Explanatory Memorandum
(Circulated by authority of the Minister for Early Childhood Education, Childcare and Youth the Honourable Kate Ellis MP)Schedule 5 - Recovery of old advances to approved child care services
Summary
Under the pre-Child Care Management System, services were paid quarterly CCB advances based on CCB fee reductions expended by the services in a penultimate quarter. Under the new Child Care Management System services are now paid weekly or fortnightly in arrears.
This Schedule amends the Child Care Management System Act to clarify that over advances resulting from acquittals made prior to services' transition to the Child Care Management System, and not recovered before the transition, are fully recoverable. These amendments operate retrospectively to 29 June 2007 (commencement of the amendments made for the purposes of the Child Care Management System).
This Schedule also makes amendments to ensure that the actions that were taken by the staff of Centrelink and the Department relating to acquittals under the Child Care Management System Act of the amounts previously advanced to services have the intended legal effect.
Background
The Family Assistance Administration Act as in force before 29 June 2007 (further referred to as 'previously in force') provided for the payment to approved child care services of advance amounts to reimburse the services for amounts of CCB fee reductions the services were required to make to individuals who were determined to be conditionally eligible for CCB by fee reduction for a child. These advance amounts were estimated for a calendar quarter and paid to services usually in quarterly instalments. By the end of the following quarter, each service was required to submit a report specifying, among other things, the actual child care usage and the amount of fee reductions which the service provided to the individuals during the quarter. After submission of the report, the advance amounts paid to the service were acquitted by comparing the amount of advance paid against the actual amount of fee reductions provided by the service. Where the comparison resulted in an excess of the advance, the excess amount was recovered by a set off against any subsequent advance amount to be paid to the service. As long as a service continued to be an approved child care service, any over-advanced amount was recoverable but not as a debt; it was merely carried over to be applied as a set off against future advances, as provided for in the Family Assistance Administration Act. It was only at the time when a service's approval was suspended or cancelled that an outstanding over-advanced amount became a debt under the Family Assistance Administration Act, due to the Commonwealth by the service.
The relevant provisions of the Family Assistance Act as previously in force, relating to payment and acquittal of advances, were included in Division 2 of Part 8A of that Act. The legislation as previously in force unambiguously provided for recovery of any excess of the advance paid to services. The recovery of an excess advance amount has been an intrinsic element of the advance and acquittal system, well recognised by the services participating in that system as a result of their approval under the family assistance law.
The Child Care Management System Act repealed the provisions of the Family Assistance Administration Act dealing with advances, as part of the amendments introducing the Child Care Management System, which did not provide for the payment of advances.
The Child Care Management System Act contained transitional provisions authorising the conducting, after the services' transition to the new Child Care Management System, of acquittals of previously advanced amounts that were not yet acquitted before the transition (item 97 of the Child Care Management System Act refers). Any over-advanced amount resulting from that post-transition acquittal is a debt due to the Commonwealth by the service, recoverable by the means specified in subsection 82(2) of the Family Assistance Administration Act. This includes from any fee reduction payment and enrolment advance payments due to the service under that Act after the service's transition to the Child Care Management System (subitem 97(4) refers).
Similarly, any excess amount of the advance determined through re-acquittal or adjustment, authorised under the transitional provisions, of the advance amounts previously acquitted before the transition (under the repealed provisions of the Family Assistance Administration Act) or after (under the transitional provisions) constitute a debt due to the Commonwealth by the service, recoverable by the means specified in subsection 82(2) of the Family Assistance Administration Act (subitem 97A(4) of the Child Care Management System Act refers).
However, the transitional provisions omitted to provide a similar mechanism specifically to recover the over-advanced amounts. These were validly acquitted under the pre-transition legislative provisions but not fully recouped under the previous legislative offsetting mechanism, which stopped being available once a service transitioned to the Child Care Management System.
Explanation of the changes
Part 1 - Amendments
Division 1 - Amendments commencing on 29 June 2007
Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007
The absence in the legislation of a specific mechanism for recovery of the over-advanced amounts acquitted under the pre-transition legislative provisions, that is, under section 219S of the Family Assistance Administration Act as previously in force, but not fully recouped before the transition of services to the Child Care Management System, has not been recognised until recently. The recoveries of those amounts were carried out after the transition, in the same way as if it was an over-advanced amount acquitted under the transitional provisions of the Child Care Management System Act. The recovery was done through setting off the unrecovered amounts against any fee reduction payment and enrolment advance payments due to the service under that Act after the service's transition to the Child Care Management System.
Items 1 to 3 make amendments to the Child Care Management System Act, with effect from 29 June 2007, to confirm the recovery of the excess of the advance amount acquitted under section 219S of the Family Assistance Administration Act as previously in force, and for related purposes.
Item 1 - At the end of item 93 of Schedule 1
Item 93 deals with application of amendments made to the Family Assistance Act and the Family Assistance Administration Act by Part 1 of Schedule 1 of the Child Care Management System Act. Generally, these amendments apply to sessions of care provided by an approved child care service after the day determined for this purpose by the Secretary under item 91 (the service's 'application day').
Item 1 inserts a note at the end of item 93 of Schedule 1 to inform the reader that the relevant provisions of the Family Assistance Act and the Family Assistance Administration Act as they were in force immediately before the commencement of Schedule 1of the Child Care Management System Act continue to apply to earlier sessions of care that were provided by an approved child care service in a week starting before or on the service's application day.
