House of Representatives

Explanatory Memorandum

Circulated by authority of the Minister for Education the Honourable Julia Gillard MP

Outline

Budget measures

Amendments are made to the family assistance law to give effect to the Budget

2008-09 measure to remove, from 7 July 2008, the minimum rate of child care benefit (CCB) for care provided to a child by an approved child care service, with the effect that an individual's rate may be reduced to nil.

Amendments are also made to make child care tax rebate (CCTR) available in respect of child care expenses incurred in a week by an individual or individual's partner if the individual who claims CCB for that care, is eligible but is not entitled to be paid CCB due to nil rate.

CCTR election commitments

The Bill gives effect to three measures related to CCTR announced by the Prime Minister as election commitments. The first measure increases, from 1 July 2008, the percentage of allowable out-of-pocket child care expenses that an individual can be paid as CCTR in an income year from 30 per cent to 50 per cent. The second measure increases the annual CCTR limit for a child from $4,354 to $7,500 starting from the income year 2008-09.

The third measure provides for CCTR to be paid quarterly to those individuals who have claimed CCB by fee reduction and either are receiving CCB as fee reductions or who would be receiving fee reductions but for nil rate. The quarterly payments will not be available to individuals claiming CCB for a past period.

The quarterly payments will be calculated after the end of a quarter, starting from the first quarter of 2008-09 and paid directly to eligible individuals. The total amount of quarterly payments made for an individual during an income year will be compared with the amount of the individual's CCTR entitlement for the year. If the amount received in quarterly payments is less than the entitlement amount for the income year, a top-up will be paid, if the amount received in quarterly payments is more than the entitlement amount for the income year, the difference will be a debt to be paid by the individual.

Debt recovery provisions

Further amendments are made to debt recovery provisions, clarifying the nature of family assistance amounts that can be set off against debts, the responsibility of an approved child care service's operator for payment of the service's debt arising under the family assistance law and the circumstances in which a debt due by an approved child care service is created. Amendments are also made to ensure that CCB amounts, which are available only for recovery of CCB debts, are also available for recovery of CCTR debts.

New civil penalties scheme

The Bill will amend the Family Assistance Administration Act to establish a civil penalties scheme which will regulate approved child care services and former approved child care services, to ensure that they comply with a range of obligations under the family assistance law.

Civil penalties for the child care compliance program were introduced on 1 July 2007 and currently only apply to the approved child care service providers' obligation to report information to the Child Care Access Hotline.

Under the new scheme the Minister will be able to seek a civil penalty order from the Federal Court of Australia or the Federal Magistrates Court, where an approved child care service (or former approved child care service where required) contravenes a civil penalty provision. The civil penalty order will determine that a monetary amount to a specified maximum must be paid by either an individual or a body corporate where relevant.

The civil penalties scheme is intended to operate in conjunction with an improved infringement notice scheme, and the current criminal offence provisions. The extension of the civil penalties scheme is intended to provide the Government with a wider range of options to encourage compliance with obligations under the family assistance law.

Expanded entry powers

The Bill will expand the purposes for which authorised officers may enter premises of approved child care services.

In undertaking on-site compliance reviews of approved child care services, officers authorised to do so under the family assistance law operate within the framework of monitoring powers in the Act. Authorised officers may only enter with the consent of the service provider or occupier of the premises. A number of offences apply if records are not provided or the occupier fails to provide an authorised officer with all reasonable facilities and assistance.

However the current powers of entry for authorised officers under the Act do not adequately support monitoring of approved child care services for compliance with the conditions for continued approval, as they are empowered to enter only 'for purposes of inspection of records' and nothing more. There are many obligations under the Act that services must meet for continuing approval which cannot be monitored by only inspecting records. For example, it would be unlikely that services subject to rules for the allocation of places would, if in breach of the rules, keep records evidencing the breach.

The Bill will therefore broaden the entry powers to allow authorised officers to enter the premises of an approved child care service for the purposes of monitoring whether the service is operating in accordance with the conditions for continued approval. This includes the power to inspect documents that presently exist, as well as make observations and generally monitor the activities being undertaken in the service in order to determine if the service is complying with the requirements of the family assistance law. The provisions in relation to acquiring requisite consent from the occupier before entering the premises have not been altered.

Other amendments

CCTR eligibility provisions are clarified to ensure that eligibility of an individual for CCTR for a week arises when the individual meets the conditions for the weekly limit of hours of 50, more than 50 or 24 hour care limit, regardless of whether the determination of the weekly limit of hours in force in respect of the individual for CCB purposes specifies this limit.

Provisions relating to variations of determination of the weekly limit of hours are clarified so that a variation made in particular circumstances has the same effect regardless of whether it is made under Subdivision U or V.

Amendments are made to align the indexation provisions for CCB and CCTR amounts, to provide for inalienability of CCTR amounts in line with the protection afforded to other family assistance payments and to ensure that an individual's CCTR entitlement determination is reviewed automatically if the individual's CCB entitlement amount is affected as a result of review.

Amendments are also made to provide the Secretary with a discretionary power to publicise information related to decisions under the family assistance law to sanction a service for non-compliance with conditions for continued approval or to immediately suspend the service's approval in the specified circumstances.

As a result of the introduction of the Child Care Management System, the current requirement of the legislation that approved child care services issue receipts when they charge individuals for care provided to the children is replaced with the requirement to provide periodic (four-weekly) statements specifying the amount of fee reduction calculated by the Secretary for the individuals and other relevant CCB information.

Minor amendments are made in relation to the giving of infringement notices under the family assistance law and to authorise delegation of the Secretary's powers.

Minor clarifying amendments are also made to the provisions relating to the allocation of child care places.

Financial Impact Statement