who also objected to Schedule 3 (Study Load Assessment).[7]

Financial implications

According to the Explanatory Memorandum to the Bill, ‘there is no financial impact’ from the measures in the Bill.[8]

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.9]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights (Human Rights Committee) made comments about the amendments in Schedule 3 to the Bill.[10] These comments are set out under the heading ‘Key issues and provisions’ below.

Key issues and provisions

Schedule 1—Special Benefit and Income Maintenance Periods

Background

Special Benefit is a safety net payment for people who cannot access another income support payment and are in severe financial hardship due to circumstances outside their control.[11]

An income maintenance period (IMP) is a period of time during which an income support payment is not payable to a claimant who has received sick leave, annual leave or a redundancy payment from a former employer when that job ended.[12] During the IMP the claimant is expected to maintain him or herself from those funds. There are hardship provisions so that IMPs can be reduced or waived where hardship results from unavoidable or reasonable expenditure.

Centrelink does not generally pay Special Benefit to a person who is serving an IMP and is in financial hardship. However there have been cases where the Administrative Appeals Tribunal has found that Special Benefit can be paid.[13] Schedule 1 makes amendments to prevent the payment of Special Benefit to people serving an IMP.

The National Welfare Rights Network has advocated for reform of the hardship provisions for people serving IMPs for some years because it has encountered cases where severe hardship has not been adequately handled by the application of the IMP hardship provisions. The Network feels that the hardship provisions are too restrictive and that people serving long IMPs often experience hardship because they are not made aware at the time that they cease employment that they must serve an IMP before receiving income support payments.

The Network’s submission to the Senate Community Affairs Legislation Committee states:

The current provisions for waiving or reducing an IMP are insufficient as they are inflexible and consider only the expenditure of the funds and do not consider the overall circumstances of the person.

Problems with the design of IMPs has resulted in a poverty trap. The poverty that ensues is absolute. While other reforms to IMP rules and administration are called for, removal of access to special benefit in the absence of other reform would be a grave mistake.[14]

Jobs Australia supported the submission by the National Welfare Rights Network adding:

Our understanding is that Special Benefit is a Social Security safety-net for citizens at risk of absolute penury. As such if a citizen has failed to realise the impact of the Income Management [sic] Period on their future social security entitlements, they would not have had sufficient warning to know how to manage this event.[15]

People with Disability (PWDA) also expressed concern at the measure.

PWDA believes that the proposed changes to eligibility for special benefit in this legislation remove the discretionary nature of the payment in regard to income maintenance periods, potentially leading to hardship and poverty. This will disproportionately impact on people with disability.[16]

The Commonwealth Ombudsman has also published a report into the policy followed by Centrelink with regard to Special Benefit and Income Maintenance Periods.[17] This report:

… makes three recommendations. The first recommends that DSS amend the policy instruction for IMP reduction so that it takes account of each person’s circumstances including the portion of the termination payment that was spent on non-permitted items in relation to the actual size of the payment and the length of the IMP. The second recommends that DSS amend its instruction about the grant of Special Benefit during an IMP so that DHS is permitted to properly consider, and, where appropriate, grant claims in that situation. The third recommends that DSS do what it can to raise community awareness of the impact of employment termination upon income support non-payment and waiting periods.

All three of these recommendations were accepted by DSS and changes were made to the Guide to Social Security Law on 8 February 2016. However, those changes were not satisfactory and Part 5 of this report concludes that more should be done to properly implement the recommendations.[18]

Provisions

Item 1 of Schedule 1 to the Bill inserts proposed section 734A into the SS Act to explicitly state that Special Benefit is not payable while a person is serving an IMP.[19] This change removes the existing option for the granting of Special Benefit when the initial decision is made or when that decision is appealed. In practise that has only infrequently occurred and only on appeal to the AAT. The amendment does not change the long standing government policy on this matter.

Schedule 2—Family Tax Benefit

Background

Families claiming Family Tax Benefit Part A (FTBA) and Family Tax Benefit Part B (FTBB) by fortnightly instalments are required, after the end of each financial year to reconcile their actual income for the year with the estimated income that formed the basis of the rate of payment that they received.[20] This is done once their income tax return has been lodged and assessed. If they were paid too little, or too much, an adjustment is made. To minimise the number of families who might be overpaid Family Tax Benefit (FTB), supplements are payable after the completion of the reconciliation process. Most overpayments are able to be recovered by reducing the amount of the supplement paid to a family.

Where a family is not required to submit an income tax assessment because their income is below the tax-free threshold they need to notify Centrelink of their actual income so that the reconciliation process can proceed.[21] In some cases Centrelink has sufficient information to do the reconciliation without receiving further information from the family.

Schedule 2 of the Bill amends the FAA Act to address a problem related to time limits for families to provide income information to Centrelink. At present time limits are in place for families to lodge income tax returns but not for income notifications from families who are not required to lodge an income tax return for the relevant financial year. Schedule 2 contains amendments to apply the same time limits to families in both situations.

The National Welfare Rights Network (NWRN) supports this amendment but recommends that administrative procedures be improved to ensure that families are fully aware of what they need to do to ensure that reconciliation can occur within the time limits and the FTB supplements can be paid. The Network’s concern is that, at present, it is unclear to many families who receive income support payments (for example Newstart Allowance or Parenting Payment) as well as FTB that they need to provide additional information when Centrelink already has income information about them as a result of the income testing of their income support payments.[22]

Provisions

Item 2 of Schedule 2 to the Bill inserts proposed subsection 14A(3A) into the FAA Act so that a person who is not required to lodge a tax return for a past period income year must notify Centrelink of the amount of their adjusted taxable income by the end of the first income year after the past period income year or a later time if the Secretary is satisfied that there are special circumstances that prevented the person from making that notification before the end of that first income year.[23]

Items 4, 7 and 10 of Schedule 2 to the Bill repeal and replace paragraph (a) of subsections 32J(2), 32M(2) and 32N(2) of the FAA Act in equivalent terms to provide time limits within which people who are not required to lodge tax returns must notify Centrelink of the amount of their adjusted taxable income where they have received FTB by instalments, so that reconciliation can occur.

