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1996-97
THE
PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
HOUSE OF
REPRESENTATIVES
SOCIAL
SECURITY LEGISLATION AMENDMENT
(ACTIVITY
TEST PENALTY PERIODS) BILL
1997
SUPPLEMENTARY
EXPLANATORY
MEMORANDUM
Amendments
to be moved on behalf of the
Government
(Circulated
by authority of the Minister for Social
Security,
Senator the Hon Jocelyn
Newman
88509 Cat. No. 96 7719
4 ISBN 0644 502614
SOCIAL SECURITY
LEGISLATION AMENDMENT
(ACTIVITY TEST PENALTY
PERIODS) BILL 1997
OUTLINE AND
FINANCIAL IMPACT STATEMENT
Outline
These
amendments affect the Social Security Act 1991 and the
Student and Youth Assistance Act
1973.
The Minister for Social Security,
in the context of Senate debate on the Social Security Legislation
Amendment (Budget and Other Measures) Act 1996, foreshadowed the
introduction of a new activity test penalty regime incorporating a combination
of rate reduction and non-payment. The Social Security Legislation Amendment
(Activity Test Penalty Periods) Bill 1997 (the amending Bill) introduces
such a regime under which a first activity test breach within a 2 year period
attracts an 18% rate reduction for 26 weeks, a second breach attracts a 36%
rate reduction for 26 weeks and a third or subsequent breach results in
withdrawal of payment for 13 weeks.
After
further consultation with interested parties, the Government has decided to
modify the penalty regime as set out in the amending Bill as follows. First,
the rate reduction applicable for a second activity test breach within a 2 year
period will be changed from 36% to 24% of the person's maximum basic rate of
payment. Second, the non-payment period for a third or subsequent breach within
a 2 year period will be changed from 13 to 8
weeks.
In addition, the Government amendments
ensure that the rules relating to the application of an activity test breach
rate reduction period or activity test non-payment period in respect of breaches
that occur prior to claim will only apply in cases of voluntary unemployment,
unemployment due to misconduct and voluntarily leaving or being dismissed from a
labour market program because of misconduct and not to the full range of
possible activity test breaches.
Minor
technical amendments to standardise terminology are also
made.
Financial impact
statement
These amendments change the
activity test penalty periods originally proposed as a component of the
Government's 1996 Budget package to tighten the activity test and simplify
penalty periods.
Program savings directly
attributable to the measures in these amendments
are:
1997-98 $12.52m
1998-99 $16.87m
1999-2000 $16.87m
Owing
to the inter-relationship of the measures in this Bill to the 1996 Budget
package, these measures will maximise savings from previously introduced
legislative and administrative components of the
package.
This will bring the total program
savings from the Government's 1996 Budget package
to:
1997-98 $
99.66m
1998-99 $105.11m
1999-2000 $105.11m
These
figures, which have not been out turned at this stage, include both legislative
and administrative changes.
NOTES ON
AMENDMENTS
PENALTIES FOR ACTIVITY TEST
BREACHES
Social Security Act
1991
As introduced, the Social
Security Legislation Amendment (Activity Test Penalty Periods) Bill 1997
(the amending Bill) imposes the following regime of penalties for activity test
breaches -
· rate reduction of 18% for 26
weeks for a first activity test breach within a 2 year period (see proposed
section 644AA and paragraph 644AE(2)(a), as inserted by item 32 of Schedule
1 of the amending Bill);
· rate reduction
of 36% for 26 weeks for a second activity test breach within a 2 year period
(see proposed section 644AA and paragraph 644AE(2)(b), as inserted by
item 32 of Schedule 1 of the amending Bill);
and
· a non-payment period of 13 weeks for
a third or subsequent breach within a 2 year period (see proposed section 630A,
inserted by item 19 of Schedule 1 of the
Bill).
Amendment 6 changes the
percentage rate reduction for a second activity test breach from 36% to 24%.
This is achieved by omitting the existing reference to "0.36" in proposed
paragraph 644AE(2)(b) as inserted by item 32 of Schedule 1 of the amending Bill
and substituting a reference to
"0.24".
Amendment 1 changes the
non-payment period for a third or subsequent activity test breach from 13 weeks
to 8 weeks. This is achieved by advice, this could be achieved by omitting the
reference to "13" in proposed section 630A as inserted by item 19 of Schedule 1
of the amending Bill and substituting a reference to
"8".
The penalty applicable to a person for a
first activity test breach within a 2 year period remains
unchanged.
