House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Family and Community Services, Senator the Honourable Jocelyn Newman)

Schedule 1 - Fares allowance

1. Summary of proposed changes

This Schedule amends the Social Security Act 1991 (the Social Security Act) to incorporate the student fares allowance provisions currently contained in the Social Security (Fares Allowance) Rules 1998 (the Fares Allowance Rules). Those Rules will lapse on the repeal by this Schedule of the present enabling provision.

2. Background

As a general principle, the fares allowance provisions are to be moved in this way without making any change in their effect. Those provisions themselves were originally set up with the intention of preserving the effect of the pre-existing AUSTUDY provisions so that students did not suffer any disruption to their payments because of the youth allowance changes, which happened half way through the academic year.

However, the new fares allowance provisions have been drafted on the basis that:

•

the drafting style and structure of the new provisions be more in keeping with the rest of the Social Security Act, including the standard provisions already set up there;

•

modifications be made to certain of the provisions to improve their structure and clarify their intent; and

•

certain technical and other minor changes be made to ensure that the original AUSTUDY provisions are correctly reflected and to refine certain aspects of the provisions, as outlined in detail below.

For the most part, there is no change in effect between the provisions of the Fares Allowance Rules and those of the new Part 2.26. Only the following technical and minor departures have been made:

1

The provisions have been restructured on the basis of the students qualification for each qualifying journey, rather than blanket qualification for a range of journeys made within a qualifying period (the change is in line with the pre-existing AUSTUDY provisions).

2

A standard Social Security Act provision has been included relating to claims by telephone, facsimile or computer to allow a student some leeway when claiming close to the annual claim deadline of 1 April.

3

Provisions have been introduced to enable the Minister to update the applicable rates of fares allowance by disallowable instrument. Such a provision was not necessary previously since the rates, along with all other provisions, were already included in subordinate legislation.

4

The hardship test for the payment of fares allowance in advance of the journey has been removed (in line with the pre-existing AUSTUDY provisions).

5

The payment rules have been relaxed to allow a person who is qualified for fares allowance but who is no longer receiving a student payment (fares allowance may be paid some time after the study ceases) to have the allowance paid into a bank account of his or her choice, rather than into the account into which the student payment was paid.

6

The rule about the payment of fares allowance after the students death has been relaxed so that this may occur even if the student had not actually claimed the allowance before death (in line with the pre-existing AUSTUDY provisions).

7

Because of 1 above, it has not been necessary to retain a provision under which information may be gathered to establish a students qualification - existing information gathering arrangements will be sufficient.

3. Clauses and Schedule involved in the changes

4. Explanation of the changes

Background

Fares allowance is available to a person who is either a full-time or concessional study-load tertiary student and who is receiving either youth allowance, austudy payment or pensioner education supplement. The allowance comprises an amount to cover the cost of travel between a persons permanent home and his or her educational institution at the beginning and end of the course and for certain journeys during the course of the study year.

New section 19AA - Fares allowance definitions

Item 5 sets up a new section 19AA containing the definitions used in new Part 2.26, which is substituted by item 8 .

The definitions contained in new subsection 19AA(2) are generally drawn from the Dictionary in the Fares Allowance Rules.

New subsections 19AA(3) to (5) define a persons permanent home, drawn from section 1.5 in the Fares Allowance Rules. The permanent home of a youth allowance recipient who is not independent is the home of the parent whose income is assessed for the purpose of determining the recipients rate of youth allowance. If the recipient becomes independent during the study year due to turning 25, or meeting the self-supporting criteria for independence, then the recipients permanent home will continue to be the home of the parent whose income was assessed before the recipient became independent.

If a parent has more than one home, then the permanent home will be taken to be the home that the parent uses most frequently. If the parent spends equal amounts of time in two or more homes, then the youth allowance recipient must nominate one home as the permanent home.

In all other situations, a persons permanent home is the persons usual place of residence.

New subsection 19AA(7) provides that a person is taken to be required to live away from his or her permanent home if the person is not independent, does not live at his or her permanent home and needs to live away in order to undertake the persons course.

New Part 2.26 - Fares allowance

Item 8 repeals the old Part 2.26, under which the Fares Allowance Rules were made, and substitutes a new Part 2.26. Accordingly, the Rules will lapse and will be replaced with the substantive provisions contained in the new Part.

