Senate

Revised Explanatory Memorandum

(Circulated by the authority of the Minister for Social Services, the Hon Christian Porter MP)

Schedule 12 - Establishment of a drug testing trial

Summary

This Schedule provides for a two year trial in three regions involving mandatory drug testing for 5,000 new recipients of Newstart Allowance and Youth Allowance (other).

Background

This Schedule will enable mandatory drug testing to be trialled for two years from 1 January 2018 in three regions for new recipients of Newstart Allowance and Youth Allowance (other).

Substance abuse is a major barrier to social and economic participation and is not consistent with community expectations around receiving taxpayer funded welfare payments. The aim of the trial is to improve a recipient's capacity to find employment or participate in education or training by identifying people with drug use issues and assisting them to undertake treatment. The trial will test the effectiveness of decreasing substance abuse through random drug testing, in an effort to improve employment outcomes for trial participants.

The trial will be conducted in three locations. These locations will be selected by considering a range of factors, including crime statistics, drug use statistics, social security data and health service availability. The trial locations will not include Community Development Program areas.

Precondition of claim

A person making a claim for Newstart Allowance or Youth Allowance (other) will be required to acknowledge in the claim form that they may be required to undergo drug testing as a condition of payment. The consequence of failing to acknowledge in the claim form that they may be subject to drug testing for claimants who reside in a trial region, is that their claim will be rejected.

Drug testing regime

New recipients of Newstart Allowance and Youth Allowance (other) after 1 January 2018 will be randomly selected to undertake a drug test. Recipients selected will be notified to attend an appointment at their local Centrelink office consistent with standard Department of Human Services appointment requirements.

At the appointment, recipients will be notified they are required to undertake a random drug test. Drug testing of selected Newstart Allowance and Youth Allowance (other) recipients will be administered by third party drug testing providers contracted for that purpose, adhering to strict privacy principles specified in legislation.

Recipients who test positive to this initial drug test will be subject to income management for a 24 month period. If the recipient's payment is cancelled during the 24 month period and later reclaims, they will return to income management for the remainder of the 24 months. If the recipient's first test is negative they will not be subject to income management.

Recipients who test positive to the initial drug test, in addition to being placed on income management, will be subject to further random tests during the trial period, the first of which will occur within 25 working days of the initial positive test.

Recipients who test positive to more than one drug test in the 24 month period will be referred to a Department of Human Services' contracted medical professional for assessment. If the medical professional recommends treatment, the recipient will be required to complete one or more treatment activities designed to address their substance abuse as part of their Employment Pathway Plan. These activities may include rehabilitation, counselling or ongoing drug testing. Where treatment is not immediately available, recipients will be required to take appropriate action such as being on a waiting list to satisfy part of their mutual obligation requirements. Recipients with a drug treatment activity in the plan may still be required to undertake other activities, including job search depending on their circumstances.

Further drug test/s will be conducted during the 24 months of the trial period.

Recipients, who fail to meet the terms of their Employment Pathway Plan including any drug treatment activities, would be subject to the participation payment compliance framework. Reasonable excuse provisions would continue to apply; however, not where the reason is wholly or substantially attributable to drug or alcohol use.

Recipients who refuse to take the test (whether first or subsequent tests) will have their payment cancelled with effect from the day on which the refusal occurred, unless the person has a reasonable excuse. Suspension will not be an option.

If the person then makes a new claim for Newstart Allowance or Youth Allowance (other) following cancellation, the payment will not be payable for a 4-week period from the date of cancellation. Recipients who subsequently return to payment after their waiting period will still be subject to the trial and required to undergo random drug testing as a condition of their ongoing receipt of payment. The 4-week period only applies to recipients whose payment was cancelled because of their refusal to take the drug test despite acknowledging and accepting that they may be subject to drug testing as part of their initial claim for payment.

If a recipient tests positive to a second or any subsequent test, they will be required to repay the cost of these tests through a small percentage reduction of their fortnightly social security payment. Hardship provisions will be operable to ensure no one is adversely affected.

The cost of the test (that is, the amount to be repaid) will be an amount determined by the Secretary in an instrument and will be no more than the lowest cost at which the test is available to the Department of Human Services under their contract with the drug testing provider. The cost will be deducted from future social security payments at a rate percentage set by the Secretary, capped at a maximum of 10 per cent. The Secretary will also be able to vary the person's repayment rate if they are experiencing financial hardship, or increase that rate at their request.

If a recipient disputes the result of their initial drug test and requests another test, the retest will be at the recipient's own expense if the result of the retest is positive.

