Explanatory Memorandum
(Circulated by the authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP)Schedule 3 - Baby bonus
Summary
This Schedule provides for eligible baby bonus claimants to have a larger portion of their baby bonus paid to them upfront, from 1 July 2011, to assist them in meeting the initial costs of welcoming a child into the family. This is one of the measures in the Government's Better Access to Family Payments election commitment.
Background
This measure is intended to assist with the upfront costs associated with a birth or adoption, such as buying a pram, baby clothes or setting up a bedroom.
Baby bonus is paid in 13 fortnightly instalments (or, in limited circumstances, 26 weekly payments). As a result of the changes made by this measure, from 1 July 2011, claimants will receive more ($500 more in 2011-12) in the first fortnightly instalment than in the 12 subsequent fortnightly instalments. The 12 subsequent payments will help parents meet ongoing costs during the baby's first six months.
The total amount of baby bonus will not change under this measure (currently $5,294), and the amount of baby bonus will continue to be indexed on 1 July each year in accordance with existing arrangements.
The amendments made by this Schedule commence on 1 July 2011.
Explanation of the changes
Item 1 repeals subsections 47(1) and (2) of the Family Assistance Administration Act and substitutes new subsections 47(1), (2) and (2A).
New subsection 47(1) sets out how baby bonus will be paid to claimants who are entitled to receive baby bonus as 13 fortnightly instalment payments. New paragraph 47(1)(a) provides that the Secretary must pay the claimant the upfront part of the amount of baby bonus that the claimant is entitled to at the end of the claimant's first instalment period. The upfront part is the amount set out in new subsection 47(2A).
New paragraph 47(1)(b) provides that, following the payment of the upfront part amount, the remainder of the baby bonus entitlement is paid over 12 fortnightly instalment periods. The amount for each of the remaining fortnightly periods is worked out by subtracting the upfront part from the total baby bonus entitlement and dividing the remaining amount by 12.
The note following new subsection 47(1) notes that section 47AB provides for rounding of the amounts of baby bonus payments.
New subsection 47(2) sets out how baby bonus will be paid to claimants who are entitled to be paid baby bonus as 26 weekly instalment payments. For claimants who are entitled to receive weekly payments, the payment for the first two weekly instalment periods is half of the upfront part of the amount of baby bonus the claimant is entitled to.
Paragraph 47(2)(d) provides that, for the remaining 24-week period the amount for each of the weekly periods is worked out by subtracting the upfront part from the total baby bonus entitlement and dividing the remaining amount by 24.
The note following new subsection 47(2) notes that section 47AB provides for rounding of the amounts of baby bonus payments.
New subsection 47(2A) sets out the amount that is the upfront part. For the 2011-2012 financial year the upfront part is $879.77. For the 2012-13 financial year and later financial years, the upfront part will be 16.18 per cent of the total amount of baby bonus that the claimant is entitled to.
Item 2 is an application provision providing that item 1 only applies to individuals who become eligible for baby bonus on or after 1 July 2011.