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2008-2009-2010
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SECURITY AND INDIGENOUS LEGISLATION AMENDMENT
(BUDGET AND OTHER MEASURES) BILL 2010
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 INDIGENOUS LEGISLATION AMENDMENT
(BUDGET AND OTHER MEASURES) BILL 2010
OUTLINE
The bill contains one Budget measure, and two non-Budget measures, as
described below.
Carer allowance
The qualification criteria and assessment process for carer allowance for
care provided to a child or children with disability will be amended to
provide a fairer and more equitable process for determining a person's
qualification, based on the level of care required and the level of care
provided, rather than the functional assessment criteria used currently.
From 1 July 2010, there will be one assessment tool used for both carer
payment and carer allowance paid to a person caring for a child aged under
16. A further amendment provides that a person may, in some circumstances,
remain qualified for carer allowance paid in respect of a child for three
months after that child has turned 16.
Income management regime
This bill makes some minor improvements to the income management provisions
in the social security law, on administrative matters such as
appropriation, debt recovery and financial transactions.
Aboriginal and Torres Strait Islander Land Account
Amendments are made by this bill to ensure a reliable income stream for the
Indigenous Land Corporation by providing for a minimum guaranteed annual
payment of $45 million from 1 July 2010, which will be indexed for later
years according to the Consumer Price Index. The bill also provides for
additional payments to be made to the Indigenous Land Corporation where the
actual capital value of the Aboriginal and Torres Strait Islander Land
Account exceeds the real capital value of the account. The amount to be
paid is the excess above the real capital value. An independent review of
the effectiveness of the funding arrangements after three years is also
introduced.
Financial impact statement
Carer allowance
The carer allowance amendments in this bill are part of a 2008 Budget
measure of which the legislative component has financial impact as set out
below. Other legislative components were enacted in the Social Security
Legislation Amendment (Improved Support for Carers) Act 2009 and the Social
Security Legislation Amendment (Improved Support for Carers) (Consequential
and Transitional) Act 2009.
Total resourcing (all portfolios) - includes 2008 Budget measures
previously enacted
|2008-09 |2009-10 |2010-11 |2011-12 |
|$15.5 m |$72.8 m |$89.9 m |$93.3 m |
Income management regime
The income management amendments have nil or negligible financial impact.
Aboriginal and Torres Strait Islander Land Account
The amendments relating to the Aboriginal and Torres Strait Islander Land
Account have nil financial impact.
SOCIAL SECURITY AND INDIGENOUS LEGISLATION AMENDMENT
(BUDGET AND OTHER MEASURES) BILL 2010
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, as the Social
Security and Indigenous Legislation Amendment (Budget and Other Measures)
Act 2010.
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:
. 'Social Security Act' means the Social Security Act 1991; and
. 'Social Security Administration Act' means the Social Security
(Administration) Act 1999.
Schedule 1 - Carer allowance
Summary
This Schedule completes the Government's response to the Report of the
Carer Payment (child) Review Taskforce, Carer Payment (child): A New
Approach, and gives effect to a number of measures aimed at improving
assistance to carers from 1 July 2010.
The qualification criteria and assessment process for carer allowance for
care provided to a child or children with disability will be amended to
provide a fairer and more equitable process for determining a person's
qualification, based on the level of care required and the level of care
provided, rather than the functional assessment criteria used currently.
Specifically, this Schedule replaces the Child Disability Assessment Tool
(CDAT), which is presently used in the assessment process to determine a
person's qualification for carer allowance paid in respect of a child, with
the Disability Care Load Assessment (Child) Determination 2009. From
1 July 2010, there will be one assessment tool used for both carer payment
and carer allowance paid to a person caring for a child aged under 16.
Further, this Schedule provides that a person may remain qualified for
carer allowance paid in respect of a child for three months after that
child has turned 16.
Background
Part 2.19 of the Social Security Act sets out the qualification criteria to
be met in order for a person to qualify for carer allowance paid in respect
of a person under the age of 16 years (a child), or in respect of a
combination of care receivers (children) under the age of 16 years.
Presently, paragraph 953(1)(c) of the Social Security Act provides for
qualification on the basis that either the care receiver is suffering from
a disability declared under subsection 38D(3) of the Social Security Act to
be a recognised disability (a disability set out in the List of Recognised
Disabilities presently to be found as a Schedule to the Child Disability
Assessment Determination 2001), or the care receiver is assessed and rated
under the CDAT.
The amendments in this Schedule provide that the CDAT will be repealed.
However, the amendments retain the List of Recognised Disabilities, which
will be inserted into the Disability Care Load Assessment (Child)
Determination. The amendments simplify the assessment process for a person
where the care receiver's disability is not set out in the List of
Recognised Disabilities in that the Disability Care Load Assessment (Child)
Determination (presently used for carer payment paid in respect of a child)
will now also be used for qualification purposes for carer allowance paid
in respect of a child.
Further, the amendments provide that a person may remain qualified for
carer allowance up to three months after the child turns 16. There is
presently a similar provision which applies to a person in receipt of carer
payment.
The amendments made by this Schedule commence on 1 July 2010.
Explanation of the changes
Amendments to the Social Security Act
Item 1 repeals section 38D because the CDAT will cease to be used as an
assessment tool for carer allowance in respect of a child from 1 July 2010.
Item 2 inserts a new subsection (3) into section 38E. The amendment
preserves the List of Recognised Disabilities.
Item 3 omits the reference to the Child Disability Assessment Tool in
section 38F.
Item 4 repeals the definition of the Child Disability Assessment Tool in
section 952.
Item 5 inserts a definition of Disability Care Load Assessment (Child)
Determination into section 952. For the purposes of Part 2.19 of the
Social Security Act, the Disability Care Load Assessment (Child)
Determination has the meaning given in subsection 38E(1). To avoid doubt,
the Disability Care Load Assessment (Child) Determination referred to in
subsection 38E(1) is the same Determination referred to in existing
subsection 38E(2).
Item 6 repeals paragraph 953(1)(c) as it refers to qualification under the
CDAT.
Item 7 inserts after paragraph 953(1)(d) a new qualification criterion for
carer allowance in respect of a single child.