If the recipient's payment, for reasons other than refusing to take a drug test, is suspended or cancelled prior to the second drug test and the recipient subsequently becomes qualified and the payment is payable, the second test will be conducted within 25 working days of the person becoming qualified and the payment being payable (irrespective of any gap in payment) during the trial period.

Compliance with notices

Recipients who are part of the drug testing trial and fail to attend scheduled appointments with the Department of Human Services will have their payment suspended until they attend a rescheduled appointment. When the recipient attends a rescheduled appointment their payment will be resumed but will not be backdated to the date of suspension, unless the recipient has a reasonable excuse for not attending, such as unforseen caring responsibilities. If no reasonable excuse exists, their payment will be payable from the date of their attendance at the rescheduled appointment. After 13 weeks, if the recipient has not attended an appointment, their payment will be cancelled. If the recipient provides prior notice to the Department of Human Services of a reasonable excuse for not being able to attend the appointment, such as work commitments, their appointment will be rescheduled.

The amendments made by this Schedule commence on 1 January 2018 if the Social Services Legislation Amendment (Welfare Reform) Act 2017 receives Royal Assent before 1 January 2018. If the Act receives Royal Assent on or after 1 January 2018 this Schedule will commence on the first 1 January, 1 April, 1 July or 1 October to occur after the day this Act receives Royal Assent.

Explanation of the changes

Part 1 - Main amendments

Social Security Act

Item 1 amends subsection 23(1) and inserts a number of definitions for the purposes of the drug testing trial. Drug test means, in relation to a person, a test that is carried out in accordance with applicable drug test rules (if any) directly or indirectly under a contract with the Commonwealth that was entered into for the purposes of carrying out the test and is for the presence of a testable drug in a sample taken in the drug test trial period from the person's saliva, urine or hair. Drug test rules means rules made under new section 38FA. Drug test trial area means an area prescribed by the drug test rules for the purposes of this definition. The drug test rules are made under new section 38FA. New section 38FA provides for the Minister to make an instrument prescribing up to three discrete areas for the purposes of the definition of drug test trial area. Drug test trial period means the 24 months starting on the commencement of this definition. That is, if the amendments establishing the two year drug testing trial commence on 1 January 2018, then the 24 month period starts on 1 January 2018 and ends on 31 December 2019. However, if the amendments commence on, say, 1 April 2018, then the 24 month period starts on 1 April 2018 and ends on 31 March 2019, and so on. Drug test trial pool member provides that a person is a drug test trial pool member at a time if:

(a)

that time is in the drug test trial period (as defined in section 23(1)); and

(b)

at that time the person's usual place of residence is in a drug test trial area; and

(c)

at that time the person is:

(i)

receiving Newstart Allowance; or

(ii)

receiving Youth Allowance (other) (that is, a Youth Allowance recipient who is not a full-time student or a Youth Allowance Australian apprentice);

as a result of a claim made during the drug test trial period; and

(e)

if the claim was for Youth Allowance-the claim was for Youth Allowance (other).

Positive drug test means, in relation to a person, an indication by a drug test that a testable drug was present in a sample of the person's saliva, urine or hair given by the person in compliance with a requirement notified to the person under new paragraph 63(4)(c) of the Social Security Administration Act.

Testable drug means methamphetamine, methylenedioxy-methamphetamine, tetrahydrocannabinol, opioids or another substance prescribed by the drug test rules for the purposes of this definition.

Item 2 inserts new paragraph (cb) into the definition of waiting period so that a Newstart Allowance drug test refusal waiting period applies for the purposes of new sections 623C and 623D.

Item 3 adds new section 38FA at the end of Part 1.3. New section 38FA provides a discretion for the Minister to make drug test rules, by legislative instrument, providing for and in relation to the following:

(a)

prescribing up to three discrete areas for the purposes of the definition of drug test trial area in subsection 23(1);

(b)

prescribing substances for the purposes of the definition of testable drug in subsection 23(1);

(c)

giving and taking of samples of persons' saliva, urine or hair for use in drug tests;

(d)

dealing with such samples;

(e)

carrying out drug tests;

(f)

giving of results of drug tests in certificates or other documents and the evidentiary effect of those certificates or documents;

(g)

confidentiality and disclosure of results of drug tests;

(h)

requirements relating to contracts entered into for the carrying out of drug tests;

(i)

keeping and destroying records relating to samples for use in drug tests or drug tests.

The intention is that the drug test rules will set out high level protocols that will apply for conducting the drug tests, including in relation to the use and disclosure of test results. This provides additional safeguards to ensure the operation of the drug testing is consistent with the requirements under the Privacy Act 1988 and the confidentiality provisions in the Social Security Administration Act.

