House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Early Childhood Education, Childcare and Youth the Honourable Kate Ellis MP)

Schedule 1 - Business continuity payments

Summary

A business continuity payment is a discretionary payment that may be made in certain circumstances to approved child care services when there are circumstances beyond their control that prevent them from providing the weekly or fortnightly report through the Child Care Management System that triggers the payment of CCB fee reduction to services. The purpose of the business continuity payments is to support the service's financial viability during the period of disruption. Business continuity payments are recoverable in full, predominantly from the next available amounts that are routinely due to the service by way of CCB fee reduction payments and enrolment advances.

Background

Approved child care services are required to provide weekly reports that trigger the payment of fee reduction amounts via the Child Care Management System, which relies on electronic means of communication. Occasionally, a service cannot provide the required reports within the prescribed legislative timeframe because there is a situation beyond the service's control that affects the service's ability to do so (eg malfunction of the internet connection or the software the service is required to use or there is a local emergency such as flood or bushfire). Where a service cannot provide the weekly report on time, the fee reductions that would otherwise have been paid to the service in connection with that report cannot be calculated and paid.

Explanation of the changes

A New Tax System (Family Assistance)(Administration) Act 1999

Item 1 - After paragraph 66(1)(fa)

Item 1 is a technical amendment consequential to the amendment made by Item 27 authorising payment to a service of a business continuity payment. Item 1 inserts new paragraph (fb) into subsection 66(1) providing for inalienability of the payments specified in this subsection, to ensure that business continuity payments are inalienable and protected from any sale, assignment, charge, execution, bankruptcy or otherwise.

Item 2 - Section 70

Section 70 provides for a regime for the creation of a debt relating to payment of amounts by way of 'family assistance' (as defined in section 3 of the Family Assistance Act) and other specified payments made under the family assistance law. Item 2 amends section 70 to ensure that an amount paid by way of business continuity payments is a debt due to the Commonwealth only if the Family Assistance Administration Act expressly provides that it is. Item 2 makes a similar amendment for the purposes of the payment made under section 219Q or 219QA(2) (fee reductions) and under section 219RA (enrolment advances).

Item 3 - Subparagraphs 71G(1)(a)(ii) and (3)(a)(ii)

Subsection 71G(1) creates a debt due by the approved child care service if an amount is paid to the service by way of weekly fee reduction payments (under section 219Q) for sessions of care provided by the service and where the service's approval was suspended or cancelled before the payment was made for the session of care. The amount paid for the sessions of care occurring after the suspension or cancellation is a debt due to the Commonwealth by the service.

Subsection 71G(1) provides that fee reduction amounts that would be paid to a service but for the fact that a debt was recovered from this amount under subsection 82(2), or a set off was made against these amounts under section 219QA (set off of fee reduction amounts) or under section 219RC (set off of enrolment amounts) are included in the amounts that are to be repaid as a debt (see subparagraph 71G(1)(a)(ii)).

Item 3 amends subparagraph 71G(1)(a)(ii) to include a reference to new section 219RE (inserted by Item 27) , which mandates a set off of business continuity payments against fee reduction amounts. As a result, fee reductions which would have been paid for the sessions of care relevant to subsection 71G(1) will also constitute a debt.

Subsection 71G(3) creates a debt due by an approved child care service if an amount is paid to the service by way of enrolment advances (under subsection 219RA) and the service's approval was suspended or cancelled. The enrolment amount paid to the service is a debt due to the Commonwealth by the service.

Subsection 71G(3) provides that fee reduction amounts that would be paid to a service but for the fact that a debt was recovered from this amount under subsection 82(2), or a set off was made against these amounts under section 219QA (set off of fee reduction amounts) or under section 219RC (set off of enrolment amounts) are included in the amounts that are to be repaid as a debt (see subparagraph 71G(3)(a)(ii)).

Item 3 amends subparagraph 71G(1)(a)(ii) to include a reference to new section 219RE (inserted by Item 27) , which mandates a set off of business continuity payments against enrolment advances. As a result, an enrolment advance amount which would have been paid but for that set off will also constitute a debt.