New subparagraph 953(1)(e)(i) provides that, if the disability from which
the child is suffering is declared on the List of Recognised Disabilities,
then the person claiming carer allowance will satisfy new paragraph
953(1)(e).
New subparagraph 953(1)(e)(ii) provides that, if a person claiming carer
allowance in respect of a child has been given the qualifying rating of
intense under the Disability Care Load Assessment (Child) Determination,
then that person will satisfy new paragraph 953(1)(e). To avoid doubt, if
a child is suffering from a disability on the List of Recognised
Disabilities, the person does not need to complete the Disability Care Load
Assessment (Child).
Therefore, to qualify for carer allowance paid in respect of a single child
under subsection 953(1), a person, either by themselves or together with
another person, must be providing daily care and attention in the private
home that is the residence of the person and the care receiver, and the
care receiver is a disabled child (see section 952), an Australian resident
and a dependent child of the person, and:
. the disability from which the carer receiver is suffering appears
in the List of Recognised Disabilities; or
. the carer has been assessed and been given a qualifying rating of
intense under the Disability Care Load Assessment (Child)
Determination for the care provided to the child.
Example - Qualification under subparagraph 953(1)(e)(i) - the List of
Recognised Disabilities
Juanita applies for carer allowance for her son, Mario. Mario suffers
from Duchenne's muscular dystrophy. Mario's condition is on the List
of Recognised Disabilities. As long as Juanita meets the other
qualification criteria for Mario, that is, Juanita is an Australian
resident and she is providing daily care and attention, and Mario is a
dependent child under the Social Security Act, Juanita is qualified
for carer allowance.
Example - Qualification under subparagraph 953(1)(e)(ii) - the
Disability Care Load Assessment (Child) Determination
Min Xi applies for carer allowance for her daughter, Lin. Lin suffers
from chronic fatigue syndrome. Lin's condition is not listed on the
List of Recognised Disabilities. In order for Min Xi to qualify for
carer allowance, she will need to be assessed and given a qualifying
rating of intense under the Disability Care Load Assessment (Child)
Determination. As long as Min Xi meets the other qualification
criteria for carer allowance, that is, Min Xi is an Australian
resident and she is providing daily care and attention to Lin, and Lin
is a dependent child under the Social Security Act, and Min Xi
receives a qualifying rating of intense under the Disability Care Load
Assessment (Child) Determination, she is qualified for carer
allowance.
Item 8 repeals paragraphs 953(2)(c) and 953(2)(ca).
Item 9 inserts a new qualification criterion for carer allowance in respect
of care for two disabled children.
New paragraph 953(2)(e) provides that, if a person claiming carer allowance
in respect of two disabled children has been given a qualifying rating of
intense under the Disability Care Load Assessment (Child) Determination,
then that person will satisfy new paragraph 953(2)(e).
Therefore, to qualify for carer allowance paid in respect of two disabled
children under subsection 953(2), a person, either by themselves or
together with another person, must be providing daily care and attention in
the private house that is the residence of the person and the care
receivers, and the care receivers are disabled children (see section 952),
Australian residents and are the dependent children of the person, and the
carer has been assessed and been given a qualifying rating of intense under
the Disability Care Load Assessment (Child) Determination for the care
provided to the two children.
Example - Qualification under paragraph 953(2)(e)
On 8 August 2010, Julie lodges a claim for carer allowance in respect
of Anthony and Malcolm. Both Anthony and Malcolm are dependent
children and Australian residents. Julie will be caring for both in a
private home that is the residence of Julie, Anthony and Malcolm.
Julie will need to be assessed and be given a qualifying rating of
intense under the Disability Care Load Assessment (Child)
Determination for caring for Anthony and Malcolm in order to qualify
for carer allowance.
Item 10 inserts new section 953A. New subsection 953A(1) provides that a
person remains qualified for carer allowance for a period up to three
months after a care receiver who is a child turns 16, if the criteria set
out in new section 953A are satisfied. The criteria in new subsection
953A(1) are:
. the person is qualified for carer allowance under subsection 953(1)
in respect of a disabled child;
. the care receiver turns 16; and
. the care receiver has not been assessed and rated and given a score
under the Adult Disability Assessment Tool (ADAT).
This provision will allow a person a longer period of time to complete the
ADAT and lodge the tool with the Secretary. This provision mirrors
section 197K in relation to carer payment.
Example
Helen qualifies for carer allowance in respect of her daughter, Bella.
Due to her caring commitments, Helen is unable to complete the ADAT
prior to Bella turning 16. Helen lodges a competed ADAT two months
after Bella's birthday. Helen will remain qualified for carer
allowance until Bella is given a score under the ADAT. In the event
that Bella does not receive the requisite score on the ADAT to qualify
for carer allowance paid in respect of an adult, then Helen's carer
allowance should be cancelled as of the date the Secretary calculates
Bella's score.
If, in the above example, Helen did not provide a new claim under the
ADAT for Bella prior to the date three months after Bella's 16th
birthday, Helen's carer allowance would be cancelled on that date.
New subsection 953A(2) provides that a person remains qualified for carer
allowance for a period of up to three months when caring for two disabled
children. A person will remain qualified for carer allowance in respect of
two disabled children until either or both of the care receivers turn 16
years and three months old. That is, the person will remain qualified for
carer allowance until:
. either or both of the care receiver(s) is/are assessed and is/are
given a score under the ADAT; or
. either or both of the care receiver(s) turns 16 years and three
months.
In both of these events, the person will continue to receive carer
allowance until the day before either the ADAT score is given or the
child/ren turn/s 16 years and three months.
Example
Ijaz qualifies for carer allowance in respect of his two sons, Ahmed
and Ali. Ahmed is aged 14 and Ali aged 16 as at 1 January. Due to
his caring commitments, Ijaz is unable to complete the ADAT and to
receive a score for Ali until 27 February. Ijaz remains qualified for
carer allowance for his care in respect of Ahmed and Ali under
subsection 953A(2) until 26 February.
