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2008-2009
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FAMILY ASSISTANCE LEGISLATION AMENDMENT
(PARTICIPATION REQUIREMENT) BILL 2009
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Families, Housing, Community Services and Indigenous Affairs,
the Hon Jenny Macklin MP)
FAMILY ASSISTANCE LEGISLATION AMENDMENT
(PARTICIPATION REQUIREMENT) BILL 2009
OUTLINE
This bill introduces a participation requirement for family tax benefit
(FTB) Part A children aged 16 to 20 years. Under a new FTB activity test,
a young person aged 16 to 20 would not be an FTB child unless the young
person has completed their final year of secondary school or equivalent
level of education or is working towards achieving this through full-time
study. In appropriate circumstances, an individual may undertake a
specified number of hours of study per week (averaged over the period that
the individual is enrolled in the course of education or study). There
will be capacity to exempt a young person from the FTB activity test in
prescribed circumstances.
Financial impact statement
|Financial impact | |Expense |
| |2009-10 |$81.6m |
| |2010-11 |$8.7m |
| |2011-12 |-$7.0m |
| |2012-13 |-$41.4m |
This financial impact includes impacts for the Department of Education,
Employment and Workplace Relations in relation to youth allowance
participation amendments included in the Social Security Amendment
(Training Incentives) Act 2009.
FAMILY ASSISTANCE LEGISLATION AMENDMENT
(PARTICIPATION REQUIREMENT) BILL 2009
NOTES ON CLAUSES
Clause 1 sets out how the Act is to be cited, that is, as the Family
Assistance Legislation Amendment (Participation Requirement) Act 2009.
Clause 2 provides a table that sets out the commencement dates of the
various sections in, and the Schedule 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or repealed as set out in that Schedule.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:
. A New Tax System (Family Assistance) Act 1999 is referred to as the
Family Assistance Act;
. A New Tax System (Family Assistance) (Administration) Act 1999 is
referred to as the Family Assistance Administration Act; and
. Social Security Act 1991 is referred to as the Social Security Act.
Schedule 1 - FTB activity test
Summary
This Schedule introduces a participation requirement for family tax benefit
(FTB) Part A children aged 16 to 20 years. Under a new FTB activity test,
a young person aged 16 to 20 would not be an FTB child unless the young
person has completed their final year of secondary school or equivalent
level of education or is working towards achieving this through full-time
study. In appropriate circumstances, an individual may undertake a
specified number of hours of study per week (averaged over the period that
the individual is enrolled in the course of education or study). There
will be capacity to exempt a young person from the FTB activity test in
prescribed circumstances.
Background
On 30 April 2009, the Council of Australian Governments announced the
Compact with Young Australians and a National Youth Participation
Requirement. Broadly, the Compact will guarantee an education or training
place for all young Australians under the age of 25 who are not in work or
education. Under the National Youth Participation Requirement,
participation in education, training or employment will be compulsory for
all young people until they turn 17.
To support this Compact, the Australian Government has agreed to strengthen
the conditions that 16 to 20 year olds without a Year 12 or equivalent
qualification must meet in order to receive or attract payment of youth
allowance or FTB Part A. The youth allowance changes have been made by the
Social Security Amendment (Training Incentives) Act 2009.
The amendments made by Schedule 1 address the implications of strengthening
payment conditions for FTB. In broad terms, the concept of FTB child is
amended so that a young person aged 16 to 20 years is subject to an FTB
activity test. The test is satisfied if the young person has completed
Year 12 or an equivalent level of education. The test is also satisfied if
the young person is undertaking full-time study in an approved course of
education or study that assists or allows the young person to complete the
final year of school or equivalent level of education or, in appropriate
circumstances, is undertaking a specified number of hours of study in such
a course.
There are already some FTB child requirements and rate calculation rules
linked to participation in full-time study. For example, under subsection
22(6) of the Family Assistance Act, an individual aged 21 to 24 must be
undertaking full-time study (among other things) to be an FTB child. Also,
the rate calculation process for FTB Part B disregards an FTB child who has
turned 16 years of age unless the child is undertaking full-time study and
the calendar year in which the child turned 18 has not ended (subclause
29(3) of Schedule 1 to the Family Assistance Act refers). This requirement
will remain for FTB Part B and will not be affected by the changes to the
concept of FTB child.
The meaning of the concept of undertaking full-time study is defined in
subsection 3(1) of the Family Assistance Act by reference to the Social
Security Act (subsection 23(1) and section 541B). This definition will
also be relevant for the new FTB activity test.