Schedule 3—study requirements

Currently sections 541B and 569A of the SS Act set out the criteria to be satisfied for a person to be considered to be undertaking full-time study for the purposes of Youth Allowance or Austudy respectively. This is based on the enrolment load in a given study period. The Bill introduces an additional requirement that the full-time enrolment load must be from one course of education only.

The National Union of Students (NUS) submitted to the Senate Community Affairs Legislation Committee that this would seem ‘to restrict student choice and undermine the rhetoric of student centred learning that has dominated higher education policy considerations over the last decade’.[24]

The lack of flexibility that the amendments will impose on students is of particular concern in the context of labour market forecasts which predict ‘both the rapid obsolescence and the creation of new types of jobs’.[25] According to the NUS, ‘some students may need maximum flexibility to be able to mix and match courses to meet the unmet needs of emerging and yet to emerge industries’.[26]

Human Rights Committee

The Human Rights Committee also commented on the amendments in Schedule 3 noting:

The amendments will affect certain individuals’ access to a social security payment which they are currently receiving and as such the measure engages the right to social security. The receipt of social security is an important resource to enable students to complete their education and, accordingly, the measure also engages the right to education.[27]

The Human Rights Committee assessed the requirements for Youth Allowance (student) or Austudy against articles 9 and 13 of the International Covenant on Economic, Social and Cultural Rights (right to social security and the right to education).[28] As the Human Rights Committee considered that the amendments in Schedule 3 to the Bill raise questions about whether preventing multiple courses from being aggregated to enable eligibility for Youth Allowance (student) and Austudy is a justifiable limitation on the right to social security and the right to education it has written to the Minister for Social Services seeking further advice.

Provisions

Items 2 and 4 of Schedule 3 to the Bill insert proposed sections 541C and 569AA respectively into the SS Act to provide that the full-time enrolment load for recipients of Youth Allowance and Austudy must be from one course of education only.

Schedules 4 to 9—housekeeping

These schedules ‘correct technical errors and clarify intended policy by removing minor ambiguities and anomalies’.[29] Further information on these amendments is set out in the Explanatory Memorandum to the Bill.[30]

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

 


[1].         Details of the terms of reference, submissions to the Committee and the final report (when published) are available on the inquiry homepage.

[2].         Senate Community Affairs Legislation Committee, Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015 [Provisions], The Senate, Canberra, 2016, p. ix.

[3].         Ibid., pp. 14 and 17.

[4].         Ibid., p. 18.

[5].         Senate Standing Committee for the Scrutiny of Bills, Alert digest, 1, 2016, Senate, Canberra, 3 February 2016, p. 41.

[6].         J Collins, ‘Second reading speech: Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015’, House of Representatives, Debates, 10 February 2016, p. 1293.

[7].         Senate Community Affairs Legislation Committee, Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015 [Provisions], op. cit., pp. 14­–15.

[8].         Explanatory Memorandum, Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015, p. 2.

[9].         The Statement of Compatibility with Human Rights can be found after page 26 of the Explanatory Memorandum to the Bill.

[10].      Parliamentary Joint Committee on Human Rights, Thirty-third report of the 44th Parliament, 2 February 2016, pp. 13–16.

[11].      Department of Social Services (DSS), ‘Special benefit’, DSS website, last updated 7 November 2014.

[12].      Department of Human Services (DHS), ‘Income maintenance period’, DHS website, 18 February 2016.

[13].      National Welfare Rights Network, Submission to Senate Standing Committee on Community Affairs, Inquiry into the Social Services Legislation (Miscellaneous Measures) Bill 2015, March 2016, p. 8.

[14].      National Welfare Rights Network, Submission to Senate Community Affairs Legislation Committee, Inquiry into Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015, March 2016.

[15].      Jobs Australia, Submission to Senate Community Affairs Legislation Committee, Inquiry into Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015, 2 March 2016.

[16].      People with Disability Australia, Submission to Senate Community Affairs Legislation Committee, Inquiry into Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015, 2 March 2016, p. 1.

[17].      C Neave,  Income Maintenance Periods and Special Benefit, Report, 02/2016, Commonwealth Ombudsman, March 2016.

[18].      Ibid., p. 2.

[20].      Department of Social Services (DSS), ‘Family tax benefit’, DSS website, last updated 13 January 2016.

[21].      Department of Human Services (DHS), ‘Do you need to lodge a tax return?’, DHS website, last updated 4 April 2016.

[22].      National Welfare Rights Network, Submission to Senate Community Affairs Legislation Committee, Inquiry into Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015, op. cit.

[24].      National Union of Students, Submission to Senate Community Affairs Legislation Committee, Inquiry into Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015, March 2016.

[25].      Ibid.

[26].      Ibid.

[27].      Parliamentary Joint Committee on Human Rights, Thirty-third report of the 44th Parliament, op. cit., p. 13.

[28].      International Covenant on Economic, Social and Cultural Rights, done in New York on 16 December 1966, [1976] ATS 5 (entered into force for Australia on 10 March 1976).

[29].      Explanatory Memorandum, Social Services Legislation Amendment (Miscellaneous Measures) Bill 2015, p. 1.

[30].      Ibid.

 

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