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1996
THE PARLIAMENT OF THE COMMONWEALTH OF
AUSTRALIA
THE SENATE
CHILD CARE LEGISLATION AMENDMENT BILL 1996
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Family
Services,
the Hon. Mrs Judi Moylan, MP)
79480 Cat. No. 96 5443 7 ISBN 0644 481358
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY
THE HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED
CHILD CARE LEGISLATION AMENDMENT BILL 1996
GENERAL OUTLINE
Schedule 1 of the Child Care Legislation Amendment Bill 1996
proposes an amendment to the Child Care Act 1972 to implement a 1996
Government budget decision to discontinue payment of operational subsidy to
community based long day care centres from 1 July 1997.
Schedule 2 of
this Bill will amend the Childcare Rebate Act 1993 in accordance with
changes announced in the 1996 Budget. These changes will establish a link
between the family income cut-offs under Part A of the Family Tax Initiative,
which was also announced in the 1996 Budget and the level of entitlement to the
Childcare Cash Rebate
The Bill will also introduce amendments aimed at
clarifying eligibility issues and compliance requirements consistent with the
intentions of the Commonwealth Childcare Cash Rebate scheme.
Operational Subsidy payments
Operational subsidy is
currently paid under Section 11 of the Child Care Act 1972 for child care
places provided by community based services (but not for places provided by the
private sector). The amendment will mean that from 1 July 1997 operational
subsidy will no longer be paid to community based long day care centres.
Childcare Cash Rebate - Income Testing for Rate of
Benefit
The Bill implements changes to the calculation of the
Childcare Cash Rebate which will reduce the rate of benefit for some
families.
The amendments to the Childcare Rebate Act 1993 will
introduce a lower rate of benefit for the Childcare Cash Rebate for some
families from 1 April 1997. The actual date of effect, due to the
administrative arrangements under the Childcare Cash Rebate scheme, is the
following Monday, 7 April 1997. This will mean that families with a taxable
income in the current year lower than the family income cut offs for Part A of
the Family Tax Initiative (currently $70,000 for one child families plus $3,000
for each additional dependent child) will have their benefit maintained at 30%
of their claimable child care costs, while families with a taxable income
in the current year greater than these cut offs will be entitled to a rate of
benefit of 20% of their claimable child care costs.
If a family has
claimed the Childcare Cash Rebate at either the 20% or 30% rate for a particular
week, but updated income advice shows that they were paid at the incorrect rate,
the Childcare Rebate Act 1993 provides for the entitlement to be
recalculated in accordance with the new advice. This may result in recoveries
if an overpayment had occurred or additional payments if an underpayment of the
Childcare Cash Rebate had been made originally.
Childcare Cash Rebate - Eligibility issues
The Bill includes
amendments to the Childcare Rebate Act 1993 which will allow more
families to gain financial assistance to support the costs of their work related
child care by:
- clarifying the eligibility for the Childcare Cash Rebate
for foster parents and persons with informal parenting responsibilities, such as
grandparents caring for their grandchild because the child's parents are
temporarily unable to provide care themselves;
- enabling families to
claim the Childcare Cash Rebate against two sets of child care fees for the same
period in certain circumstances. For example, in some cases parents are
required to pay child care costs for care provided for say an illness or other
extenuating circumstances which prevent that child from attending their usual
child care service, and child care costs to hold a usual child care place for
the same period of time. It is intended that parents should not be penalised
under the Childcare Cash Rebate scheme because of this; and
- amending
the definition of a family for the purposes of the Childcare Cash Rebate
according to amendments made to the Family Law Act 1975 which replace the
concept of “custody” of a child with the concept of “care and
responsibility” for a child.
The Bill also makes consequential
amendments and amendments of a machinery nature to the Childcare Rebate Act
1993.