To support the new FTB activity test, amendments are also made to
section 29 of the Family Assistance Administration Act to enable a
claimant's instalment entitlement determination to be varied if the person
fails to provide information relevant to the new FTB activity test. The
Secretary will have capacity to vary the claimant's determination so as to
establish a different rate of FTB that disregards the FTB child in respect
of whom the information or document has been sought. Section 31 of the
Family Assistance Administration Act will apply, without the need for
amendment, to enable a claimant's entitlement determination to be
appropriately varied if a child fails to satisfy the activity test (the
'event' referred to in section 31). The usual review and appeals processes
will apply.
The amendments made by this Schedule commence on 1 January 2010. However,
the amendments will apply progressively. New claimants from
1 January 2010, including end of year lump sum / past period claimants,
will be subject to the new activity test from 1 January 2010. For existing
instalment customers, it will first be necessary to collect information
relevant to the application of the new FTB activity test (under authority
of a transitional provision), a process that is expected to occur in March
2010. If the relevant information is not provided or an FTB child is found
not to be satisfying the FTB activity test, then this will affect a
claimant's entitlement to FTB by instalment from 1 May 2010. The
amendments will apply to payment of FTB for a past period that falls on or
after 1 January 2010.
Explanation of the changes
Part 1 - Amendments
Amendments to the Family Assistance Act
Items 1 to 3 insert definitions into subsection 3(1) of the Family
Assistance Act. The newly defined terms and concepts are relevant for the
purposes of the FTB activity test set out in new section 17B (inserted by
item 4).
An approved course of education or study has the meaning given by
subsection 541B(5) of the Social Security Act for the purposes of
paragraph (1)(c) of that section, that is, a course determined under
section 5D of the Student Assistance Act 1973 to be a secondary or tertiary
course for the purposes of that Act.
An individual is exempt from the activity test in the circumstances
mentioned in new subsection 17B(2).
An individual satisfies the activity test in the circumstances mentioned in
new subsection 17B(1).
Item 4 outlines the new FTB activity test.
An individual satisfies the FTB activity test if the individual has
completed their final year of secondary school or an equivalent level of
education.
An individual can also satisfy the FTB activity test by undertaking full-
time study (as defined in subsection 3(1) of the Family Assistance Act) in
an approved course of education or study that, in the Secretary's opinion,
assists or allows the individual to complete their final year of secondary
school or an equivalent level of education.
These rules are in new subsection 17B(1).
The Secretary will have the capacity to set guidelines, by legislative
instrument, for the exercise of the Secretary's power to determine that an
approved course of education or study would assist or allow a person to
complete the final year of secondary school or an equivalent level of
education (new subsection 17B(4) refers). New subsection 17B(5) requires
the Secretary to have regard to the guidelines in making such a
determination.
New subsection 17B(3) provides some flexibility, where an individual's
circumstances warrant, for the Secretary to determine a number of hours of
study per week for an individual, averaged over the period that the
individual is enrolled in the course, which would then become that
individual's normal amount of full-time study for the purposes of the
definition.
For example, where a child has almost completed their Year 12 or equivalent
qualification, but is undertaking a final unit, it would be appropriate for
the Secretary to determine this reduced number of hours as meeting the
definition of full-time study for FTB purposes.
New subsection 17B(2) sets out the situations in which an individual is
exempt from the activity test. These are if:
. there is no locally accessible approved course of education or study
(including any such course available by distance education);
. where there is such a course, there is no place available, the person
is not qualified to undertake the course, or the person lacks capacity
to undertake the course due to physical, psychiatric, intellectual or
learning disability; or
. there are, in the Secretary's opinion, special circumstances that make
it unreasonable for the person to undertake such a course.
It is not uncommon in the family assistance law for certain discretions to
be exercised in special circumstances. Generally, special circumstances
are interpreted by Courts and tribunals as those that are unusual, uncommon
or exceptional, and it is difficult for the legislation to define
exhaustively the range of circumstances that might be covered under this
description.
New subsection 17B(4) provides authority for the Secretary to set
guidelines, by legislative instrument, for the exercise of the Secretary's
power to determine that there are special circumstances that make it
unreasonable for a person to undertake an approved course of education or
study. New subsection 17B(5) requires the Secretary to have regard to the
guidelines in making such a determination. Otherwise, policy guidelines
will assist in this regard. The discretion would be exercised by an
appropriate decision maker with delegated authority, having regard to
relevant guidelines and policy. The usual review and appeals processes
would apply in relation to these decisions.
Item 5 repeals the FTB child categories in subsections 22(2) to (5) and
reworks these provisions to enable an FTB activity test to apply only to
individuals who are aged 16 to 20. The legal responsibility requirements
are also reworked into a single provision (new subsection 22(5)), which is
then cross-referenced as appropriate. The latter is a change in form, not
substance.