Because Ali is now aged 16, he has to be assessed separately under
either section 954 or 954A. In the event that Ali does not receive
the requisite score on the ADAT to qualify for Ijaz for carer
allowance paid in respect of an adult, then Ijaz's carer allowance
should be cancelled as from 26 February.
If Ali does receive the requisite score on the ADAT, then Ijaz will
continue to qualify for carer allowance in respect of Ali.
Item 11 provides that the amendments made by items 6 to 9 apply for the
purposes of working out a person's qualification for carer allowance on and
from 1 July 2010.
Therefore, unless a care receiver's disability is declared on the List of
Recognised Disabilities, the Disability Care Load Assessment (Child)
Determination will be used from 1 July 2010 in the assessment process to
determine qualification for carer allowance in respect of a single child.
In respect of the care provided to two children, the Disability Care Load
Assessment (Child) Determination will be used from 1 July 2010 to determine
qualification for carer allowance.
Item 12 inserts a transitional provision which preserves the List of
Recognised Disabilities as a pathway to qualification for carer allowance.
Subitem 12(1) provides that the List of Recognised Disabilities made under
subsection 38D(3) will, after commencement of the amendments on
1 July 2010, be taken to be made under new subsection 38E(3).
Subitem 12(2) provides that any instrument made under section 38E may be
varied or revoked.
Schedule 2 - Income management regime
Summary
This Schedule makes some minor improvements to the income management
provisions in the social security law, on administrative matters such as
appropriation, debt recovery and financial transactions.
Background
These amendments to the income management regime include: removing the
concept of 'Special Account' and replacing it with the Income Management
Record; allowing the collection of income management debts through the
social security debt collection system; allowing recovery where funds have
been paid to an income management account in error; allowing the Secretary
to credit the income management of certain customers earlier in some
circumstances; giving the Minister the power to specify the amount of the
deductible portion of two new student scholarships; and some other
amendments relating to financial management of income management accounts.
Part 1 - Income Management Record
Part 3B of the Social Security Administration Act establishes an income
management regime for recipients of certain social security payments. As a
result of a person being subject to the income management regime, amounts
are deducted from the person's welfare payments, with equivalent amounts
credited to the Income Management Special Account and the person's
(notional) income management account, under Division 5 of Part 3B.
Part 3B established the Income Management Special Account, which is a
Special Account for the purposes of the Financial Management and
Accountability Act 1997 (Financial Management and Accountability Act).
Under the Financial Management and Accountability Act, a Special Account is
an appropriation mechanism that notionally sets aside an amount within the
Consolidated Revenue Fund to be expended for specific purposes. The
concept of 'Special Account' under Part 3B, however, was to provide a
vehicle to record and track a person's welfare payment that was subject to
the income management regime. In other words, the Special Account was
intended to be used merely as an accounting mechanism, rather than an
appropriation mechanism.
As the 'Special Account' under the income management regime should be used
as a ledger, recording the total notional balances of all income management
accounts, rather than as the appropriation authority for paying out income
managed funds from the income management account, this Schedule clarifies
the legislation by removing the concept of 'Special Account' from the
social security law.
Part 2 - Debt recovery
These changes will allow the Secretary to recover income management debts,
which arise under Division 8 of Part 3B of the Social Security
Administration Act, through methods identical to the debt recovery methods
in Part 5.3 of the Social Security Act.
Whilst the provisions in Division 8 of Part 3B of the Social Security
Administration Act are effective to 'raise' debts, there is inflexibility
in the methods that can be used to recover such debts. Whilst Division 8,
Part 3B debts are debts under the Financial Management and Accountability
Act, they are not debts that can be recovered under Chapter 5 of the Social
Security Act.
Chapter 5 of the Social Security Act is a code providing for the recovery
of 'social security payments'.
For debts that arise under the Social Security Act, there is a range of
recovery methods available, including:
. deductions from the person's pension, benefit or allowance
(section 1231);
. legal proceedings (section 1232);
. garnishee notice (section 1233);
. arrangement for payment of debt (section 1234);
. recovery of amounts from financial institutions (section 1234AA); and
. deductions by consent from the social security payment of a third
party (section 1234A).
These changes will also allow the non-recovery provisions in Part 5.4 of
the Social Security Act to apply to this category of debts. That is, in
certain circumstances, it will be possible for the Secretary to waive or
write-off this type of debt.
Part 3 - Credit of income management accounts in error
Under section 1234AA of the Social Security Act, the Secretary is able to
recover amounts held in an account kept with a financial institution in
circumstances where the Secretary has mistakenly credited funds into the
wrong account, or where the Secretary continues to make payments of a
social security payment into an account after a person has died.
This amendment is to enable the Secretary similarly to recover funds
wrongly credited to an income management account in circumstances where a
person has died, or where funds are otherwise mistakenly credited to a
person's income management account.
Part 4 - Credit of income management accounts before debt recovery
Under sections 123YI and 123YJ of the Social Security Administration Act,
the Secretary is able to direct funds from a person's income management
account to a third party on condition that the third party will credit the
amount to an account held by the first person with the third party for the
purposes of acquisition of goods or services by the person. In practice,
this arrangement has mostly been utilised by giving funds to a community
store; the funds being held in the name of a person who can obtain goods
from the community store, having the goods charged to their store account.
There have been certain issues in the past where, for example, a store goes
out of business while holding funds on behalf of income-managed people. In
these circumstances, while the store is under an obligation to repay these
amounts if required to do so, there can be a substantial delay before the
funds are actually recovered. During the delay, the income-managed person
can be out-of-pocket until action is eventually taken to 'recredit' their
income management account (that is, when the Commonwealth has actually
recovered the funds from the store). The same situation can occur where a
store breaches a condition - in this case, there can be a delay before
recovered funds are finally recredited to a person's income management
account.
Additionally, section 123ZG of the Social Security Administration Act
currently provides that, if an unauthorised person uses a customer's stored
value card, for example, the BasicsCard, without the customer's consent,
this will result in a debt being due by that unauthorised person to the
Commonwealth. Under section 123ZG, if the Commonwealth receives an amount,
by way of reimbursement, from the unauthorised person, the customer's
income management account is credited by the amount received, but only
after the actual recovery of the funds. This can leave the customer out-of-
pocket until the funds are actually recovered.