Item 4 - After section 71GA

Item 4 inserts new section 71GB. New subsection 71GB(1) creates a debt in respect of a business continuity payment paid to a service in circumstances where the service's approval is suspended or cancelled and the amount of a business continuity payment has not been set off in full under new section 219RE (inserted by Item 27) against an amount of fee reductions or enrolment advances or a payment under subitem 97(5) or 97A(5) of Part 2 of Schedule 1 of the Child Care Management System Act that were to be made to the service. The amount of the business continuity payment that has not been set off before the day of suspension or cancellation is a debt due to the Commonwealth by the service.

New subsection 71GB(2) creates a debt in respect of a business continuity payment made to a financial institution for the credit of an account kept with that institution but the payment was not intended for the person or persons who kept that account. The whole amount paid is a debt due to the Commonwealth by that person or persons.

New subsection 71GB(2) ensures that only the amount of a debt that has not been recovered from the financial institution under the recovery mechanism in section 93A is the debt recoverable from the person or persons in whose name the account is kept. Item 8 amends section 93A to ensure that it applies to enable the recovery of business continuity payments from the financial institution.

Item 5 - Subsection 82(3)(paragraph (a) of the definition of

Item 5 is an amendment consequential to the amendment made by Item 4 to include a reference to an amount of business continuity payment paid to a service in the definition of debt under subsection 82(3). This amendment ensures that a business continuity payment debt is recoverable by the same means as specified in subsection 82(2) relating to recovery of all other debts owed by approved child care services.

Items 6 and 7 - Paragraphs 87A(2)(b) and 87B(2)(b)

Items 6 and 7 make minor technical amendments to the wording of paragraphs 87A(2)(b) and 87B(2)(b) to reflect correctly the intended operation of the setting off mechanism when a debt owed by an approved child care service is being recovered from both fee reductions (under section 87B) and enrolment advances (under section 87A) that are to be paid to the service.

Item 8 - Subsection 93A(6)(after paragraph (ba) of the definition of family assistance payment)

Section 93A enables the recovery from financial institutions of the family assistance payment amounts paid to an incorrect account. This may be where it is intended to be paid to someone who was not the person in whose name the account was kept, or to an account in the name of the person who died before the amount was paid. Item 8 amends the definition of 'family assistance payment' applicable in the context of this section to ensure that business continuity payments paid in these circumstances are recoverable from the financial institution.

Items 9 - After paragraph 104(d)

Item 9 amends section 104 so that a decision made by the Secretary relating to business continuity payments under new section 219RD (inserted by Item 27) is not reviewable by the Secretary on the initiative of the Secretary.

Item 10 - After paragraph 108(2)(da)

Item 10 amends subsection 108(2) so that where an applicant seeks a review of a decision made by the Secretary relating to business continuity payments under section 219RD (inserted by Item 27) the decision is not reviewable.

The effect of the amendments made by Items 9 and 10 is that under the family assistance law these decisions are not able to be the subject of the merits review. Business continuity payments may be made if an approved child care service is unable, in accordance with the circumstances to be specified in a ministerial determination (a legislative instrument), to give the Secretary a weekly report, as required by section 219N, that triggers the payment of fee reduction amounts to the service. Business continuity payments are designed as discretionary and fully recoverable payments that provide short-term financial assistance to approved child care services. The payment is not an entitlement and there is no lasting benefit associated with the payment. It is therefore considered that, given the nature of the payments, it would be inappropriate to provide for the merits review of decisions relating to those payments.

Items 11, 12, 13, 14 and 15 - Subparagraph 176(1)(a)(iii), at the end of paragraph 176(1)(a), at the end of subsection 176(2), at the end of subsection 176(3), and at the end of subsection 176(4)

Items 11 to 15 amend section 176, which provides that a person contravenes this section if the person obtains the payments specified in subsection 176(1) by means of impersonation, or by fraudulent means, or if the person obtains the payment as a result of making a false or misleading statement and the person was reckless as to whether the statement is false or misleading. This includes fee reductions and enrolment advances paid to approved child care services. Section 177 creates an offence for these contraventions. The offence is a strict liability offence (subsections 176(2) and (4) refer).

