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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SECURITY AND FAMILY ASSISTANCE LEGISLATION AMENDMENT (2009 BUDGET
MEASURES) BILL 2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Families, Housing, Community Services and Indigenous Affairs,
the Hon Jenny Macklin MP)
SOCIAL SECURITY AND FAMILY ASSISTANCE LEGISLATION AMENDMENT (2009 BUDGET
MEASURES) BILL 2009
OUTLINE
This bill gives effect to a number of measures announced as part of the
2009 Budget.
Carer supplement
A new ongoing payment, carer supplement, will be introduced into the social
security law.
A person will be qualified for carer supplement if the carer is qualified
for and receives an instalment of a qualifying payment. The qualifying
payments are carer allowance, carer payment and Department of Veterans'
Affairs carer service pension. A person who receives wife pension or
Department of Veterans' Affairs partner service pension as well as
carer allowance will also be eligible for carer supplement.
Around 500,000 carers are expected to benefit each year.
In 2009, carer supplement will be paid to people who received a qualifying
payment for the period including 12 May 2009.
From 1 July 2010, carer supplement will be paid to people who receive a
qualifying payment for a period which includes the test day (1 July) each
year.
The amount of carer supplement payable in relation to a single qualifying
instalment will be $600. A person can be eligible for more than one amount
of $600 as part of their carer supplement.
Carer supplement will not be indexed.
Indexation
Amendments are made to the indexation arrangements for certain family
assistance income threshold amounts so that these amounts are not indexed
on 1 July of 2009, 2010 and 2011. The relevant income threshold amounts
are the higher income free area for family tax benefit (FTB) Part A (both
the basic amount and the additional amount for each FTB child after the
first), the FTB Part B income limit and the baby bonus income limit.
Indexation will again occur in accordance with the usual rules on 1 July
2012.
Financial impact statement
Carer supplement
|Financial impact | |Total resourcing |
| | |- all portfolios |
| |2008-09 |$384.8 m |
| |2009-10 |$7.6 m |
| |2010-11 |$445.8 m |
| |2011-12 |$469.4 m |
Indexation
|Financial impact | |Total resourcing |
| | |- all portfolios |
| |2008-09 |$0.6 m |
| |2009-10 |- $209.6 m |
| |2010-11 |- $291.0 m |
| |2011-12 |- $432.1 m |
SOCIAL SECURITY AND FAMILY ASSISTANCE LEGISLATION AMENDMENT (2009 BUDGET
MEASURES) BILL 2009
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, as the Social
Security and Family Assistance Legislation Amendment (2009 Budget Measures)
Act 2009.
Clause 2 provides a table that sets out the commencement dates of the
various sections in, and Schedules to, the Act.
Clause 3 provides that each Act that is specified in a Schedule is amended
or repealed as set out in that Schedule.
This explanatory memorandum uses the following abbreviations:
. 'Family Assistance Act' means the A New Tax System (Family Assistance)
Act 1999;
. 'FTB' means family tax benefit;
. 'Social Security Act' means the Social Security Act 1991;
. 'Social Security Administration Act' means the Social Security
(Administration) Act 1999; and
. 'Veterans Entitlements Act' means the Veterans' Entitlements Act 1986.
Schedule 1 - Carer supplement
Summary
A new ongoing payment, carer supplement, will be introduced into the social
security law.
A person will be qualified for carer supplement if the carer is qualified
for and receives an instalment of a qualifying payment. The qualifying
payments are carer allowance, carer payment and Department of Veterans'
Affairs carer service pension. A person who receives wife pension or
Department of Veterans' Affairs partner service pension as well as
carer allowance will also be eligible for carer supplement.
Around 500,000 carers are expected to benefit each year.
In 2009, carer supplement will be paid to people who received a qualifying
payment for the period including 12 May 2009.
From 1 July 2010, carer supplement will be paid to people who receive a
qualifying payment for a period which includes the test day (1 July) each
year.
The amount of carer supplement payable in relation to a single qualifying
instalment will be $600. A person can be qualified for more than one
amount of $600 as part of their carer supplement.
