Explanatory Memorandum
(Circulated by authority of the Minister for Vocational and Technical Education the Honourable Gary Hardgrave MP)Outline and financial impact
Outline
This Bill gives effect to a Government election commitment to extend eligibility for Youth Allowance and Austudy payment to full-time New Apprentices. Under this Bill, all New Apprentice claimants will be subject to parental, personal and partner means testing according to their circumstances and consistent with current provisions for full-time students receiving Youth Allowance and Austudy payment. Part-time and schools-based New Apprentices are already able to qualify for Youth Allowance.
The extension of assistance to New Apprentices will provide extra help during the initial years of training while wages are generally at their lowest. As an apprentice or trainee's wages will increase as they progress through their New Apprenticeship, the amount of assistance that they qualify for will progressively decrease according to the application of the personal income test.
The Bill also exempts the value of the Commonwealth Trade Learning Scholarships and Tools for your Trade initiative from assessment as income under the Social Security Act 1991 and the Veterans' Entitlements Act 1986 and exempts the value of the Commonwealth Trade Learning Scholarships from assessment as income under the Income Tax Assessment Act 1997.
Financial impact
Net outlays of $383.2 million over three years.
It is not possible to estimate the financial impact of the exemptions as this will be determined by the personal circumstances of New Apprentices and the number of Youth Allowance, Austudy payment or ABSTUDY New Apprenticeship recipients who qualify for assistance under the Tools for your Trade initiative and the Commonwealth Trade Learning Scholarships.
The total amounts expected to be appropriated for the Tools for your Trade initiative and the Commonwealth Trade Learning Scholarships is $84 million and $73.9 respectively over the next three financial years.
Notes on clauses
Provides for the Act to be cited as the Social Security Amendment (Extension of Youth Allowance and Austudy Eligibility to New Apprentices) Act 2005.
Subclause 2(1) inserts a three column table setting out commencement information for various provisions in the Act. Each provision of the Act specified in column 1 of the table commences (or is taken to have commenced) in accordance with column 2 of the table and any other statement in column 2 has effect according to its terms.
The table has the effect of providing for sections 1-3 of the Act to commence on Royal Assent, for Schedules 1 and 2 to commence on 1 July 2005 and for Schedule 3 to be deemed to have commenced on 20 March 2000.
Subclause 2(2) provides that column 3 of the table is for additional information which may be added to or edited in any published version of the Act but that information in this column is not part of the Act.
Provides that each Act that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule and that any other item in a Schedule has effect according to its terms.
Schedule 1 - Extending payments to New Apprentices
Part 1 - Amendments relating to youth allowance
Inserts a definition of New Apprentice in subsection 23(1).
Inserts a new section 540AA which sets out the specific requirements new apprentices must meet to qualify for youth allowance. It provides that a person is qualified for a youth allowance in respect of a period if, throughout the period, the person is a new apprentice, is of youth allowance age (as set out in Subdivision D of the Act) and is an Australian resident (or is exempt from the residence requirement within the meaning of subsection 7(7) of the Act).
Items 3 and 4 Paragraph 541(3)(a) and subsection 541(4)
Repeal paragraph 541(3)(a) and subsection 541(4) and substitute a new paragraph 541(3)(a) to have the effect of removing activity test impediments to new apprentices qualifying for youth allowance and to complement the insertion of section 540AA by item 2.
Item 5 At the end of subsection 543A(2)
Amends subsection 543A(2) to insert a new paragraph 543A(2)(d) which has the effect of allowing new apprentices not yet 18 years old to qualify for youth allowance.
Items 6 and 7 At the end of subsection 543B(1) and paragraph 543B(2)(b)
Insert new paragraphs 543B(1)(d), (e) and (f) and repeal paragraph 543B(2)(b) and insert a new paragraph to have the effect of extending the maximum age for youth allowance provisions to new apprentices.
Item 8 At the end of subsection 552A(1)
Adds Living Away from Home Allowance (payable to some new apprentices) to the list of schemes in paragraph 552A(1) which are "multiple entitlement exclusions" for the purposes of paragraph 552(2)(b). A youth allowance payment is not payable to a person who is otherwise qualified for youth allowance while the person is subject to a multiple entitlement exclusion.
Item 9 At the end of paragraph 1067D(1)(c)
Inserts a new subparagraph 1067D(1)(c)(iii) which has the effect of extending living away from home provisions for youth allowance to new apprentices.
Items 10 and 11 Paragraphs 1067F(1)(c) and (d)
Repeal paragraph 1067F(1)(c) and substitute a new paragraph and amend paragraph 1067F(1)(d) to have the effect of extending the definition of long term income support student to eligible new apprentices. A long term income support student is entitled to a higher maximum fortnightly rate of youth allowance.