This Schedule seeks to remedy this situation by allowing the Secretary to
credit to the customer's income management account the amount of any debt
raised against a third party prior to the debt actually being recovered.
This will mean that the income-managed person will not have to wait for the
funds actually to be recovered.
Part 5 - Student start-up scholarship payments and relocation scholarship
payments
The Social Security and Other Legislation Amendment (Income Support for
Students) Bill 2009 [No. 2], which provides for a new Part 2.11B in the
Social Security Act, was introduced into the Parliament on 25 September
2009 by the Deputy Prime Minister, Minister for Education, Employment and
Workplace Relations. Subject to enactment, that bill will establish two
new student payments - the student start-up scholarship payment (which will
be paid six-monthly during the period the student is studying) and the
relocation scholarship payment (which is an annual payment made each year
that the student continues to study). Sections 123XPF and 123XPG under the
bill will provide for deductions to be made from both scholarship payments
if the person is subject to the income management regime. The amount of
the deductible portion is 100 per cent of the amount of the payment.
This Schedule amends sections 123XPF and 123XPG (subject to their
enactment), giving the Minister the capacity to specify that a lower
percentage amount, rather than the current 100 per cent, is to be deducted
from a person's scholarship payment, if the person is subject to the income
management regime and one of the above scholarship payments is payable to
the person.
Part 6 - Other amendments
Where the processing of a transaction has been delayed, often through
administrative error, from being debited to a customer's income management
account, and the balance of that account has fallen below the value of the
delayed debit transaction, at any point prior to the debit being applied to
the account, then these changes provide the Secretary with the option
either to debit the transaction to the customer's income management
account, as would have happened in the past, or to raise a debt against the
customer that can be recovered using any of the debt recovery mechanisms
allowed for under Chapter 5 of the Social Security Act. These changes are
beneficial to the customer and allow an affected customer to pay off a debt
owed to the Commonwealth in a more flexible manner than simply having his
or her income management account debited, thus preventing potential
hardship or customers being unable to meet the priority needs of themselves
or their families.
To assist with this process, a further consequential change is being made
to make it clear that a person's income management account is only credited
or debited at such time as the corresponding accounting entry is made,
rather than by force of law at the time of a transaction.
The amendments made by this Schedule commence on Royal Assent.
Explanation of the changes
Part 1 - Income management record
Amendments to the Social Security Administration Act
Item 1 repeals the definition of Finance Minister in section 123TC because
the amendment made by item 11 below makes the definition redundant.
Item 2 inserts into section 123TC a definition of Income Management Record,
which means the Income Management Record established by section 123VA.
Item 3 repeals the definition of Special Account in section 123TC. That
term is being replaced with Income Management Record.
Item 4 repeals the heading to Division 3 of Part 3B and replaces it with
the new heading 'Division 3 - Establishment of the Income Management
Record'.
Item 5 repeals sections 123VA and 123VB and substitutes a new
section 123VA. New section 123VA establishes the Income Management Record
as a means of recording and reporting the collective balances of all the
individual income management accounts. For most purposes, the Income
Management Record is simply a renaming of the previous Income Management
Special Account.
Item 6 removes the words 'Special Account' from section 123VC and replaces
them with the words 'Income Management Record'.
Item 7 removes the words 'Special Account' from subsection 123WA(1) and
replaces them with the words 'Income Management Record'.
Item 8 inserts a new subsection 123WA(3) into section 123WA. New
subsection 123WA(3) provides that an amount standing to the credit of the
Income Management Record is not held on trust for the individuals
concerned. This has not changed from the arrangements in place for the
previous Income Management Special Account.
Items 9 and 10 provide for the term 'Special Account' to be omitted from
paragraphs 123WJ(6)(a), 10(a), (13)(a) and (16)(a) and
paragraph 123WL(5)(a) and replaced with 'Income Management Record'.
Item 11 removes the words 'and the Finance Minister' from section 123WN.
Accordingly, only the Minister administering Part 3B of the Social Security
Administration Act may, by legislative instrument, now make rules as
provided by section 123WN.
Items 12, 13 and 14 removes the words 'Special Account' from the provisions
identified in these items and replaces them with 'Income Management
Record'.
Items 15 and 19 replaces the words 'Special Account' with the words 'Income
Management Record' in paragraphs 123XJA(2)(b), 123XJB(2)(b), 123XJC(2)(b),
123XJD(2)(b), 123XPH(2)(b) and 123XPI(2)(b). Subject to their enactment,
these provisions are being inserted into Part 3B of the Social Security
Administration Act by the Social Security and Other Legislation Amendment
(Welfare Reform and Reinstatement of Racial Discrimination Act) Bill 2009,
which was introduced into the Parliament on 25 November 2009.
Item 16 removes the words 'Special Account' and replaces them with 'Income
Management Record' in the provisions identified in this item.
Item 17 replaces the words 'Special Account' with the words 'Income
Management Record' in paragraph 123XPE(2)(b). Subject to its enactment,
this provision is being inserted into Part 3B of the Social Security
Administration Act by the Carbon Pollution Reduction Scheme Amendment
(Household Assistance) Bill 2010, which was introduced into the Parliament
on 2 February 2010.
Item 18 replaces the words 'Special Account' with the words 'Income
Management Record' in paragraphs 123XPF(2)(b) and 123XPG(2)(b). Subject to
their enactment, these provisions are being inserted into Part 3B of the
Social Security Administration Act by the Social Security and Other
Legislation Amendment (Income Support for Students) Bill 2009 [No. 2],
which was introduced into the Parliament on 25 November 2009.
Items 20 to 36 replace the words 'Special Account' with the words 'Income
Management Record' in the provisions identified in these items. The notes
to these items direct the reader to the change in the name of the heading
to the relevant provisions.
Item 37 provides transitional rules. Subitem 37(1) provides that an amount
that is equal to the balance of the Income Management Special Account,
immediately before commencement of this item, is to be transferred and
credited to the new Income Management Record immediately after commencement
of this item.
Subitem 37(2) provides that notional accounts which are kept, immediately
before commencement of this item, within the Income Management Special
Account are to be transferred and kept within the Income Management Record
on and after commencement of this item.