Item 4 inserts new subsection 544B(1AA) into section 544B. New section 544B(1AA) provides that one of the requirements of a Youth Allowance Employment Pathway Plan that is in force in relation to a person must relate to the person undertaking treatment for the use of drugs. This requirement applies if a drug test trial pool member who has had two or more positive drug tests and has undergone a medical, psychiatric or psychological examination in accordance with a notice given under subsection 63(4) of the Social Security Administration Act after the second (or further) positive drug tests and the report of the examination given to the Secretary recommends that the person undertake treatment for the use of drugs.

The intention is that the Secretary could formulate the requirement as one to undertake treatment (if treatment is available) or as one to commit to undertaking treatment if it is not available when the requirement is included in the plan but becomes available later.

Item 5 adds new paragraph 549(2)(c) so that Youth Allowance is not payable to a person while the person is subject to a drug test refusal waiting period for the purposes of new sections 549EA and 549EB.

Item 6 inserts new section 549EA. New section 549EA sets out the circumstances in which a person is subject to a drug test refusal waiting period. A person is subject to this waiting period if the person fails to comply with a notice given under paragraph 63(4)(c) of the Social Security Administration Act, that results in the person's Youth Allowance not being payable under section 64 of the Social Security Administration Act and being cancelled under section 80 of that Act. If, after the non-compliance with the notice, the person qualifies for Youth Allowance (other), the person will be subject to the waiting period.

The intention is that a person's payment will be cancelled with immediate effect, if the person refuses a drug test, noting that they previously acknowledged and accepted potential drug testing as a condition of payment when they claimed the payment. Consequently, cancellation will trigger the waiting period to prevent Youth Allowance being payable for that period if the person makes a new claim for Youth Allowance.

The note under section 549EA clarifies that paragraph 63(4)(c) of the Social Security Administration Act is about giving a sample for a drug test.

New section 549EB provides for the length of the drug test refusal waiting period. The period is 28 days starting on the day of the cancellation of the person's Youth Allowance.

Item 7 inserts new subsection 606(1AA) into section 606. New subsection 606(1AA) provides that one of the requirements of a Newstart Employment Pathway Plan that is in force in relation to a person must relate to the person undertaking treatment for the use of drugs. This requirement applies if a drug test trial pool member who has had two or more positive drug tests and has undergone a medical, psychiatric or psychological examination in accordance with a notice given under subsection 63(4) of the Social Security Administration Act after the second (or further) positive drug tests and the report of the examination given to the Secretary recommends that the person undertake treatment for the use of drugs.

The intention is that the Secretary could formulate the requirement as one to undertake treatment (if treatment is available) or as one to commit to undertaking treatment if it is not available when the requirement is included in the plan but becomes available later.

Item 8 adds new sections 623C and 623D at the end of Subdivision E of Division 1 of Part 2.12. New section 623C sets out when a drug test refusal waiting period applies due to a person's non-compliance with a notice requiring the person to do an act described in paragraph 63(4)(c) of the Social Security Administration Act. A person is subject to this waiting period if the person fails to comply with a notice given under paragraph 63(4)(c) of the Social Security Administration Act, that results in the person's Newstart Allowance not being payable under section 64 of the Social Security Administration Act and being cancelled under section 80 of that Act.

The note under section 623C clarifies that paragraph 63(4)(c) of the Social Security Administration Act is about giving a sample for a drug test.

New section 623D provides that the duration of the drug test refusal waiting period is 28 days starting on the day of the cancellation of the person's Newstart Allowance.

Item 9 inserts into the Youth Allowance Rate Calculator new paragraph (ba) in step 14 of the method statement under point 1067G-A1. Under new paragraph (ba), the amount of the drug test repayment deduction (worked out in accordance with Part 3.16C) should be subtracted from the provisional fortnightly payment rate if there is any amount remaining after subtracting any special employment advance deduction or any advance payment deduction.

Item 10 inserts into Benefit Rate Calculator B new paragraph (ba) in step 7 of the method statement under point 1068-A1. Under new paragraph (ba), the amount of the drug test repayment deduction (worked out in accordance with Part 3.16C) should be subtracted from the provisional fortnightly payment rate if there is any amount remaining after subtracting any special employment advance deduction or any advance payment deduction.

Item 11 inserts new Part 3.16C (Drug test repayment deductions) after existing Part 3.16B (Advance payment deductions). This new Part inserts new sections 1206XA, 1206XB, 1206XC, 1206XD, 1206XE and 1206XF.