For example, a person may be qualified for and receive an instalment of
both carer allowance and wife pension during a period which includes the
test day. The person will receive carer supplement both in respect of
carer allowance, and in respect of wife pension and carer allowance, giving
a total of $1,200. A person may receive an amount of $600 in respect of
each care receiver for whom the carer receives carer allowance. For
example, if a person receives carer allowance in respect of three children
as well as carer payment, then the person will receive a total of $2,400 in
carer supplement. However, a person will only receive one payment of $600
in relation to their receipt of carer payment.
Carer supplement will not be indexed.
Background
Since 2004, ad hoc bonus provisions have been introduced each year to
provide one-off assistance to carers. However, this assistance has not
been ongoing.
The Government examined ways to provide greater security to carers and, as
a result, has introduced the carer supplement as an ongoing supplement to
alleviate some of the financial pressures on carers.
The carer supplement is part of the secure and sustainable Pension Reform
package announced as part of the 2009-10 Budget.
Explanation of changes
Part 1 - Main amendments
Amendments of the Social Security Act
Item 1 inserts a definition of carer supplement into subsection 23(1) and
provides that it means carer supplement under Part 2.19B.
Item 2 inserts a new Part 2.19B after Part 2.19A.
New section 992X sets out how a person's qualification for carer supplement
is determined in 2009 and later years. Subsection (1) provides that the
test day for determining a person's eligibility is 12 May 2009, and then 1
July in each year from 2010. A note clarifies that there may be more than
one qualifying instalment for a person. Subsection (2) sets out how the
amount of carer supplement payable to a person is determined. For
recipients of carer allowance, a person receives an amount of carer
supplement for each eligible care receiver (a term which is defined in
subsections (4) and (5)). Recipients of carer allowance who also receive
wife pension or partner service pension (qualification for which is
determined under the Veterans' Entitlement Act) will receive a further
amount of carer supplement. Recipients of carer payment or carer service
pension (which is defined in subsection (6)), will receive one amount of
carer supplement.
Subsection (5) provides that, if the person was eligible for carer
allowance under subsection 953(2) in relation to two disabled children, the
two children are to be treated as a single eligible care receiver, with the
result that the person caring for them is only qualified for a single
amount of carer supplement. Subsection 953(2) deals with entitlement to
carer allowance in relation to two children, where neither child alone has
a score on the Child Disability Assessment Tool to entitle his or her carer
to carer allowance, but the children's total score under the Child
Disability Assessment Tool means that the person is qualified for one
payment of carer allowance.
It is intended that a person may be qualified for more than one amount of
carer supplement.
Subsection 981(1) provides that the Secretary may determine that two people
are each qualified for carer allowance for a particular care receiver or
care receivers, and specify the share of the carer allowance for the care
receiver or care receivers that each of the two people is to receive.
Paragraph 992X(3)(b) provides that carer supplement is to be split in the
same way as a determination made under subsection 981(1), if any, splitting
carer allowance. Only carer allowance may be split; this provision does
not affect carer payment, wife pension, carer service pension or
partner service pension.
Item 3 inserts an item into the table in subsection 1222(2) about the new
debt provisions inserted by item 4. Section 1222 provides an outline of
how debts are dealt with.
Item 4 inserts new sections after section 1223ABB. The new sections deal
with debts in relation to carer supplement.
New section 1223ABC deals with when debts arise in relation to payments of
carer supplement made in respect of 12 May 2009. Consistently with bonuses
paid in previous years, section 1223ABC provides that a payment of carer
supplement will only become a debt if there is evidence that the person
made a false or misleading statement or knowingly provided false
information. Because a person will not actually claim carer supplement,
the false or misleading statement or provision of false information will
relate to the person's carer allowance, carer payment, wife pension, carer
service pension or partner service pension. The false or misleading
statement or knowingly false information must be one of the reasons why a
determination is made revoking, setting aside or superseding the earlier
determination.