Division 1 - Qualification for fares allowance

This Division sets down the qualification criteria for fares allowance.

First, the person must be undertaking an approved tertiary course at an educational institution in Australia.

Second, the person must be receiving either youth allowance, austudy payment or pensioner education supplement. If the person is receiving youth allowance, it must be because the person satisfies the activity test either by undertaking full-time study or by complying with a Youth Allowance Activity Agreement, the only requirement of which is to undertake an approved course of education or study. This latter requirement ensures that only youth allowance recipients who are full-time or concessional study-load students (as opposed to those who, for example, are seeking work) are qualified for fares allowance.

Third, the person must meet certain criteria relating to personal circumstances. The persons permanent home must be in Australia. As the first qualification criterion provides that the educational institution must also be in Australia, fares allowance will be available only for travel within Australia.

Furthermore, the person must be someone who is required to live away from his or her permanent home in order to undertake his or her course of study. If the person is a youth allowance recipient, then the person must be not independent and required to live away from home in order to be qualified. If the person fitted into this category, and then during the study year became independent because of turning 25 or meeting the self-support criteria for independence, then the person will be qualified for fares allowance, but only (in that capacity) for the remainder of that study year.

Independent students will be qualified for fares allowance if they live away from their permanent homes in order to undertake their course, but must have a partner or dependent child who continues to live at that permanent home. Also, a person who is enrolled as an external student qualifies.

Fourth, the journey that attracts fares allowance must be a journey specified in the Division. For a person who is not an external student, this must be a journey from the persons permanent home to his or her educational institution to start the course, a journey from the persons educational institution to his or her permanent home on completing or discontinuing the course, or a specified return journey during the study year between the persons permanent home and the educational institution. An external student who must attend the institution as part of the course is entitled to one return journey during the study year.

The last qualification criterion is that the journey must have already been made or, if not, that the Secretary is satisfied that the person intends to make it and that the travel is to be provided by a commercial operator.

Division 2 - Making and determination of claim for fares allowance

This Division explains how a claim for fares allowance is made, and is based on similar provisions for all payment types in the Social Security Act.

A person who wants to be granted fares allowance must make a proper claim for the allowance, that is, one that is in writing, in an approved form and lodged with the Department or at an approved place or with an approved person. If the claim is lodged after an earlier enquiry, including by telephone, facsimile or computer, in relation to claiming fares allowance, the claim is taken to have been lodged on the day of the enquiry.

A person must lodge a claim for fares allowance, in respect of a study year, before 1 April in the year following that study year. A claim may be accepted after that date if the claimant took reasonable steps to ensure that it would be lodged by the due date, or if circumstances beyond the persons control prevented the person from taking reasonable steps to lodge the claim in time, and the person then lodged the claim as soon as practicable after the circumstances stopped.

Either the claimant or a person on his or her behalf may withdraw (orally or in writing) a claim for fares allowance that has not been determined, in which case the claim is taken not to have been made.

The Secretary must determine that a claim for fares allowance is to be granted if satisfied that the person is qualified for the allowance.

Division 3 - Amount of fares allowance

This Division sets down the amount of fares allowance that is to be paid for a particular journey. The rates and general rules are the same as those set down in the Fares Allowance Rules. However, there is now also a provision under which the Minister may update the rates by disallowable instrument.

Division 4 - Payment of fares allowance

This Division specifies when and how fares allowance is to be paid to a person.

Fares allowance is generally to be paid after the journey is made, to the person to whom the substantive student payment is or was paid. However, if, as described in new Division 1, the Secretary is satisfied that a person intends to make the journey and that the travel is to be provided by a commercial operator, then the fares allowance is to be paid in advance to the commercial operator.

Fares allowance will generally be paid to the account into which the substantive student payment is or was paid, or into a nominated account if the student payment is not paid into an account. However, the Secretary may direct that fares allowance be paid in a different way, eg, if a person who is qualified for fares allowance is no longer receiving a student payment and would prefer the allowance to be paid into a separate account.

There is provision for the payment of fares allowance after the students death, including when the student had not claimed fares allowance before death. The Secretary may pay the allowance to the person who, in the Secretarys opinion, is best entitled to it, as long as the application for payment was made within 6 months of the students death. Also, in the case of the allowance not having been claimed before death, the person applying must do so within the students original claim lodgment period.