New section 1206XA provides for drug test repayment deductions to be made from a person's Newstart Allowance or Youth Allowance (other). New subsection 1206XA(1) provides that a drug test repayment deduction is to be made from the rate of Newstart Allowance or Youth Allowance (other) that is payable to a person.

New subsection 1206XA(2) provides that a person has a drug test repayment deficit, at a time, if the sum of all the drug test repayment amounts that arose for the person before that time exceeds the sum of the amounts by which instalments of social security benefit paid to the person before that time have been properly reduced by the making of drug test repayment deductions. The intention is that all a person's drug test repayment amounts (for life) and all reductions of instalments (for life) are taken into account in working out whether a person has a deficit.

For example, if a person has returned a positive drug test, not including the initial drug test, they will be required to repay the amount determined by the Secretary (not greater than the lowest test cost available to the Department of Human Services under contract), an amount of $80 has been used for the purposes of this example. Repayment will commence from the next social security payment once the Department of Human Services become aware of a drug test repayment requirement for a person. If the repayment rate is set by the Secretary at 5 per cent, and the person's rate of Newstart Allowance is calculated to be $535.60 - the maximum basic rate - this person will have an amount of $26.80 deducted from their payment rate and credited to their drug test repayment balance. This will reduce their outstanding balance to $53.20. If they subsequently return a further positive drug test, the amount to be repaid for that test will be added to their balance. If a person leaves payment with an outstanding drug testing repayment balance and subsequently returns to payment, they will continue to pay off that balance by rate reduction.

For clarity, the reference to social security benefit by virtue of subsection 1206XA(1) is Newstart Allowance or Youth Allowance (other).

The reference to 'proper' reduction is intended to cover the possibility that deductions may be made because of a positive drug test that a contractor later says should not be taken into account. New subsection 1206XA(5) will then apply so that the amount of the deficit can be recalculated to exclude the drug test repayment amount that arose from that test.

New subsection 1206XA(3) provides that the amount of the drug test repayment deficit is the amount outstanding (the excess) that is owed by a person for any positive drug test at a point in time after a person's instalment of Newstart Allowance or Youth Allowance (other) has been reduced by the making of a drug test repayment.

New subsection 1206XA(4) provides that a drug test repayment amount arises for each positive drug test for the person if the drug test was carried out at the request of the person and use a sample given by the person in compliance with the first notice given under paragraph 63(4)(c) of the Social Security Administration Act.

New subsection 1206XA(5) provides that a drug test repayment amount is taken not to have arisen for a person from a positive drug test if the contractor who carried out the test gives a written notice to the Secretary that the test should not be taken into account for the purposes of this Part. For example, if the contractor becomes aware that of a false positive test result such as when they are provided with evidence that the person is taking legal medication which may cause this, the contractor will be required under the drug testing rules to notify the Secretary that the test should not be taken into account for the purposes of a drug test repayment deduction. The criteria for guiding when the contractor would give a written notice will be provided in the drug test rules.

New subsection 1206XA(6) provides that the amount of the drug test payment amount is the amount prescribed by legislative instrument under subsection 1206XA(7).

New subsection 1206XA(7) provides a discretion for the Secretary to make a legislative instrument for the purposes of subsection 1206XA(6). In doing so, the Secretary must have regard to the lowest cost to the Commonwealth of any drug test that could be carried out at the time the legislative instrument is to commence.

New section 1206XB sets out the basic calculation for working out the amount of the drug test repayment deduction.

New subsection 1206XB(1) provides that the amount of a drug test repayment deduction is the percentage, worked out in accordance with subsection 1206XB(3), and section 1206XC or 1206SD (if relevant).

To work out the amount of Newstart Allowance that is payable to a person where a drug test repayment deduction applies, the amount of the person's rate of Newstart Allowance is worked out under step 7 of the method statement in point 1068-A1, disregarding paragraph (ba) and (c) of that step.

To work out the amount of Youth Allowance that is payable to a person where a drug test repayment deduction applies, the amount of the person's rate of Youth Allowance is worked out under step 14 of the method statement in point 1067G-A1, disregarding paragraphs (ba) and (c) of that step.

New subsection 1206XB(2) provides that subsection (1) has effect subject to section 1206XE.

New subsection 1206XB(3) provides that for the purposes of subsection (1), the percentage is the percentage prescribed by legislative instrument under subsection (4). Subsection (3) has effect subject to sections 1206XC and 1206XD.