Item 12 After paragraph 1067G-H29(a)
Inserts a new paragraph 1067G-H29(aa) to extend the fortnightly income free area for full time students to new apprentices.
Amends Point 1067G-J2 to have the effect of extending the full time student personal income test for youth allowance to new apprentices.
Items 14 and 15 Point 1067G-J3
Amends paragraph (a) and inserts a new paragraph (aa) in step 3 of the method statement in Point 1067G-J3 to have the effect of allowing new apprentices eligible for youth allowance to access the student income bank up to a maximum balance of $1,000.
The student income bank allows youth allowance recipients to offset periods of higher income against credits accrued in the student income bank. Credit is accrued during periods when a student is earning income below the fortnightly income free area.
Item 16 Subparagraph 1067G-J8(c)(i)
Amends subparagraph 1067G-J8(c)(i) to extend to new apprentices provisions dealing with the transfer of working credit balance to the student income bank following the suspension of youth allowance in the previous twelve months.
Item 17 Section 1067G (at the end of Module J)
Inserts a new Point 1067G-J11 which has the effect of providing for the transfer of the working credit balance of a current youth allowance recipient commencing as a new apprentice, to their student income bank.
Item 18 After subsection 1073E(5)
Inserts a new subsection 1073E(5A) which has the effect of providing for the transfer of the student income bank balance of a current youth allowance recipient ceasing as a new apprentice, to their working credit balance.
Part 2 - Amendments relating to austudy payment
Inserts a new section 568AA which sets out the specific requirements new apprentices must meet to qualify for austudy payment. It provides that a person is qualified for an austudy payment in respect of a period if, throughout the period, the person is a new apprentice, is of austudy age (as set out in Subdivision C of the Act) and is an Australian resident.
Items 20 and 21 Paragraph 569(2)(a) and subsection 569(3)
Repeal paragraph 569(2)(a) and subsection 569(3) and substitute a new paragraph 569(2)(a) to have the effect of removing activity test impediments to new apprentices qualifying for Austudy and to complement the insertion of section 568AA by item 19.
Item 22 At the end of subsection 578A(1)
Adds Living Away from Home Allowance (payable to some new apprentices) to the list of schemes in subsection 578A(1) which are "multiple entitlement exclusions" for the purposes of paragraph 578(2)(b) (as modified by item 1 of Schedule 3). An austudy payment is not payable to a person who is otherwise qualified for an austudy payment while the person is subject to a multiple entitlement exclusion.
Items 23 and 24 Paragraphs 1067K(1)(c) and (d)
Repeal paragraph 1067K(1)(c) and substitute a new paragraph and amend paragraph 1067K(1)(d) to have the effect of extending the definition of long term income support student to eligible new apprentices. A long term income support student is entitled to a higher maximum fortnightly rate of austudy.
Items 25 and 26 Point 1067L-E2
Amends paragraph (a) and inserts a new paragraph (aa) in step 3 of the method statement in Point 1067L-E2 to have the effect of allowing new apprentices eligible for austudy to access the student income bank up to a maximum balance of $1,000.
The student income bank allows austudy recipients to offset periods of higher income against credits accrued in the student income bank. Credit is accrued during periods when a student is earning income below the fortnightly income free area.
Schedule 2 - Commonwealth Trade Learning Scholarships and Tools for Your Trade initiative
Income Tax Assessment Act 1997
Item 1 Section 11-15 (table item headed "education")
Amends the "education" entry in the table in section 11-15, to add the recipient of a Commonwealth Trade Learning Scholarship to one of the list of classes of exempt income to reflect the amendment made by item 2.
Item 2 Section 51-10 (at the end of the table)
Inserts a new item 2.3 in the table to section 51-10, which has the effect of adding Commonwealth Trade Learning Scholarships to the list of education and training amounts exempt from income tax.
Item 3 Application of amendments
Provides that the amendments made by items 1, and 2 of Schedule 2 apply in relation to the 2005-2006 income year and to later income years.
Items 4 and 5 After paragraph 8(8)(zi) and at the end of subsection 8(8)
Inserts new paragraphs 8(8)(zia) and (zs) to exempt the amount or value of Commonwealth Trade Learning Scholarships and the value of the benefit provided under the Tools for Your Trade initiative from the definition of income.
Veterans' Entitlements Act 1986
Items 6 and 7 After paragraph 5H(8)(ha) and at the end of subsection 5H(8)
Inserts new paragraphs 5H(8)(haa) and (zzb) to exempt the amount or value of Commonwealth Trade Learning Scholarships and the value of the benefit provided under the Tools for Your Trade initiative from the definition of income.
Schedule 3 - Technical correction
Corrects an out of date cross reference which was overlooked when section 578 was divided into subsections by the Social Security (Administration and International Agreements)(Consequential Amendments) Act 1999.