Division 5 - Protection of fares allowance

This Division replicates standard provisions in the Social Security Act which provide that fares allowance is absolutely inalienable and for the effect of a garnishee or attachment order.

Items 3 and 4 amend subsection 4(6A) of the Social Security Act, which modifies the meaning of member of a couple for non-independent youth allowance recipients and their partners.

That subsection operates to the effect that a person who is the partner of a youth allowance recipient who is not independent, while still a member of a couple for most purposes in the Act, is not a member of a couple in a range of specified provisions relating to the income, assets and liquid assets tests and compensation recovery provisions and in any provision that operates for the purposes of one of those specified provisions. Furthermore, the non-independent youth allowance recipient himself or herself is also not a member of a couple in a similar respect for youth allowance, nor would be any other person who has claimed youth allowance and is not independent.

Thus, if two people are in a marriage-like relationship which has lasted for less than one year, and one of them is a youth allowance recipient who is not independent on any other ground, then the relationship is (if all the usual member of a couple criteria are met) recognised for most purposes for each of their payments, including setting maximum basic rate, pharmaceutical allowance, rent assistance, etc (to the extent that it is relevant). However, the relationship is effectively disregarded for all purposes specified. This is largely beneficial. The rationale for it is that the youth allowance recipient, being not independent, is subject to the parental means test and therefore should not also be subject to the partner income and assets tests. As a matter of consistency, if the partner's income and assets are not to be taken into account for the youth allowance recipient, nor should the youth allowance recipient's for the partner.

The refinement made by these items is to add fares allowance to the list of provisions in which the modified meaning of member of a couple applies. This reflects subsection 1.6(4) of the Fares Allowance Rules and is relevant in establishing the fares allowance claimants qualification, in the sense that the person will qualify if he or she, while required to live away from his or her permanent home to study, has a partner still living at that permanent home.

Items 6 and 7 provide definitions in subsection 23(1) of fares allowance and Social Security (Fares Allowance) Rules 1998 so that provisions in the new Part as well as elsewhere in the Social Security Act operate correctly in view of the transition between the Rules and the new Part. This is particularly necessary for the information gathering and debt recovery provisions of the Social Security Act, as amended by this Schedule.

Items 9 to 28 amend relevant debt recovery provisions in the Social Security Act to make sure that fares allowance debts may be raised and recovered as appropriate. For example, a debt may be raised against a person if an amount of fares allowance has been paid and the person was not qualified for the amount; if two amounts have been paid for the same journey (that is, a duplicate payment) or if an amount of fares allowance has been calculated, and therefore paid, incorrectly. In these situations, and others, an amount is a debt due to the Commonwealth by the person in respect of whom fares allowance was paid. These provisions were previously free-standing in Part 7 of the Fares Allowance Rules. However, now that the substantive provisions will appear in the Social Security Act itself, the mainstream debt recovery provisions are to apply directly.

Similarly, items 29, 30 and 31 amend the relevant information gathering provisions in the Social Security Act (sections 1304 and 1307) and the provision that provides an offence when payment is knowingly obtained by a person who is not entitled to it (section 1347) to make sure that fares allowance is appropriately covered.

Item 32 inserts a new clause 126 into Schedule 1A to the Social Security Act to deal with the transition from fares allowance under the Fares Allowance Rules to fares allowance under new Part 2.26.

New Part 2.26 will apply in respect of claims for fares allowance made after the commencement of the new Part in respect of journeys made after that commencement. A claim made either before or after that commencement for fares allowance in respect of a journey made before that commencement, will be determined under the Fares Allowance Rules, which are continued in force for that purpose.

If a person has made a journey before the commencement of the new Part, for which he or she is qualified for fares allowance under the Fares Allowance Rules as they continue in force, then a claim must be determined for that journey under the Fares Allowance Rules before a claim under the new Part, for a journey made after its commencement, will be determined. This rule ensures that a person finalises any outstanding entitlement under the Fares Allowance Rules so that his or her qualification under the new Part may be assessed properly, taking into account all journeys made for the year.

5. Commencement

This Schedule will commence on Royal Assent.