New subsection 1206XB(4) provides a discretion for the Secretary to make a legislative instrument for the for the purposes of subsection (3). The instrument must not prescribe a percentage greater than 10 per cent.

New section 1206XC enables a person to request a greater percentage for their drug test repayment deduction.

New subsection 1206XC(1) provides that the percentage for working out a person's drug test repayment deduction is increased to a greater percentage if the person asks the Secretary in writing for it to be increased.

New subsection 1206XC(2) provides that subsection (1) does not apply if the Secretary is satisfied that the person would suffer severe financial hardship if the percentage is increased.

New section 1206XD provides for the Secretary to reduce the amount of the percentage for a person's drug test repayment deduction if the person is in severe financial hardship.

New subsection 1206XD(1) provides a discretion for the Secretary to determine that, for a specified period, the percentage for working out a person's drug test repayment deduction may be a percentage (which may be nil) that is less than the percentage that would otherwise apply, if the Secretary is satisfied that:

(a)

the person's circumstances are exceptional; and

(b)

the person would suffer severe financial hardship if the percentage that would otherwise apply were to continue to apply.

New subsection 1206DX(2) provides a discretion for the Secretary, at any time while the determination is in force, to:

(a)

vary the determination so that a percentage that is greater than that previously determined under subsection (1) will apply but will be less than the percentage that applied immediately prior to the determination under subsection (1) have been made; or

(b)

revoke the determination;

but only if the Secretary is satisfied that the person would not suffer severe financial hardship because of the variation or revocation.

New section 1206XE provides for the final drug test repayment deduction where the person's drug test repayment deduction is greater than the amount of the person's drug test repayment deficit. In these circumstances, if an instalment of a person's Newstart Allowance or Youth Allowance is reduced by a drug test repayment deduction that is greater than the amount of the person's drug test repayment deficit, then the deduction is reduced so that the person's instalment is reduced by the amount of the deficit. For example, where a person has a drug test repayment balance of $20 and they are entitled to the maximum basic rate of Newstart Allowance that fortnight - $535.60 - their repayment amount will only be $20 and not the $26.80 that would otherwise be calculated according to the rate calculator formula.

New section 1206XF provides for the rounding up to the nearest cent (rounding 0.5 cents upwards) for amounts worked out under this Part.

Social Security Administration Act

Item 12 inserts new subsection 37(7A) into section 37. New subsection 37(7A) modifies the obligation for the Secretary to grant a claim for Newstart Allowance or Youth Allowance under subsection 37(1) so that the requirements under subsection 37(1) are subject to subsection 37(7A). Subsection 37(7A) provides that despite subsections (2), (3), (6) and (7), the Secretary must not, in a drug test trial period, determine that a claim for Newstart Allowance or Youth Allowance by a potential drug test trial pool member is to be granted unless the Secretary is satisfied that the claimant acknowledged in the claim that the claimant could be required to give samples for drug tests to be carried out in that period.

Item 13 is consequential to item 15, which inserts a new paragraph into subsection 63(4).

Item 14 inserts new subsection 63(2A), which provides a discretion for the Secretary to notify a person under subsection (2) that he or she is required, at or within a specified time, to do an act described in paragraph (2)(a) if:

(a)

the person was earlier, while the person was a drug test trial pool member, required under that subsection to do that act or thing but did not comply with that earlier requirement; and

(b)

because of that non-compliance and subsection 64(1), the Newstart Allowance or Youth Allowance that the person received as a drug test trial pool member is not payable to the person (whether or not the payment is suspended).

To avoid doubt, the notification is taken for all purposes to be under subsection (2).

Item 15 inserts new paragraph 63(4)(c), which provides that if the Secretary is of the opinion that a person who is a drug trial pool member should give a sample of a particular kind at a particular place for a drug test to be carried out (at that place or elsewhere) on the sample, the Secretary may notify the person that he or she is required within a specified time to give a sample.

Item 16 inserts new subsections 63(4A) and (4B). New subsection 63(4A) provides that the Secretary must not notify a person of a requirement to give a sample for a drug test as described in paragraph 63(4)(c) if 5,000 other persons have given samples in compliance with the such requirements. This is whether or not any of those 5,000 persons had given two or more samples under one or more such requirements.

The note under subsection 63(4A) clarifies that this does not prevent the Secretary from notifying a particular person multiple times of such requirements, as long as fewer than 5,000 other persons have given samples under such requirements.