For example, a person provides information which indicates that the person
should be qualified for carer payment, and that carer payment should be
payable to the person, and the Secretary makes a determination to that
effect. However, later investigations reveal that the person knowingly
provided false information about his or her income, such that carer payment
should not have been payable to the person. The Secretary makes a
determination cancelling the person's carer payment from a particular date
prior to 12 May 2009. The person's carer supplement paid in respect of 12
May 2009 would become a debt (see subsection 1223ABC(2)).
In another example, the person received carer payment, but was also
qualified for and received carer allowance, and therefore received $1,200
in carer supplement. The person knowingly provided false information about
his or her carer payment, but the false information only affected his or
her carer payment and not carer allowance. Therefore $600 (the part of
carer supplement related to carer payment) of the total carer supplement
payment of $1,200 would become a debt (see subsection 1223ABC(3)).
Subsection 1223ABC(4) provides that the total debt in relation to carer
supplement cannot exceed the amount of carer supplement paid to the person.
Subsection 1223ABC(5) provides that normal debt arrangements do not apply,
except for a debt which arises when a person other than the intended
recipient receives a cheque for a social security payment, and manages to
obtain value from that cheque.
New section 1223ABD deals with debts in respect of carer supplement for
2010 and later years. Because carer supplement will be an ongoing payment,
and eligibility will be tested each 1 July from 2010, the debt arrangements
are consistent with treatment of other debts under the social security law.
Section 1223ABD applies when a person's instalment of carer allowance,
carer payment or carer service pension (or a person's instalment of
wife pension or partner service pension which affects the amount of
carer supplement paid) has become a debt (called the primary debt).
Subsection 1223ABD(2) provides that, if the carer supplement, or a part of
it, would not have been paid if the circumstances which gave rise to the
primary debt had not existed, then the carer supplement, or part of it, is
also a debt due to the Commonwealth. For example, a person received carer
payment and two amounts of carer allowance, and thus received $1,800 as
carer supplement. However, it was later shown that the person was only
qualified for one amount of carer allowance, and one payment of carer
allowance became a debt. In that situation, $600 of the carer supplement
would also become a debt.
Subsection (3) provides that, if the carer supplement debt arose as a
result of failure to take a splitting determination in relation to carer
allowance under subsection 981(1) into consideration, the amount of carer
supplement a person would not have received had the splitting determination
been taken into consideration becomes a debt.
Subsection (4) provides that debts which arise under section 1223ABD,
whether under subsection (2) or (3), may be consolidated, but any
carer supplement debt will not be greater than the amount of
carer supplement originally paid to the person.
A reduction in the amount of a qualifying payment paid to a person will not
result in carer supplement becoming a debt. So long as the person received
an amount of a qualifying payment during a period which includes the test
day, the person is qualified for carer supplement.
Amendments of the Social Security Administration Act
Item 5 inserts section 12G, which provides that a claim is not required for
carer supplement.
Item 6 inserts reference to carer supplement into subsection 47(1), which
sets out the definition of lump sum benefit. The inclusion of carer
supplement in the definition of lump sum benefit will mean that carer
supplement can be paid to a person's payment nominee, if a payment nominee
has been appointed.
Item 7 inserts new section 47AB, which provides that, if a person is
qualified for carer supplement for a year, the Secretary must pay the carer
supplement in a lump sum to the person on the earliest practicable date or
dates and in the manner the Secretary considers appropriate.
Carer supplement will be a payment that may be subject to income
management. Carer supplement will be treated in the same way as child
disability assistance for the purposes of income management relating to
child protection, school enrolment and attendance and the Queensland
Commission. As the new carer supplement is an annual lump sum payment, 100
per cent of the payment would be subject to income management under the
rules relating to the Northern Territory, consistent with the treatment of
annual family tax benefit lump sums and social security advances.
This effect is achieved by items 8 to 12, which insert references to carer
supplement into the definitions of category C welfare payment,
category G welfare payment, category I welfare payment, category Q welfare
payment and category S welfare payment in section 123TC of the Social
Security Administration Act.
Part 2 - Related amendments
Amendments of the Income Tax Assessment Act 1997
Carer supplement will be exempt from income tax. Items 14 and 15 make
amendments to section 52-10 of the Income Tax Assessment Act 1997 to
achieve this effect.