Subitem 37(3) applies to any rules made under section 123WN of the Social
Security Administration Act that were in force immediately before
commencement of this item in respect of the Income Management Special
Account and a person's income management account. If any such rules were
previously made, they continue to have effect on or after commencement of
this item as if they were in force under section 123WN in relation to the
Income Management Record and a person's income management account. That
is, any legislative instrument previously made under section 123WN remains
valid, but any reference to the Special Account in the instrument should be
read as a reference to Income Management Record.
Part 2 - Debt recovery
Amendments to the Social Security Act
Item 38 inserts new paragraph 1222(1)(ba), so that the appropriate methods
to recover a debt owed by a person to the Commonwealth, set out in
Chapter 5, now also apply to debts arising under Part 3B of the Social
Security Administration Act.
Item 39 inserts a new item into the table in subsection 1222(2), which sets
out that debts arising under Part 3B of the Social Security Administration
Act (that is, income management debts) can be recovered by way of
deductions, legal proceedings, garnishee notice or repayment by instalments
under the Social Security Act.
Item 40 amends paragraph 1230(1)(a) so that section 1230 now also applies
in relation to debts raised under Part 3B of the Social Security
Administration Act.
Item 41 amends subsections 1230C(1) and (2) so that section 1230C now also
applies in relation to debts raised under Part 3B of the Social Security
Administration Act. This means that any of the debt recovery methods
listed in subsection 1230C(1), among others, can be used to recover income
management debts. These changes also have the consequential effect that
the non-recovery of debt provisions in Part 5.4 will now also apply to
income management debts.
Item 42 amends subsection 1234A(1) to allow the recovery of an income
management debt, owed by one person, from a third party by way of deduction
from that third party's social security payment, with the third party's
consent.
Item 43 amends subsection 1237AB(1) to allow income management debts to be
specified, by the Minister, as part of a class of debts that the Secretary
may waive in certain circumstances.
Item 44 provides that those amendments made in items 38 to 43 above apply
in relation to debts arising after the commencement of those items, or
prior to commencement, where any part of that debt was still outstanding
immediately prior to commencement. The application of the amendment made
by item 43 is in addition to the rule in subsection 1236A(2).
Amendments to the Social Security Administration Act
Item 45 inserts new subsection 123WJ(16A), which makes it clear that the
set-off power in subsection 123WJ(14) is not limited by the fact that the
'debt amount' is now recoverable using Chapter 5 of the Social Security
Act.
Item 46 adds notes at the end of subsections 123ZF(2) and 123ZG(2) and (3)
to alert readers to the fact that debts arising under sections 123ZF and
123ZG are now recoverable using Chapter 5 of the Social Security Act.
Item 47 amends subsection 123ZH(2) to make it clear that an obligation, of
a third person, to repay an amount to the Commonwealth is, in fact, a debt
owed to the Commonwealth and can be recovered using Chapter 5 of the Social
Security Act.
Item 48 adds notes at the end of subsections 123ZH(2), 123ZI(2) and
123ZJ(5) to alert readers to the fact that debts arising under sections
123ZH, 123ZI and 123ZJ are now recoverable using Chapter 5 of the Social
Security Act
Part 3 - Credit of income management accounts in error
Amendments to the Social Security Administration Act
Item 49 inserts new section 123YR, which allows the Secretary to reverse a
credit to a person's income management account where that credit was made
in error. This power will most commonly be used where a number of income
management amounts have been credited to a person's income management
account after they have passed away. This provision largely replicates the
power that already exists in respect of payments of a social security
payment to a deceased person's bank account.
Item 50 provides that that the amendment made by item 49 applies in respect
of credits that occur on or after the commencement of this item.
Part 4 - Credit of income management accounts before debt recovery
Amendments to the Social Security Administration Act
Item 51 repeals subsections 123ZG(4) and (5) and replaces them with new
subsections 123ZG(4) to (7). These provisions relate to misuse of vouchers
and stored value cards.
New subsection 12ZG(4) provides that, where a customer has been issued with
a voucher and, without the person's consent, the voucher has been used by a
third party, then the Secretary may recredit the person's income management
account by an amount equal to the value of the voucher.
New subsection 123ZG(5) provides that, where the Secretary decides to
recredit a person's income management account under subsection (4), then
the value of the voucher in question is credited to both the Income
Management Record and the person's income management account.
New subsection 12ZG(6) provides that, where a customer has been issued with
a stored value card and, without the person's consent, the card has been
used by a third party, then the Secretary may recredit the person's income
management account by an amount equal to the value of unauthorised use.
New subsection 123ZG(7) provides that, where the Secretary decides to
recredit a person's income management account under subsection (6), then
the value of the unauthorised use of the card is credited to both the
Income Management Record and the person's income management account.
Item 52 repeals and substitutes subsections 123ZH(3) and (4). These
provisions relate to funds paid to a third person to be held on credit for
the income management customer (for example, funds held by a store for an
income management customer), where some of those funds are yet to be spent
by the customer.
New subsection 123ZH(3) provides that, where the Secretary has issued a
notice to a person (store) requiring repayment of funds held for the
benefit of the income-managed customer, which have not been used to acquire
goods or services, and the Secretary is aware of the amount of those
unspent funds, then the Secretary may recredit the person's income
management account by that amount.
New subsection 123ZH(4) provides that, where the Secretary decides to
recredit a person's income management account under subsection (3), then
the amount in question is credited to both the Income Management Record and
the person's income management account.
Item 53 repeals and substitutes subsections 123ZI(3) and (4). These
provisions relate to funds paid to a third person to be held on credit for
the income management customer (for example, funds held by a store for an
income management customer), where the third person (store) has breached a
condition upon which the funds were paid to them.
New subsection 123ZI(3) provides that, where a third person (store) owes a
debt to the Commonwealth, due to their having breached a condition upon
which the funds were paid, and the Secretary is aware of the amount of
unused funds still held by the store, then the Secretary may recredit the
customer's income management account by that amount.