New subsection 63(4B) provides that the Secretary may also notify a person under subsection 63(4) that he or she is required, at or within a specified time, to do an act or thing described in paragraph (4)(b) or (c) if:

(a)

while the person was a drug test trial pool member, the person was earlier required under that subsection to do that act or thing or under subsection (2) to attend an office of the Department but did not comply with that earlier requirement; and

(b)

because of that non-compliance and subsection 64(1), the Newstart Allowance or Youth Allowance the person received as such a member is not payable to the person (whether or not the payment is suspended).

To avoid doubt, the notification is taken for all purposes to be under subsection (4).

Item 17 inserts new subsection 64(1AA) into section 64. New subsection 64(1AA) provides that a notice of a requirement to do an act described in paragraph 63(4)(c) is not unreasonable for the purposes of paragraph 64(1)(c) merely because of the nature of the act (even if it is not the first notice requiring the person to do such an act). For example, if a person attends an office of the Department in accordance with a section 63(2) notice and, at that time, is given a section 63(4)(c) notice to give a sample immediately (or shortly after attending the office), the requirement to give a sample is not unreasonable merely because of its nature, for the purposes of paragraph 64(1(c).

Item 18 inserts new section 64A after section 64, which provides for the contractual arrangements that relate to drug tests. New subsection 64A(1) provides that, for the purposes of paragraph 63(4)(c), the Secretary may, on behalf of the Commonwealth, enter into contracts for the carrying out of drug tests as mentioned in that paragraph. New subsection 64A(2) provides that a contract mentioned in subsection (1) must meet any requirements prescribed by the drug test rules. New subsection 64(3) sets out that without limiting subsection (2), the drug test rules may require a contract mentioned in subsection (1) to include provisions requiring the following:

(a)

give the Secretary written notice of the results of the drug test. In this situation, the contractor must be satisfied that there is a positive drug test result for the person; and

(b)

give notice as mentioned in paragraph 123UFAA(1A)(c) (written notice that the person should be subject to the income management regime, see item 24) in circumstances prescribed by the drug test rules. In this case, if a person's drug test result is positive, the contractor will give a notice to the Secretary that the person should be subject to income management; and

(c)

withdraw or revoke a notice as mentioned in paragraph 123UFAA(1A)(d) in circumstances prescribed by the drug test rules. For example, if a person requests a second drug test which results in a negative result or if the contractor receives evidence that the person is taking legal medication which could cause a false positive result, the contractor can withdraw or revoke a notice that was previously given a notice under paragraph 123UFAA(1A)(c); and

(d)

give notice as mentioned in subsection 1206XA(5) of the Social Security Act (written notice that the a positive drug test should not be taken into account, see item 11) in circumstances prescribed by the drug test rules. For example, if the contractor becomes aware that of a false positive test result such as if the contractor received evidence that the person is taking legal medication which could cause a false positive result, the contractor will be required under the drug testing rules to notify the Secretary that the test should not be taken into account for the purposes of a drug test repayment deduction; and

(e)

any subcontracts to include provisions requiring matters mentioned in paragraphs (a) to (d).

Item 19 is consequential to item 20, which is a technical amendment for the purposes of adding new subsections into section 110A.

Item 20 adds new subsection 110A(2) and (3), which sets out the consequence if a drug test pool member fails to comply with a notice given under paragraph 63(2)(a), 63(4)(b) or 63(4)(c).

In accordance with new subsection 110A(2), subsection 110A(3) applies if:

(a)

a drug test pool member's Newstart Allowance or Youth Allowance was suspended under subsection 64(1) because the person did not comply with a requirement (the earlier requirement) to do an act or thing in accordance with a notice that was given under paragraph 63(2)(a), 63(4)(b) or 63(4)(c) while he or she was a drug test pool member; and

(b)

if the earlier requirement was to do an act described in paragraph 63(2)(a), it is reasonable to expect that, had the person complied with the earlier requirement, the person would have been required to do an act (give a sample) described in paragraph 63(4)(c); and

(c)

the person complies with:

(i)

a later requirement under subsection 63(2) or (4) to do the act or thing required by the earlier requirement; and

(ii)

if the earlier requirement was to do an act described in paragraph 63(2)(a), a later requirement to do an act (give a sample) described in paragraph 63(4)(c); and

(d)

a favourable determination is made under section 85 to resume payment of social security payment to the person.

New subsection 110A(3) provides that a favourable determination takes effect, or is taken to have taken effect:

(a)

when the person met the condition in paragraph 110A(2)(c); or

(b)

if the Secretary is satisfied that the person had a reasonable excuse for not complying with the earlier requirement, on the day on which the person was required by the earlier requirement to do the act or thing concerned.