Items 11 to 15 make amendments to section 176, to which an offence already applies, to insert references to business continuity payments (under new section 219RD inserted by Item 27) so that a section 177 offence also applies to contraventions specified in section 176 relating to obtaining business continuity payments. Consistent with the current operation of sections 176 and 177 as they apply to the existing payments made to child care services, strict liability applies to the element of the new offence that a payment is made to the service under new section 219RD. Strict liability is an appropriate basis for the offence because of the difficulty the prosecution would have in proving fault (especially knowledge or intention) in this case and the fact that the offence does not involve dishonesty or serious imputation affecting a person's reputation.

Item 16 makes an amendment to section 178, consequential on the amendments made to section 176 by Items 11 to 15 . Section 178 provides for a court order that a person pays the Commonwealth an amount equal to any amount of the payment made as a result of the offence against section 177 if the person is convicted of that offence. The amendment made by Item 16 ensures that a court order may be made in relation to the amounts of business continuity payments.

Items 17 and 18 - Subsection 219AB(2) and at the end of section 219AB

Section 219A deals with a service's obligation to notify the Secretary of the enrolment of a child by an individual, and section 219AA deals with a service's obligation to notify the Secretary of an enrolment where the service is eligible for CCB by fee reduction for a child at risk under section 47 of the Family Assistance Act and the service has given a certificate under section 76 of that Act.

Section 219AB sets out the time and manner in which a notice of an enrolment must be given under sections 219A and 219AA. Item 18 inserts new subsection 219AB(4) which deals with the timeframe within which a notice (under sections 219A and 219AA) must be given in circumstances where a business continuity payment has been made to the service ( Item 27 inserted new section 219RD providing for business continuity payments). New subsection 219AB(4) provides that if a business continuity payment is made to a service for a specified period as notified to the service; and the payment is made because of the service's inability to give a report as required under section 219N for a particular week for enrolments that have been notified already; and the last day on which the service must notify new enrolments (as specified in section 219AB) is the same as the last day on which the report required to be given (as specified in subsection 219(5)) or occurs during the period specified in the business continuity payment notice (provided to the service under new subsection 219RD(4)); then the enrolment notice must be given no later than 7 days after the end of the specified period. In a situation where business continuity payments were made for more than one consecutive period (each separately notified), the enrolment notice must be given no later than 7 days after the end of the last of those periods.

This new deadline ensures that, where a business continuity payment is made in connection with a report required to be given by a particular day, sanctions, criminal and civil penalties do not apply for the service's failure to notify an enrolment which was due to be notified by that day or during the period for which a business continuity payment is paid.

An example is provided at the end of new subsection 219AB(4) to illustrate how this new provision will operate.

Item 17 makes a consequential amendment to subsection 219AB(2) to insert a reference to new subsection 219AB(4) inserted by Item 18 .

Items 19 and 20 - Subsection 219AF(1) and after subsection 219AF(1)

Section 219AF deals with the obligation of a service to update enrolment information where that information becomes incorrect or new information subsequently becomes available. The updated information must be provided to the Secretary within 7 days after the information becomes incorrect or new information becomes available. Item 20 inserts new subsections 219AF(1A) and (1B), which together with Item 19 (which makes a consequential amendment to subsection 219AF(1)) provide that if a business continuity payment is made to a service in relation to a specified period notified to the service; and the payment is made because of the service's failure to give a report required to be given under section 219N for a particular week for enrolments that have been notified already; and the last day on which the service must notify new enrolments (as specified in section 219AB) is the same as the last day on which the report is required to be given (as specified in subsection 219(5)) or occurs during the period specified in the business continuity payment notice (provided to the service under new subsection 219RD(4)); then the enrolment notice must be given no later than 7 days after the end of the specified period. In a situation where business continuity payments were made for more than one consecutive period (each separately notified), the enrolment notice must be given no later than 7 days after the end of the last of those periods.

This new deadline ensures that, where a business continuity payment is made in connection with a report required to be given by a particular day, sanctions, criminal and civil penalties do not apply for the service's failure to update an enrolment if the update was due by that day or during the period for which a business continuity payment is paid.