New subsection 123ZI(4) provides that, where the Secretary decides to
recredit a person's income management account under subsection (3), then
the amount in question is credited to both the Income Management Record and
the person's income management account.
Item 54 inserts new subsection 123ZJ(2A), which clarifies that, where an
action that overdraws a person's income management account is validated by
the operation of section 123ZJ, then the funds used as a result of that
transaction are validly appropriated under section 123ZN. This is merely a
clarification, rather than a change to the law.
Item 55 repeals and substitutes subsection 123ZJ(4). This new subsection
provides that, where there is a relevant excess caused by an action
described in subsection 123ZJ(1), then this amount is credited to both the
Income Management Record and the person's income management account. In
effect, this means that, where a person's income management account is
overdrawn, the balance of that account is 'reset' to zero, and the amount
by which the account was overdrawn becomes a debt owing to the
Commonwealth, which can be recovered under Chapter 5 of the Social Security
Act. This change is beneficial to customers, allowing them to repay an
overdraft gradually, rather than it affecting their ability to pay for
priority needs, as may have been the case previously.
Item 56 repeals subsections 123ZJ(6) and (7).
Item 57 provides a number of application rules. It provides that item 51
above applies to the use of a voucher or stored value card after the
commencement of that item, or to its use prior to the commencement of that
item, where no amount has yet been recovered by the Secretary from the
unauthorised person.
Item 52 applies in respect of a notice given to a third person (store)
after the commencement of that item, or where a notice has been given prior
to the commencement of that item, where no amount has yet been recovered by
the Secretary from the third person.
Item 53 applies in respect of an amount paid to a third person (store)
after the commencement of that item, or where funds have been paid to that
person prior to the commencement of that item, where no amount has yet been
recovered by the Secretary from the third person.
New paragraph 123ZJ(4)(a), as inserted by item 55, applies where a relevant
excess arises on or after the commencement of that item, whereas new
paragraph 123ZJ(4)(b) applies both where a relevant excess arises on or
after commencement, and where it arises prior to commencement if no amount
has yet been received. The reason for the different application for new
paragraphs 123ZJ(4)(a) and (b) is that, where a relevant excess arose prior
to the commencement of these new provisions, then the value of that excess
has already been credited to the 'old' Income Management Special Account
(now renamed the Income Management Record) under 'old' subsection 123ZJ(4).
Accordingly, there is no need to process a second credit for the same
amount to the Income Management Record.
Part 5 - Student start-up scholarship payments and relocation scholarship
payments
Amendments to the Social Security Administration Act
Item 58 repeals and substitutes subsection 123XPF(3). New
subsection 123XPF(3) provides that the deductible portion of a student
start-up scholarship payment, for the purposes of subsection 123XPF(2), is
either 100 per cent of the amount of the payment or a lower percentage of
the amount of the payment, if a lower percentage is specified in a
legislative instrument made by the Minister.
Item 59 repeals and substitutes a new subsection 123XPG(3). New subsection
123XPG(3) provides that the deductible portion of a relocation scholarship
payment, for the purposes of subsection 123XPG(2), is either 100 per cent
of the amount of the payment or a lower percentage of the amount of the
payment, if a lower percentage is specified in a legislative instrument
made by the Minister.
Item 60 provides that the amendments made by items 58 and 59 apply to the
student start-up scholarship payment and the relocation scholarship
payment, if those payments become payable on or after commencement of those
items. This is consistent with other provisions in Division 5 of Part 3B
of the Social Security Administration Act and allows for a more beneficial
treatment for people who are subject to the income management regime in
appropriate circumstances.
Part 6 - Other amendments
Amendments to the Social Security Administration Act
Item 61 inserts new section 123ZIA. New subsections 123ZIA(1), (2) and (4)
provide, in effect, that, where the Secretary takes action under Division 6
(that is, debits a customer's income management account) and, at any time
between the time the Secretary took that action and the time at which the
customer's account is debited for the value of the transaction, the balance
of the customer's account falls below the value of the transaction in
question, then the Secretary has the option either to debit the customer's
income management account or to raise a debt against the person for the
value of the transaction.
New subsections 123ZIA(3) provides that, where the Secretary decides to
raise a debt against the customer, then an amount equal to the amount of
the debt will be credited to both the customer's income management account
and the Income Management Record.
New section 123ZIA is beneficial to customers and allows them, in certain
circumstances, to repay an amount more slowly (through the mechanisms set
out in Chapter 5 of the Social Security Act) than would otherwise be the
case if the amount were simply debited in one go from their income
management account.
Item 62 inserts new section 123ZNA, which provides that, where any
provision in Part 3B provides that the Income Management Record or a
person's income management account are to be debited or credited, then this
does not occur by force of law, as was the case previously, but at such
time as the transaction is actually credited or debited in the accounts or
records of the Department or Centrelink. This provision is necessary,
among other reasons, for the smooth operation of item 61, above.
Item 63 provides that item 61, above, applies in relation to actions taken
by the Secretary under Division 6 that occur after the commencement of that
item.
Schedule 3 - Aboriginal and Torres Strait Islander Land Account
Summary
Amendments are made by this Schedule to the Aboriginal and Torres Strait
Islander Act 2005 (Aboriginal and Torres Strait Islander Act) to ensure a
reliable income stream for the Indigenous Land Corporation (the ILC), by
providing for a minimum guaranteed annual payment of $45 million from
1 July 2010, which will be indexed for later years according to the
Consumer Price Index (CPI). The Schedule also provides for additional
payments to be made to the ILC where the actual capital value of the
Aboriginal and Torres Strait Islander Land Account (Land Account) exceeds
the real capital value of the account. The amount to be paid is the excess
above the real capital value. An independent review of the effectiveness
of the funding arrangements after three years is also introduced.
Background
The purpose of the ILC is to assist Aboriginal people and Torres Strait
Islanders to acquire and manage Indigenous-held land so as to provide
economic, environmental, social and cultural benefits.
The ILC is not budget-funded. The ILC's main source of funding in a
financial year is the payment made to it under section 193C of the
Aboriginal and Torres Strait Islander Act. This amount is equal to the
realised real return on the investments of the Land Account in the previous
financial year. The Land Account is administered by the Families, Housing,
Community Services and Indigenous Affairs portfolio.