Item 13 makes a consequential amendment to the table in section 11-15 to
add a reference to carer supplement.
Schedule 2 - Indexation
Summary
Amendments are made to the indexation arrangements for certain family
assistance income threshold amounts so that these amounts are not indexed
on 1 July of 2009, 2010 and 2011. The relevant income threshold amounts
are the higher income free area for FTB Part A (both the basic amount and
the additional amount for each FTB child after the first), the FTB Part B
income limit and the baby bonus income limit. Indexation will again occur
in accordance with the usual rules on 1 July 2012.
Background
Higher income free area
Clause 1 of Schedule 1 to the Family Assistance Act outlines the overall
rate calculation process for FTB. There are three different rate
calculation processes for FTB Part A, depending on the individual's
circumstances and their family income (whether or not the individual's
adjusted taxable income exceeds the individual's higher income free area).
The concept of a higher income free area is then defined in clause 2 of
Schedule 1. An individual's higher income free area is the basic amount
($94,316) plus an additional amount ($3,796) for each FTB child of the
individual after the first.
The amounts that may comprise an individual's higher income free area are
indexed annually on 1 July of each year in accordance with movements in the
Consumer Price Index (CPI). The relevant indexation provisions are items
11 and 12 in the table in clause 2 of Schedule 4 to the Family Assistance
Act (which identify the amounts and provide abbreviations for them) and
Part 2 of Schedule 4, including items 11 and 12 in the table in
subclause 3(1), which provide for CPI indexation of these amounts.
The indexation arrangements for the amounts that comprise the higher income
free area are amended so that these amounts are not indexed on 1 July of
2009, 2010 and 2011.
FTB Part B income limit
Under clause 28B of Schedule 1 to the Family Assistance Act, an
individual's FTB Part B rate is nil if the adjusted taxable income of the
primary earner is more than $150,000. This rule does not apply if the
individual or their partner is receiving a social security pension or
benefit or a veterans' service pension or income support supplement.
This income limit of $150,000 for FTB Part B is indexed in accordance with
the CPI on 1 July of each year. The relevant indexation provisions are
item 17AA in the table in clause 2 of Schedule 4 to the Family Assistance
Act (which identifies this amount and provides an appropriate abbreviation)
and Part 2 of Schedule 4, including item 17AA in the table in subclause
3(1), which provides for CPI indexation of the amount.
The indexation arrangements for the FTB Part B income limit are amended so
that this amount is not indexed on 1 July of 2009, 2010 and 2011.
Baby bonus income limit
The eligibility requirements for baby bonus are set out in section 36 of
the Family Assistance Act. For each of the different categories of
eligibility, there is a requirement that the individual provide, in their
claim for baby bonus, an estimate of adjusted taxable income for the
individual and their partner (if any) for the relevant six month period,
that the estimate be less than or equal to $75,000 and be an estimate that
the Secretary considers to be reasonable.
This income limit of $75,000 for baby bonus is indexed in accordance with
the CPI on 1 July of each year. The relevant indexation provisions are
item 17AAA in the table in clause 2 of Schedule 4 to the Family Assistance
Act (which identifies this amount and provides an appropriate abbreviation)
and Part 2 of Schedule 4, including item 17AAA in the table in subclause
3(1), which provides for CPI indexation of the amount.
The indexation arrangements for the baby bonus income limit are amended so
that this amount is not indexed on 1 July of 2009, 2010 and 2011.
Explanation of the changes
Item 1 inserts a new subclause 3(7) into Schedule 4 to the Family
Assistance Act. This new provision prevents indexation of specified
amounts from occurring on 1 July of 2009, 2010 and 2011.
The specified amounts are:
. FTB basic HIFA (A) - which is the basic higher income free area amount;
. FTB additional HIFA (A) - which is the additional amount of the higher
income free area for each FTB child of the individual after the first;
. FTB income limit (B) - which is the FTB Part B income limit; and
. baby bonus income limit.
The existing indexation rules will again apply on 1 July 2012 to ensure
that these amounts are CPI indexed on that date and on each 1 July
thereafter.
This change commences on 30 June 2009.