Childcare Cash Rebate - Compliance issues
The
Bill includes amendments to the Childcare Rebate Act 1993 which will
improve compliance and reduce the risk of fraud under the Childcare Cash Rebate
scheme. These amendments will have the effect of:
- allowing the Health
Insurance Commission to suspend payment of a claim for the
Childcare Cash
Rebate while it is in the process of investigating matters relevant to the claim
or registration if a problem with the claim or the registration of the family or
child care provider has been identified. This will prevent recovery action if
the identified problem is confirmed;
- preventing payment of the
Childcare Cash Rebate for care provided by a parent of a family, or partner of a
parent, to a dependent child of that family. The Childcare Cash Rebate will not
be claimable for care provided by a partner in a child care business to the
dependent child of another partner in that business;
- requiring
registered Childcare Cash Rebate child care providers to notify the Health
Insurance Commission of changes to their circumstances which may affect their
eligibility to be registered. This will prevent persons from remaining
registered as Childcare Cash Rebate child care providers if they no longer meet
the eligibility criteria for registration; and
- clarifying the definition of
child care to ensure that the Childcare Cash Rebate is only payable for child
care and not tuition or other non-child care services. It is the intention
under the Childcare Cash Rebate scheme that, to be considered child care, a
service providing care for school aged children should provide a range of
activities for children and allow children to choose which activities they will
participate in. The amendment therefore defines child care on the basis of the
nature of the service rather than the premises at which the service is
provided.
FINANCIAL IMPACT
The amendment to the Child Care Act 1972 to no longer pay
operational subsidy to community based long day care centres will achieve net
savings of $108.8m over the first four years, taking account of the $10m per
year for support for children with “high” additional needs,
especially children with disabilities, $8.3m over 2 years for advice to services
and the $4.1m per year for supplementary grants for severely disadvantaged
areas.
The amendments to the Childcare Rebate Act 1993 arising
from the 1996 Budget are anticipated to result in savings of $34.7m over the
first four years.
The amendments to allow parents to claim the Childcare
Cash Rebate against two sets of child care fees in specified circumstances may
allow the Rebate to be claimed under a wider range of circumstances, which may
result in a slight increase in expenditure. This increase is estimated to be
minimal.
Other amendments reduce the risk of fraud and increase the
power of the Health Insurance Commission to suspend payment of the Rebate,
reducing the need for recovery action.
CHILD CARE LEGISLATION AMENDMENT BILL
1996
NOTES ON CLAUSES
Clause 1 - Short Title
This is a formal provision that
specifies the short title of the Act as the Child Care Legislation
Amendment Act 1996.
Clause 2 - Commencement
This
clause provides that the Act will commence on the date of Royal Assent, except
Schedule 1 which commences on 1 July 1997.
Clause 3 -
Schedules
This is a formal provision that specifies that the Acts and
other items specified in the Schedules are amended or repealed as set out in the
Schedules.
SCHEDULE 1
Amendment of the Child Care Act
1972 (“the Act”)
Item 1 - Section 11 - Grants for recurrent
expenditure
This item repeals Section 11 of the
Act.
Item 2 - Section 20
This item omits reference
to subsection 11(19) under subsection 20(6) of the Act, which deals with
conditions relating to grants. This is because section 11 of the Act has been
repealed.
Item 3 - Section 24
This item omits reference
to subsection 11(19) under section 24 of the Act, which deals with money to be
appropriated for the purposes of grants.
SCHEDULE 2
Amendment of the Childcare Rebate
Act 1993 (“the Act”)
Item 1 - Section 3 - Outline of the Act
This
item corrects a typographical error in the placement of a comma in subsection
3(4).
Items 2 and 3 - Section 4 - Definitions
These items add
references in section 4 to new definitions relating to the meanings of
“partner” and “business partner” for the purposes of the
Act.
Item 4 - Section 4 - Definition of Parental
Member
This item amends the definition of “parental
member” under section 4 to omit reference to the current definition of
“partner” under subsection 5(2). This is because the definition of
“partner” has been revised to ensure that the distinction between de
facto partners and business partners is clear within the
Act.
Item 5 - Section 5 - Definition of Family
This
item expands the application of the definition of “partner” to apply
to the whole Act, instead of only subsection 5(2).