Items 21 and 22 - Subsection 219N(5) and after subsection 219N(5)

Section 219N imposes an obligation on an approved child care service to give reports to the Secretary for each week of care provided to the enrolled children whose enrolment was notified by the service and confirmed by the Secretary (subsections 219N(1) and (2) refer). A report for a week must be given by the end of the week following the week in which care was provided; the first report in respect of a new confirmed enrolment must be given within 7 days from the day of the confirmation (subsection 219N(5) refers). The report is required to be given in the form and manner or way approved by the Secretary (subsection 219N(3) refers); services must provide the report via the electronic interface maintained by the department using registered software, as approved.

The report triggers calculation of CCB fee reductions for the week reported. The fee reductions are paid to the service to be passed on to the individuals who are conditionally eligible for CCB by fee reduction under section 50F of the Family Assistance Act, or onto the service itself if the service is eligible for CCB by fee reduction under section 47 of that Act.

Sanctions (section 200 refers) and civil penalties (subsection 219N(5) refers) apply for failure to give the report in accordance with section 219N (including for failure to provide the report within the prescribed time or in the approved form, manner and way). Contravention of section 219N is an offence (subsection 219N(6) refers).

Item 22 inserts new subsection 219N(5AA), which together with Item 21 (making a consequential amendment to subsection 219N(5)) provides that if a business continuity payment is made to a service in relation to a specified period notified to the service; and the payment is made because of the service's failure to give the report required under subsections 219N(1) or (2) (within the period applicable under subsection 219N(5)), the report must be given no later than 7 days after the end of the specified period. In a situation where the payments are made for more than one consecutive period, the notice must be given no later than 7 days after the end of the last of those periods.

This new deadline ensures that, where business continuity payments are made in connection with a report, sanctions, criminal and civil penalties do not apply for the service's failure to provide the report within the time specified in subsection 219N(5).

Item 23 - After paragraph 219Q(3)(c)

Section 219Q requires the Secretary to pay to an approved child care service the amounts of fee reductions calculated in respect of a week under section 50Z or 50ZB or recalculated under section 50ZA or 50ZC. Subsection 219Q(3) provides that the requirement in section 219Q is subject to: the provisions in Part 4, which deal with overpayments and debt recovery; section 219QA which deals with set off where the amount of applicable fee reduction is reduced on recalculation; section 219RC which deals with set off where enrolment ceases; and paragraph 200(1)(h) which deals with suspension of payment in respect of fee reduction. Item 23 inserts a reference to new section 219RE providing for a set off from fee reduction amounts where a business continuity payment is made under new section 219RD (both new sections 219RE and 219RD are inserted by Item 27) .

Item 24 - Subparagraph 219QB(1)(a)(ii)

Section 219QB requires the service to remit any fee reduction amount paid to the service under new section 219Q or that would be paid but for a set off under subsection 82(2) (debt recovery), section 219QA (set off of a previously calculated higher amount) or section 219RC (set off of an enrolment advance) if it is not reasonably practicable for the service to pass on that amount to the individual or the service itself within the time required under new subsections 219B(2) or 219BA(2) (within 14 days after being notified of the amount calculated or recalculated). Item 24 inserts a reference to new section 219RE (set off of business continuity payments) in subparagraph 219Q(1)(a)(ii) that specifies the provisions authorising a set off against fee reductions, to include this new set off within the ambit of section 219QB (as it further affects the payment).

Item 25 - After paragraph 219RA(2)(c)

Section 219RA provides that the Secretary must pay the amount of the enrolment advance if an approved child care service makes an election to receive an enrolment advance in relation to a particular enrolment (in accordance with section 219R) and the Secretary confirms the enrolment (under section 219AE). Subsection 219RA(2) specifies the following provisions that may affect the payment: Part 4 (overpayments and debt recovery); section 219QA (set off where amount of applicable fee reduction reduced on recalculation); section 219RC (set off when enrolment ceases); and paragraph 200(1)(f) (withholding of enrolment advances). Item 25 inserts a reference to new section 219RE (set off of business continuity payments) in paragraph 219RA(2)(c) that specifies the provisions authorising a set off against enrolment advances, to include this new set off within the ambit of section 219RA (as it further affects the payment).