New subsection 22(2) covers individuals aged under 16. There is no
substantive change for this category of FTB child. New subsection 22(3)
covers individuals aged 16 and 17 and incorporates the substance of the
existing rules plus the new requirement for the individual to satisfy or be
exempt from the FTB activity test. New subsection 22(4) covers 18 to 20
year olds and also incorporates the substance of the existing rules plus
the new requirement for the individual to satisfy or be exempt from the FTB
activity test.
Items 6 to 9 amend various provisions as a consequence of the restructure
of the FTB child categories in section 22 of the Family Assistance Act.
These changes are not substantive in effect.
Section 34 of the Family Assistance Act sets out the circumstances in which
an approved care organisation is eligible for FTB in respect of an
individual (young person). Under the current rules, the individual must be
aged under 21 or aged under 25 and undertaking full-time study and meet
other prescribed requirements. Item 10 amends subsection 34(1) so that an
individual aged 16 to 20 must satisfy or be exempt from the FTB activity
test. The rules for individuals aged under 16 and individuals aged 21 to
24 are unchanged.
Amendments to the Family Assistance Administration Act
Section 29 of the Family Assistance Administration Act applies where the
claimant (or their partner) is required, under Division 1 of Part 6, to
provide information or produce a document relevant to the claimant's
eligibility for, or rate of, FTB, and there is a refusal or failure to
comply with the requirement.
In these circumstances, the Secretary can vary the claimant's instalment
entitlement determination with the effect that the claimant is not entitled
to payment of FTB for any day after the end of the last instalment period
before the variation decision is made or a later day determined by the
Secretary. The effect of the variation under section 29 is different where
the required information or documents relate to eligibility for, or rate
of, rent assistance, in which case the claimant's entitlement determination
is varied to exclude rent assistance from their rate of FTB.
In either scenario, if the claimant subsequently gives the information or
produces the document by the end of the next income year, then the
Secretary must undo the effect of the variation (and reassess eligibility
or rate having regard to the new information).
Item 11 amends section 29 to take account of the introduction of the new
FTB activity test. Under new subsection 29(2A), if the information or
documents required to be provided relate to whether a child satisfies or is
exempt from the new FTB activity test and the claimant fails to comply with
the requirement, then the Secretary will have capacity to vary the
claimant's instalment entitlement determination, disregarding the FTB child
in respect of whom the information or document has been sought.
The variation would take effect from the day after the end of the last
instalment period before the variation decision is made or a later day
specified by the Secretary. As with other variations under section 29 of
the Family Assistance Administration Act, if the claimant subsequently
gives the information or produces the document by the end of the next
income year, then the Secretary must undo the effect of the variation.
However, if the information provided indicates that the relevant child is
not meeting the new FTB participation requirement, then relevant action
will need to be taken to vary the claimant's entitlement determination
under section 31 of the Family Assistance Administration Act. The event
referred to in section 31 would be the failure of an FTB child to meet the
new FTB participation requirement. The variation would take effect from
the date of the event.
The usual review and appeals processes would apply in relation to these
decisions.
Item 12 makes a consequential amendment to subsection 29(3).
Part 2 - Application and transitional
Item 13 sets out the application rules for the amendments made by Part 1 of
Schedule 1.
While these amendments commence on 1 January 2010, they will apply
progressively.
The amendments will apply from 1 January 2010 in relation to new claims for
FTB by instalment made on or after that date. The relevant questions
relating to the new FTB activity test will be asked as part of the claim
process and the claim will then be determined and the rate of FTB
calculated on the basis of the information provided.
For existing instalment customers, it will first be necessary to collect
information relevant to the application of the new FTB activity test. This
initial data collection will occur under authority of item 14. Item 14
enables the Secretary to require the provision of information or production
of a document during the transition period (1 January 2010 to 30 April
2010) that may be relevant for the purposes of the new FTB activity test,
as if the requirement were made under Division 1 of Part 6 of the Family
Assistance Administration Act. This process is expected to occur in March
2010.
If the relevant information is not provided or an FTB child is found not to
be satisfying the FTB activity test, then this will affect a claimant's
entitlement to FTB by instalment from 1 May 2010.
This transitional provision is required because the amendments will not
apply until 1 May 2010 to existing instalment customers. After 1 May 2010,
Division 1 of Part 6 will provide authority for the Secretary to require
the provision of information or production of documents relevant to the new
FTB activity test, which potentially affects eligibility for, and rate of,
FTB.
The amendments will apply to payment of FTB for a past period that falls on
or after 1 January 2010. As with new claims for FTB by instalment after
1 January 2010, the relevant questions relating to the new FTB activity
test will be asked as part of the claim process for past period claims and
the claims will then be determined and rate of FTB calculated on the basis
of the information provided.