Since 2004-05, the value of payments to the ILC from the Land Account has
fluctuated as a result of changes in the value of the realised real return
on investments. These fluctuations have caused difficulties for the ILC in
its long-term strategic planning.
Starting in the 2010-11 financial year, an annual payment of $45 million,
indexed in future years by the CPI, is to be paid to the ILC. These
indexed payments would be made in all years, even if the amount paid would
reduce the real capital value of the Land Account.
In addition to the annual amount, the amendments allow for the payment of
additional amounts to the ILC from the Land Account in years where the
actual balance of the Land Account is greater than that required to
maintain its real capital value.
The amendments to the legislation also require an independent review of the
effectiveness of the funding arrangements. The review will be designed to
determine whether the amended funding formula was effective in producing
the outcome proposed by the amendments. A report of the findings of the
review will be given to the Minister.
The amendments made by this Schedule commence on Royal Assent
Explanation of the changes
Item 1 repeals the definition of category A year, as it is spent.
Item 2 repeals the definition of category B year, as a consequence of other
amendments in this Schedule.
Items 3 and 4 repeal spent provisions (subsections 191L(2) to (5)) and make
a consequential numbering change.
Item 5 makes an amendment required as a consequence of repealing the spent
provision, subsection 191L(2).
Item 6 repeals sections 192Y to 193E and substitutes new sections 192Y
and 193, whose effect is described below.
New section 192Y provides, in new subsection (1), a different formula for
calculating adjustments to the amounts to be paid to the ILC to reflect
inflation. Where the Aboriginal and Torres Strait Islander Act provides
that an amount (such as the annual payment to the ILC or the guarantee
limit) is indexed each year, this formula, called the indexation factor,
would be applied to determine the indexed amount.
The indexation factor is calculated by dividing the sum of the index
numbers for the four quarters of one year; the first June year, by the sum
of the index numbers for the four quarters in the year immediately before
that year, the second June year.
New subsection 192Y(2) provides for the indexation factor to be calculated
to three decimal places (rounded up in specified circumstances), and new
subsection (3) states that, if the value of the indexation factor is less
than 1, then the indexation factor is taken to be equal to 1. This is
necessary so that the amount calculated in a subsequent year is not less
than the amount for the prior year.
The index number that applies under the current legislation is defined to
be the implicit price deflator for the gross non-farm product (trend) index
as the measure of inflation. The use of this index number has been
problematic and this index number can differ significantly from the more
commonly used CPI.
New section 192Y provides that the index number for a quarter is the All
Groups CPI Index number, being the weighted average of the eight capital
cities, as published by the Australian Statistician for that quarter.
Annual payments
New section 193 primarily prescribes the manner in which the value of the
annual payment to the ILC is to be calculated. Under the current
provisions, the ILC is entitled to receive an annual payment, which is paid
on the last business day of the financial year. Under the amendments, the
ILC will receive one payment of $45 million on the first business day of
October in the financial year commencing on 1 July 2010. In subsequent
years, the ILC may receive two payments, one on the first business day of
October, paid under subsection (2), and an additional payment on the first
business day of December, paid under subsection (3).
New subsection 193(1) provides that, on the first business day in October
in the financial year commencing on 1 July 2010, an amount of $45 million
will be paid to the ILC from the Land Account. This payment will be made
on 1 October 2010, which will be a business day in the Australian Capital
Territory, noting that the Land Account is administered from Canberra.
New subsection 193(2) provides for the manner in which annual payments to
the ILC will be calculated for financial years commencing on 1 July 2011
and following. The formula in subsection (2) provides that the ILC will
receive an amount equal to $45 million, indexed by the index number. Under
this formula, if the value of CPI is greater than 1, the ILC will receive
an amount greater than $45 million in the second year and each year after
that. The formula provides that the amount for the current year is the
amount paid in the previous year, indexed by CPI. Thus, each year, the
amount would increase to reflect inflation for all previous years.
If the index number is less than 1, the ILC will receive the same amount
under this subsection as it received in the previous year. The amount paid
in a later year cannot be less than the amount paid in a previous year.
All payments to the ILC are made from the Land Account. As the ILC will
always receive a minimum amount of $45 million, indexed by CPI, the actual
balance held in the Land Account may be reduced from the previous year's
balance in those years where the return on investments is less than the
amount needed to meet this annual payment.
Additional payments
New subsection 193(3) provides that an additional payment will be made out
of the Land Account to the ILC in the year commencing on 1 July 2011 and
subsequent years if threshold criteria are met. Before any additional
payments can be made in respect of a financial year, the actual capital
value of the Land Account calculated at 30 June in the previous financial
year must be greater than the real capital value of the Land Account at 30
June in the same financial year. These additional payments, if any, will
be made on the first business day in December in the following financial
year.
The amount to be paid is equal to the difference between the actual capital
value of the Land Account and the real capital value of the Land Account.
The actual capital value of the Land Account is reported in the audited
financial statements in the annual report of the Department of Families,
Housing, Community Services and Indigenous Affairs each year.
In a year where the actual capital value of the Land Account is less than
the real capital value of the Land Account, no additional payment will be
made. No additional payments would be made until the actual capital value
of the Land Account was restored to a sum greater than the real capital
value of the Land Account.
The real capital value of the Land Account is calculated with reference to
the actual value of the Land Account in the base year, which is the balance
on the last business day immediately before the financial year commencing
on 1 July 2010, that is, 30 June 2010. This amount is then indexed each
year by reference to the index number to maintain the real capital value of
the Land Account over time.
The actual capital value of the Land Account is calculated by reference to
the amounts held to the credit of the Land Account, plus investments.
Section 192W establishes the Land Account and provides that any money
standing to the credit of the Land Account that is not needed to meet
annual payments to the ILC must be invested under section 39 of the
Financial Management and Accountability Act 1997. Thus, in any year, the
greater proportion of any balance held in respect of the Land Account will
be invested and not actually held in the Land Account.