Item 6 - Section 5
- Definition of Family
This item amends paragraph 5(4)(b) to bring
the definition of a family into line with amendments to the Family Law Act
1975 which replaces the concept of “care and control” and
“custody” with the concept of “parental
responsibility”.
Item 7 - Section 10 - Definition of
Parent
This item amends section 10 of the Act to make it clear that
foster parents and other persons caring for a child or children in a long term
informal parenting arrangement (eg grandparents caring for grandchildren because
the children's parents are temporarily unable to provide that care) are eligible
for the Childcare Cash Rebate. The definition of “parental member”
under section 4 of the Act also applies to families which are eligible under
this amendment.
Item 8 - Section 11 - Definition of Dependent
Child
This item amends subsection 11(1) to ensure that a person must
meet the requirements of the whole section (formerly only subsection (2)) in
order to be a considered a dependent child for Childcare Cash Rebate purposes.
Item 9 - Section 11 - Definition of Dependent Child
This
item amends the definition of a dependent child under section 11 to include a
child where a determination has been made under clause 10(2) of the Bill, which
allows for long term informal parenting arrangements to be eligible.
Item
10 - Section 16 - Other People may be Treated as Australian
Residents
This item incorporates a requirement in section 16 that
determinations made in relation to treating persons who are not Australian
residents as residents for Childcare Cash Rebate purposes must be made in
compliance with any guidelines made under section 62AA, thereby streamlining the
Act by placing the guideline making power of the Minister in one section.
Item 11 - Section 17 - Guidelines for Making
Determinations
This item repeals section 17 as a consequence of the
amendment made by Item 10.
Item 12 - Section 27 - Definition of Child
Care
This item replaces subsections 27(1), (2) and (3) which define
child care for the purposes of the Act. Much of the definition remains the same
as that which is provided in the existing section. However, paragraph
(27)(1)(d) of the Act had the effect of defining child care by reference to the
nature of the premises at which the care is provided. This amendment removes
the reference to premises and provides for the Health Insurance Commission to
make a determination (subject to Ministerial guidelines) stating the type of
care considered as child care.
Item 13 - Section 36 - Claims in
Respect of which the Rebate is not Payable
This item restricts the
range of child care arrangements against which the Childcare Cash Rebate may be
claimed by ensuring that it cannot be claimed for care provided by a registered
child care provider to dependent children of that person or that person's
partner or business partner (as defined in the Act) under section 36.
Item 14 - Section 36 - Claims in Respect of which the Rebate is not
Payable
This item amends section 36 to confer power on the Minister
to determine circumstances under which the Childcare Cash Rebate will be payable
in respect of two sets of fees for the one period of care. This serves the
purpose of allowing the Childcare Cash Rebate to be paid if two sets of child
care fees have been paid for the same period of care because, for example, an
alternate child care provider has been required because the child could not
attend the usual child care (eg due to illness) and the fees for that usual
care were still payable to hold the child's place.
Item
15
This item inserts two new sections, 36AA and 36AB, which give
power to the Health Insurance Commission to suspend payment of a claim where a
problem with the claim or the registration of the family or child care provider
has been identified. Section 36AA allows the Health Insurance Commission to
defer the making of a decision on a claim for a period of up to 28 days to allow
them to investigate the problem. Subsection 36AA(4) provides that the
Commission is deemed to have made a decision that the childcare rebate is
payable if, after 28 days, the Commission has not informed the claimant of its
decision following any investigation. Section 36AB allows the Commission to
suspend payment of a claim for 28 days to enable them to make inquiries into the
registration of the family or child care provider to which the claim relates.
Item 16 - Section 38 - Children Who Are Members of More Than One
Family
This item amends section 38 to enable the Minister to make a
determination that the Childcare Cash Rebate is payable in respect of children
who are members of more than one family, in respect of claims for two sets of
fees for the one period of care. This ensures consistent treatment of families
by making section 38 consistent with section 36.
Item 17 - Section 38
- Children Who Are Members of More Than One Family
This item
provides that a determination under section 38(1) is a disallowable
instrument.