Item 26 - Paragraph 219RC(b)

An enrolment advance amount paid is recoverable when the enrolment to which it relates ceases (in the circumstances specified in section 219AD). If the enrolment ceases, section 219RC requires the Secretary to set off the amount of the advance against any other enrolment amount to be paid to the service or any fee reduction amount to be paid to the service, whether fee reductions relate to this particular enrolment or not. Paragraph 219RC(b) provides that an enrolment advance amount that would have been paid but for the fact that a debt was recovered from this amount under subsection 82(2), or a set off under section 219QA or 219RC occurred against this amount, is also recoverable in full. A business continuity payment amount made to a service is to be set off against any enrolment advance that is to be paid to the service (under new section 219RE inserted by Item 27) . Item 26 amends paragraph 219RC(b) to insert a reference to that new set off affecting enrolment advance amounts. The effect of the amendment is that an enrolment advance amount that would have been paid but for a set off of a business continuity payment will still be recoverable under section 219RC.

Item 27 - At the end of Part 8A

Item 27 inserts a new Division 4, which deals with business continuity payments to approved child care services.

New subsection 219RD(1) provides the Secretary with a discretionary power to determine that a business continuity payment is to be made to an approved child care service in relation to a period if: the service is required to give to the Secretary a report under subsection 219N(1) or (2) for a week in respect of one or more enrolments (where one or more sessions of care have been provided to the child in the week); and, the service fails to give the report for the week within the period applicable to the report under subsection 219N(5) ; and, the Secretary is satisfied that the failure to give the report is due to circumstances specified in a determination under new subsection 219RD(2).

New subsection 219RD(2) provides that the Minister must, by legislative instrument, determine the following matters: the circumstances in which the Secretary may determine that business continuity payment may be paid; and the method of determining the amounts of business continuity payment. It is intended that the relevant circumstances will encompass situations beyond the service's control, such as, a malfunction of the internet connection or the software the service is required to use, or a local emergency (flood or bushfire). The intended method of calculating the amount of the payment is to set the payment at the amount of the fee reduction payment for the last week for which the service provided a report.

This subsection authorises the Minister to set out in the instrument any other matter relating to the payment that the Minister thinks appropriate. For example, the instrument may specify the time limit on the period for which business continuity payments may be paid or such matters as the application process (if any) for obtaining the payment.

New subsection 219RD(3) provides that the Secretary must pay into a nominated bank account maintained by the service any amount of business continuity payments determined by the Secretary under new section 219RD.

New subsections 219RD(4) and (5) require the Secretary to give a notice to the service, in the form, manner and way approved by the Secretary, of the business continuity payment and of the period to which the payment relates.

New section 219RE provides that if a business continuity payment is made to an approved child care service (under new section 219RD), the Secretary must set off an amount equal to the payment against any amount of fee reductions to be paid to the service; or any enrolment advance to be paid to the service; or any payment to be made to a service resulting from acquittals under subitem 97(5) of Schedule 1 to the Child Care Management System Act; or subitem 97A(5) of that Schedule (as modified by Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009) .

Item 28 - Application

Item 28 inserts an application provision which provides that paragraph 219RD(1)(a) (as inserted by Item 21) , providing for the payment of business continuity payments, applies in relation to:

•

a report required to be given under subsection 219N(1) or (2) on or after the commencement of this item (that is, where the week to be reported on falls after the commencement day); and

•

a report required to be given under that subsection before that commencement, where the period under subsection 219N(5) of that Act relating to the report (that is, the period within which the report for a particular week has to be provided) ends on or after that commencement.

The application provision does not authorise the making of business continuity payments in respect of the reports under subsection 219N(1)) and (2) if the last day of the period within which the service is required to provide the report (under subsection 219N(5)) ended before the commencement of the amendments made by this Schedule (the day of Royal Assent).

Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007

Item 29 - Before item 98 of Schedule 1

Item 29 inserts new section 97C. New subitem 97C(1) ensures that all payments that are to be made to services under subitem 97(5) and subitem 97A(5) are subject to set off for recovery of relevant amounts of business continuity payments (under section 219RE of the Family Assistance Administration Act). New subitem 97(2) defines the term subitem 97A(5) to mean subitem 97A(5) of this Schedule as modified by the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009 .