The intention is that a person's Newstart Allowance or Youth Allowance will not be backdated to the date of suspension but will only be payable from the date the person attended an appointment in accordance with the later notice, unless the Secretary is satisfied that the person had a reasonable excuse (for example, was required to attend a job interview at short notice) for not attending the appointment in accordance with the earlier notice and can provide evidence of this.

Item 21 inserts new paragraph (gb) in the simplified outline of Part 3B which appears in section 123TA. New paragraph (gb) sets out a new circumstance in which a person may become subject to the income management regime in Part 3B. The new paragraph provides that a person may become subject to the income management regime if there is a positive drug test for the person and the tester tells the Secretary that the person should be subject to the income management regime.

Item 22 repeals the current heading for section 123UFAA and substitutes a new heading. The new heading reflects the inclusion in section 123UFAA of new subsection 123FUAA(1A), which provides for the referral of a person to income management if the person has a positive drug test.

Item 23 amends paragraph 123UFAA(1)(g) to insert the words 'or subsection (1A) of this section' at the end of the paragraph. This amendment is intended to ensure that if a person is subject to the income management regime under new subsection 123UFAA(1A) (see item 24), the person cannot become subject to the income management regime under subsection 123UFAA(1). Therefore, if a person has already been referred onto income management by way of a written notice from a contractor under new subsection 123UFAA(1A) a person cannot be subject to income management under subsection 123UFAA(1) on the basis of a referral from a recognised State/Territory authority.

Item 24 inserts new subsections 123UFAA(1A), (1B) and (1C) after subsection 123UFAA(1).

New subsection 123UFAA(1A) provides for a new circumstance in which a person can be made subject to the income management regime in Part 3B.

Under new subsection 123UFAA(1A) a person is subject to the income management regime at a particular time (the test time) if:

(a)

at the test time, the person is an eligible recipient of a category H welfare payment (as defined in section 123TC); and

(b)

before the test time, there was a positive drug test for the person; and

(c)

in the 24 months, or longer period (if any) determined under new subsection 123UFAA(1B), before the test time, the contractor who carried out the test gave the Secretary a written notice saying that the person should be subject to the income management regime under this subsection. The circumstances under which such a notice may be given will be provided in the drug test rules, for instance, if the drug test result is positive; and

(d)

at the test time, the notice has not been withdrawn or revoked; and

(e)

at the test time, the person is not covered by a determination under new subsection 123UFAA(1C); and

(f)

if, at the test time, the person has a Part 3B payment nominee-the Part 3B payment nominee is not an excluded Part 3B payment nominee; and

(g)

at the test time, the person is not subject to the income management regime under section 123UC (the child protection measure of income management), 123UD (the school enrolment measure of income management), 123UE (the school attendance measure of income management) or 123UF (referral onto income management by the Queensland Commission) or subsection (1) of this section (referral onto income management by a recognised State/Territory authority).

New subsection 123UFAA(1B) provides that the Secretary may by legislative instrument, determine a period longer than 24 months for the purposes of paragraph(1A)(c). The intention is to give the Secretary the discretion to extend the period of income management for longer than the 24 month trial period. For example, if a person continues to return a positive drug test during the 24 month trial period, the person will continue to be subject to income management after the drug testing trial ends. It is intended that this provision would be used where it is considered to be beneficial to a person's drug rehabilitation outcome to remain on income management for a longer period of time.

New subsection 123UFAA(1C) provides that the Secretary must determine that a person is not subject to the income management regime under new subsection 123UFAA(1A) if the Secretary is satisfied that being subject to the regime under that subsection poses a serious risk to the person's mental, physical or emotional wellbeing. The intent of this provision is to protect those persons who, based on documentary evidence, may seriously be at risk of adverse impacts on their mental, physical or emotional wellbeing as a result of being subject to the income management regime.

New subsection 123UFAA(1D) provides that the Secretary is not required to inquire into whether a person being subject to the income management regime under new subsection 123UFAA(1A) poses a serious risk to the person's mental, physical or emotional wellbeing. Although the Secretary is not required to inquire into a person's wellbeing when the person becomes subject to income management, if the Secretary becomes aware that the person's mental, physical or emotional wellbeing may be affected by being income managed, the Secretary must determine that the person is not subject to the regime if satisfied that being subject to the regime poses a serious risk, while that risk remains. .