Item 18 - Sections 45 (Calculation of rebate) and 46
(Family Payment notices and family income notices)
This item repeals
the existing sections 45 and 46 of the Act and replaces them with new sections
which restrict the 30% rate of benefit for the Childcare Cash Rebate to
families in which either parental member has been issued a notice from
the Department of Social Security stating either that the person is receiving
Family Payment or satisfies the family income test under Part A of the Family
Tax Initiative. A rebate percentage of 20% will apply to all other families.
Under subsection 46(4), it is intended that matters taken into account
by the Secretary in issuing notices under section 46 will relate to
qualification for and payability of Family Payment or whether the person to whom
the notice applies satisfies the family income test.
A review under
section 46 will be subject to the provisions available under the Social
Security Act 1991. This will enable people to appeal against a decision by
the Department of Social Security to issue or not issue a notice under the
Childcare Rebate Act 1993.
Item 19 - Section 48 - Additional
Functions of the Commission
This item inserts a new subsection (1A)
to clarify that anything done under the Act by the Managing Director of the
Commission, or by a member of the Commission's staff in the name of the Managing
Director, is to be taken to have been done by the Commission.
Item 20
- Section 49 - Registration of Carers
This item substitutes a new
paragraph 49(4)(b). This paragraph includes much of what was in the previous
paragraph but includes an additional requirement that, where the Commission
registers an applicant as a carer, it must notify the applicant of those matters
which the applicant is required to notify the Commission under section 50A.
These are matters directly effecting the carer's eligibility to be
registered.
Item 21 - Section 50 - Eligibility for
Registration
This item amends section 50 to prevent payment of the
Childcare Cash Rebate for care provided by a registered child care provider to
dependent children of that person or that person's partner or business partner
(as defined in the Act).
Item 22
This item inserts
section 50A which places a requirement on registered carers to notify the Health
Insurance Commission of any changes in their circumstances which may effect
their eligibility to be registered. The Commission must determine the matters
of which registered carers are required to notify it. While a child care
provider must meet certain criteria in order to register for Childcare Cash
Rebate purposes under the current legislation, there are no requirements for
child care providers to advise the Health Insurance Commission if they no longer
meet these criteria. This amendment places the onus on the child care provider
to inform the Health Insurance Commission of matters relevant to their status as
a registered child care provider.
Item 23 - Section 53 - Decisions
That May Be Subject to Reconsideration by the Commission
This item
clarifies that decisions relating to issues as included under section 53 are
reviewable decisions. The amendment omits the previous reference to
applications for review to be made in writing to the Health Insurance Commission
which enables the Health Insurance Commission to instigate review of decisions
without the need for clients to apply for review.
Item 24 - Section 53
- Decisions That May Be Subject to Reconsideration by the Commission
This item amends section 53 to include decisions relating to the
definition of a parent for Childcare Cash Rebate purposes as decisions that are
reviewable. This means that a refusal to consider a person to be a parent of a
child for Childcare Cash Rebate purposes on the part of the Health Insurance
Commission may be subject to review.
Item 25 - Section 53 -
Decisions That May Be Subject to Reconsideration by the Commission
This item amends section 53 to incorporate decisions made on the
suspension of payment of Childcare Cash Rebate claims as decisions that may be
subject to review.
Item 26 - Section 61 - Recovery of Amounts
Paid
This item amends subsection 61(4) to refer to the
“Managing Director”, rather than to the “Managing Director of
the Commission”.
Item 27
This item inserts a new section
62AA to provide a guideline making power for the Minister. This replaces
section 17 which previously served this purpose and is repealed by Item 11.
Item 28
This item is a saving provision to provide for
guidelines made under section 17 of the Act to continue to be in force as if it
had been made under section 62AA, which replaces section 17 in allowing for
guidelines for making determinations. This amendment also allows for
determinations made in respect of a child care service under section 27 of the
Act to continue to be in force as if it had been made under the revised section
27.
Item 29
This item provides that the application of
amendments relating to the percentage rate of benefit under the Childcare Cash
Rebate scheme applies for the week starting on 7 April 1997, and for all later
weeks.