Student and Youth Assistance
Act 1973
A similar penalty regime to
that described above is provided for by the amending Bill for activity test
breaches under the Student and Youth Assistance Act 1973 (the SYA
Act). Accordingly, amendments 13 and 8 make equivalent changes to the
relevant provisions in that Act.
Amendment
13 omits the existing reference to "0.36" in proposed
paragraph 136AE(2)(b), inserted by item 66 of Schedule 1 of the amending
Bill, and substitutes a reference to
"0.24".
Amendment 8 omits the reference
to "13" in proposed section 109, inserted by item 53 of Schedule 1 of the
amending Bill, and substitutes a reference to
"8".
APPLICATION OF ACTIVITY TEST
PENALTY PERIODS BEFORE CLAIM
Social
Security Act 1991
Proposed section
644AC as inserted by item 32 of Schedule 1 of the amending Bill deals with the
situation where an event occurs that would have resulted in an activity test
rate reduction period applying had the person made a claim for newstart
allowance. Section 630BA of the SS Act is a similar provision that applies
where an event occurs that would have resulted in an activity test deferment
period applying had the person made a claim for newstart allowance.
As currently drafted, these provisions can
apply to any events (activity test breaches) that would attract an activity test
deferment or rate reduction period had the person claimed newstart allowance.
These potentially include any breaches covered by sections 624 to 630AA of the
SS Act inclusive. This was not
intended.
Amendments 2, 3, 4 and 5 limit
the operation of proposed section 644AC and section 630BA of the SS Act so
that these provisions only apply to the following
situations:
· voluntary unemployment (a
breach covered by section 628 of the SS
Act);
· unemployment due to misconduct (a
breach covered by 629 of the SS Act);
and
· voluntarily leaving or being
dismissed from a labour market program due to misconduct (an activity test
breach covered by section 624 by virtue of subsection 601A(2) of the SS
Act).
To this end, amendments 2 and 3
omit the amendments made by item 24 and 26 of Schedule 1 of the amending
Bill. Amendment 2 substitutes a new subsection 630BA(1) that limits the
operation of section 630BA to the situations described above.
Amendment 3 limits the operation of subsection 630BA(3) is the same
manner.
The technical amendments provided for
in items 24 and 26 of the amending Bill as introduced are retained in
amendments 2 and 3.
Amendments 4 and
5 make equivalent changes to proposed section 644AC as inserted by item 32
of Schedule 1 of the amending Bill. Amendment 4 inserts a new
paragraph 644AC(1)(a) that is limited in its operation to the situations
described above. Amendment 5 limits the operation of paragraph
644AC(2)(a) in the same manner.
Student
and Youth Assistance Act 1973
Section
136AC inserted by item 66 of Schedule 1 of the amending Bill and section 111 of
the SYA Act are similar provisions that apply to youth training allowance
customers who breach the activity test before claiming that allowance. Similar
amendments to those outlined above in relation to the SS Act are made to these
provisions by amendments 9, 10, 11 and
12.
TECHNICAL
AMENDMENTS
Social Security Act
1991
Proposed section 644AD, inserted
by item 32 of Schedule 1 of the amending Bill, deals with the interaction of an
activity test rate reduction period and a waiting period under the SS Act.
Proposed section 644EA, inserted by item 36 of Schedule 1, is a similar
provision dealing with the interaction between an administrative breach rate
reduction period and a waiting period. There is currently an inconsistency in
the way subsection (3) of each provision is drafted. The better
formulation of words is in subsection
644AD(3).
Amendment 7 amends subsection
644EA(3) to reflect the preferred wording used in subsection 644AD(3). This is
a technical amendment.
Student and Youth
Assistance Act 1973
A similar
inconsistency exists in relation to the SYA Act (see the
difference in the wording of subsection 112(3), inserted by item 61 of Schedule
1 of the amending Bill, and subsection 136DA(3), inserted by item 70 of Schedule
1 of the amending Bill). Amendment 14 amends subsection 136DA(3) so that
it reflect the wording used in subsection 112(3). This is also a technical
amendment.
Social Security Legislation
Amendment (Budget and Other Measures) Act
1996
Amendment 15 makes a minor
technical amendment to item 9 of Part 3 of Schedule 2 of the Social
Security Legislation Amendment (Budget and Other Measures) Act 1996
by correcting an incorrect reference. New paragraph 4D(1)(c) of the
National Health Act 1973 should be inserted after paragraph
4D(1)(b) and not after paragraph (c). The substance of the original amendment
is not altered by amendment 15.