Item 25 amends paragraph 123UFAA(2)(c) to add the words 'or (1A)' at the end of the paragraph. Subsection 123UFAA(2) currently provides that, for the purposes of Part 3B, a person is subject to the income management regime at a particular time (the test time) if:

(a)

at the test time, the person is not subject to the income management regime under any other provision of Subdivision A of Division 2 of Part 3B; and

(b)

at the test time, the person has a Part 3B payment nominee; and

(c)

at the test time, the Part 3B payment nominee is subject to the income management regime under subsection (1).

This item amends paragraph 123UFAA(2)(c) to provide that a person's Part 3B payment nominee is also subject to the income management regime provided for in subsection 123UFAA(1A).

Item 26 repeals the heading of Subdivision DAA of Division 5 of Part 3B and inserts a new heading. This amendment is a consequential amendment resulting from the insertion of new subsections 123UFAA(1A), (1B) and (1C) by item 24.

Item 27 amends subsections 123XPAA(4) and 123XPAB(4) to add a new paragraph (d) to both subsections. The inclusion of a new paragraph (d) in subsections 123XPAA(4) and 123XPAB(4) extends the range of circumstances in which the Minister can make an instrument to specify a different percentage for the purposes of determining the person's deductible portion for income management purposes. A person's deductible portion is the amount of a person's welfare payment that is subject to income management. New paragraph (d) in subsections 123XPAA(4) and 123XPAB(4) will ensure that where a person is subject to income management as a result of the person having a positive drug test, the Minister can make an instrument specifying a different percentage to the percentages contained in paragraphs 123XPAA(3)(a) and 123XPAB(3)(a).

Item 28 insert the definition of potential drug test trial pool member into subclause 1(1) of Schedule 1.

Potential drug test trial pool member provides that a person is a potential drug test trial pool member at a time if:

(a)

that time is in the drug test trial period (as defined in section 23(1) of the Social Security Act); and

(b)

the person has, before that time and in the drug test trial period, made:

(i)

a claim for Newstart Allowance; or

(ii)

a claim for Youth Allowance (other); and

(c)

at that time the claim has not been determined; and

(d)

when the claim was made, the person's usual place of residence was in a drug test trial area.

Item 29 amends subparagraph 15(b)(i) of Schedule 2. This amendment ensures that if:

•

a person claims Newstart Allowance or Youth Allowance (other);

•

the person's payment is not payable because of new paragraph 63(4)(c); and

•

the person's Newstart Allowance or Youth Allowance (other) has been cancelled, with cancellation taking effect in the previous 14 days,

a person's start date in relation to the payment claimed is not the date of cancellation.

If a recipient of Newstart Allowance or Youth Allowance (other) does not comply with a notice under new paragraph 63(4)(c) (see item 15), the person's payment can be cancelled under section 80 as the payment is not payable to the person under section 64. The person is then subject to a 28 day waiting period commencing on the date of cancellation (see items 6 and 8), making it necessary to amend the start date provision in subparagraph 15(b)(i) of Schedule 2.

Part 2 - Consequential amendments

Farm Household Support Act

Item 30 inserts new paragraph 94(na) after paragraph 94(n). Section 94 provides that various provisions of the Social Security Act do not apply in relation to the operation of the Farm Household Support Act. The insertion of new paragraph 94(na) by this item will ensure that the new drug test repayment deduction provisions in Part 3.16C of the Social Security Act (inserted by item 11) will not apply to payments made under the Farm Household Support Act.

Item 31 amends the table in section 95 to insert new item 1A. The table in section 95 modifies the way that particular provisions of the Social Security Act can apply in relation to payments made under the Farm Household Support Act. New item 1A will operate to ensure that paragraph (c) of the definition of drug test trial pool member in subsection 23(1) of the Social Security Act (inserted by item 1) applies to the Farm Household Support Act as if the words '(other than farm household allowance)' were inserted after 'Newstart Allowance' and after 'Youth Allowance'. The purpose of this amendment is to ensure that a person who receives farm household allowance is not to be treated as a drug test trial pool member for the purposes of the drug test trial established under this Schedule.

Item 32 amends the table in section 99 to insert new item 13A after item 13 of the table. The table in section 99 modifies the way that particular provisions of the Social Security Administration Act can apply in relation to payments made under the Farm Household Support Act.

New item 13A will operate to ensure that paragraph (b) of the definition of potential drug test trial pool member in subclause 1(1) of Schedule 1 to the Social Security Administration Act (inserted by item 28) applies to the Farm Household Support Act as if the words '(other than farm household allowance)' were inserted after 'Newstart Allowance' and after 'Youth Allowance'. The purpose of this amendment is to ensure that a person who receives farm household allowance is not to be treated as a potential drug test trial pool member for the purposes of the drug test trial established under this Schedule.