Additional payments will only be made after maintaining the real capital
value of the Land Account over time. In order to take account of this, the
actual capital value of the Land Account is defined as the amount standing
to the credit of the Land Account plus the value of its investments. This
value is accurately reported as at 30 June in any year as the 'total
equity' (net assets) amount in the Land Account's audited annual financial
statements.
Reporting
Any payments made under new subsection 193(3) must be applied in accordance
with the National Indigenous Land Strategy (section 191N of the Aboriginal
and Torres Strait Islander Act). It is intended that the ILC would report
to the Minister to indicate whether the payments have been used in
accordance with that strategy in each financial year.
The ILC is required to make annual reports under section 9 of the
Commonwealth Authorities and Companies Act 1997. Subsection 193K(2) of the
Aboriginal and Torres Strait Islander Act provides that the annual report
of the ILC must include such additional information (if any) as is
specified in the regulations under the Act.
It is proposed that the ILC will report annually in relation to any
additional payments received under new subsection 193(3). If necessary
regulations may be made to ensure that this occurs.
Item 7 repeals subsection 193G(3) as a consequence of other amendments in
this Schedule.
Items 8 and 9 repeal spent provisions (subsections 193H(2) and (3)) and
make a consequential numbering change.
Item 10 amends paragraph 193(2)(d) to remove a reference to the term
'realised real' as a consequence of other amendments to the calculation of
amounts to be paid to the ILC.
Item 11 repeals subsections 193I(2A), (5) and (6). Subsections (2A) and
(6) are spent and subsection (5) is repealed as a consequence of other
amendments in this Schedule.
Item 12 repeals subsection 193K(3) as a consequence of other amendments in
this Schedule.
Item 13 omits a sentence from subsection 193L(2) as a consequence of other
amendments in this Schedule.
Item 14 repeals the note appearing after subsection 193L(2) as a
consequence of other amendments in this Schedule.
Item 15 repeals subsections 193L(3) to (8) and substitutes a new
subsection (3) for subsection (8). Subsections (3) to (8) currently set
out the manner in which the borrowing limit is to be calculated.
Subsections (3) to (7) are spent.
Subsection 193L(1) provides that the ILC may borrow money. Subsection (2)
provides that the ILC must not borrow any amount that is in excess of its
borrowing limit. New subsection (3), which is substituted for existing
subsection (8), sets out the formula for calculating the borrowing limit
for a financial year. For the purposes of this formula, the borrowing
limit for the financial year commencing on 1 July 2010 is established in
item 24(2) - transitional. The borrowing limit for the financial year
commencing on 1 July 2009 is equal to $294,170,517. So, the borrowing
limit for the financial year commencing on 1 July 2010 would, as provided
by the formula in new subsection 193L(3), be equal to $294,170,517 times
the index number in section 192Y.
Items 16 and 17 repeal a spent provision (subsection 193M(2)) and make a
consequential numbering change.
Item 18 omits a sentence from subsection 193N(1), as it is spent.
Item 19 omits the note appearing after subsection 193N(1) as a consequence
of other amendments in this Schedule.
Item 20 repeals subsections 193N(2) to (7) and substitutes a new
subsection (2). Section 193N provides for limits on the value of any
guarantees that the ILC may give. Subsections (2) to (6) are spent.
New subsection (2) sets out the manner in which the guarantee limit for a
financial year is to be calculated. For the purposes of this formula, the
guarantee limit for the financial year commencing on 1 July 2010 is
established in item 24(2) - transitional. The guarantee limit for the
financial year commencing on 1 July 2009 is equal to $294,170,517. So, the
guarantee limit for the financial year commencing on 1 July 2010 would, as
provided by the formula in new subsection 193N(2), be equal to $294,170,517
times the indexation number in section 192Y. This new provision allows the
repeal of subsection (7).
Item 21 repeals paragraph (f) of the definition of exempt matter in
subsection 193R(1) to correct a numbering error.
Reviews
Item 22 adds a new Division 15 to Part 4A, consisting of new section 193U.
The Government is committed to securing a more reliable level of funding
for the ILC and the amendments in this Schedule have been developed in
order to achieve this. The arrangements constitute a different approach
for funding the ILC. The Government is committed to reviewing the
effectiveness of various matters relating to the ILC generally and the
operation of the Land Account. In order to do this, it is proposed that
three separate reviews will be undertaken.
New section 193U requires regulations to provide for independent statutory
reviews of the operation of Part 4A. It is intended that a review be
undertaken of the effectiveness of the new ILC funding arrangements after
they have been in place for three financial years and every three financial
years after the first review.
These reviews would be designed to determine whether the funding
arrangements are effective in producing the outcome intended by these
amendments. It would also focus on the impact that providing additional
amounts has on the capacity of the ILC to perform its functions, while
maintaining the real value of the Land Account. A report on the findings
of each review will be provided to the Minister.
The timing, manner and content of the review and its terms of reference
will be prescribed in regulations so that the specific detail of the terms
of the review can be composed after the provisions have been in operation
for a time and the findings of the other reviews outlined below are known.
In the first financial year of the new arrangements, the Department of
Families, Housing, Community Services and Indigenous Affairs, in
consultation with the Department of Finance and Deregulation and the
Department of the Treasury, will conduct a review of the ongoing management
arrangements of the Land Account. The review will consider the most
effective administrative arrangements for the management of the Land
Account to maximise the future investment returns from the Land Account.
Also within that timeframe, the ILC's guarantee and borrowing limits will
be reviewed. A report on the findings of these two reviews will be
provided to the Minister for Families, Housing, Community Services and
Indigenous Affairs.
Item 23 repeals subsection 200C(2) and substitutes new subsection (2) as
the existing subsection (2) is spent.
Transitional
Item 24(1) makes it clear that reports required to be made under existing
section 193I of the Aboriginal and Torres Strait Islander Act about the
Land Account, as in force immediately before the commencement of items 10
and 11, are required in relation to the financial year ending on 30 June
2010. This would have the effect that the realised real return of the Land
Account must still be reported for that year.
Item 24(2) identifies the dollar value of the borrowing and guarantee
limits at the commencement of the new arrangements (see items 15 and 20)
These figures have been calculated under existing provisions, starting with
a dollar value of $100 million that has been indexed each year since 1995.