Item 2 - After item 96 of Schedule 1
Item 2 inserts new item 96A into Schedule 1. New item 96A creates a debt out of an amount of the excess advance amount not offset as required by section 219S of the Family Assistance Administration Act as previously in force, before the service's 'application day'.
New subitem 96A(1) provides that new item 96A applies where:
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- under section 219S of the Family Assistance Administration Act (as in force before the commencement of this Schedule), a comparison is or has been made between the amount of an advance determined by the Secretary under section 219Q of the Family Assistance Administration Act (as in force before the commencement of this Schedule) in respect of the service and the period; and
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- and the amount of the advance exceeds the amount passed on.
New subitem 96A(2) provides that where such a comparison results in an excess amount that has not been offset (as required by section 219S of the Family Assistance Administration Act, as in force before the commencement of this Schedule), before the service's application day, that excess amount becomes a debt due to the Commonwealth by the service. The date on which the debt becomes due to the Commonwealth is either the service's application day (if the comparison has already been made by that day) or, if the comparison was made after a service's application day, the day on which the comparison is actually made.
New subitem 96A(3) provides that any debt arising under new item 96A is recoverable by one or more of the means set out in subsection 82(2) of the Family Assistance Administration Act. This includes setting off the debt amount against any fee reduction payment due to the service under sections 219Q, 219QA or enrolment advance payment under 219RA of the Family Assistance Administration Act.
New subitem 96A(4) provides that in respect of any such debt, Division 4 (non- recovery of debts) of Part 4 of the Family Assistance Administration Act applies, allowing the Secretary, for example, to write off or waive a debt.
Item 3 - Before item 98 of Schedule 1
Item 3 inserts new item 97B. New subsection 97B(1) has the effect that if a payment or payments are required to be made to a service as a result of a comparison made under item 97 or section 219S of the Family Assistance Administration Act (as in force before the commencement of this Schedule) any debt arising under new item 96A or item 97 may be recovered by setting off the amount of the debt against any of these payments. New subsection 97B(2) provides that such recovery is not limited by any of the debt recovery methods set out in subsection 82(2) of the Family Assistance Administration Act (as permitted under new subitem 96A(3)).
Division 2 - Amendments commencing on 16 May 2009
Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007
Item 4 - At the end of item 96A of Schedule 1
The Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009 modified Schedule 1 of the Child Care Management System Act by inserting item 97A under which adjustments of the acquittals of advance amounts are made on or after 16 May 2009.
Item 4 inserts new subitems (5) and (6) into new item 96A (inserted by Item 2) .
New subitem 96A(5) deals with the situation where an adjustment debt under item 97A in respect of advances paid for a period before a service's application day has occurred (after 16 May 2009) before a debt for the same period is created as a result of new item 96A applying from 29 June 2007. New subitem 96A(5) has the effect of discharging a debt created (later) under item 96A in respect of a service and a particular period if a debt has already been created under item 97A in relation to the same service and the same period.
New subitem 96A(6) defines the term 'item 97A', to mean item 97A of this Schedule as modified by Family Assistance Legislation Amendment (Child Care Management System and Measures) Regulations 2009 .
Items 5, 6 and 7 - Subitem 97B(1), Paragraph 97B(1)(a) of Schedule 1 and At the end of item 97B of Schedule 1
Items 5, 6 and 7 are amendments consequential on the amendment made by item 4 of Division 2 of Part 1 of this Schedule.
Items 5 and 6 ensure that the provisions of new item 97B apply also to a debt arising under item 97A (adjustment of acquittals). Item 97B (as inserted by item 3 of Division 1 of Part 1 of this Schedule) provides that where a payment is required to be made to a service as a result of a comparison made under item 97 or under section 219S of the Family Assistance Administration Act (as in force before the commencement of this Schedule), any debt (arising from new item 96A or item 97) may be recovered by setting off the amount of the debt against that payment. As a result of the amendments made by Items 5 and 6 , a debt arising under item 97A (after 16 May 2009) may be recovered by setting off that debt against the payment required under item 97 or item 97A.
Item 7 inserts new subitem 97B(3). New subitem 97B(3) defines the term item 97A , for the purposes of item 97B, to mean item 97A of this Schedule as modified by Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009 .
Part 2 - Other provisions
Item 8 - Comparisons of amounts of advances and amounts passed on
These amendments relate to acquittals of advances made under subitem 97(2) or 97A(2) of the Child Care Management System Act after commencement of those items; that is, after 29 June 2007 and 16 May 2009, respectively.
Subitems 8(1) and 8(2) provide that any of the following things that an officer (within the meaning of the Family Assistance Administration Act) did before the commencement of Item 8 (that is, before the day of Royal Assent), without authority from the Secretary, is taken always to have applied as if the thing had been done by the Secretary:
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- comparison of amounts described in subitem 97(2), or subitem 97A(2), of Schedule 1 to the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007 (that is, the acquittal or adjustment of the acquittal of advance amounts under those items); or
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- giving of notice purporting to be a notice of either a debt arising under subitem 97(4), or subitem 97A(4), of that Schedule, or a payment under subitem 97(5), or of subitem 97A(5), of that Schedule.
Subitem 8(3) defines the term, item 97A of Schedule 1 to the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007 (for the purposes of Item 8 of Part 2 of this amending Schedule) to mean item 97A of Schedule 1as modified by Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009 as in force at the commencement of this definition.