House of Representatives

Supplementary Explanatory Memorandum

(Circulated by the authority of the Treasurer, the Hon Scott Morrison MP)

General outline and financial impact

Financial impact

As a result of the amendments to the Bill, the Bill will now have the following estimated impact on the underlying cash balance over the forward estimates.

Australian Renewable Energy Agency's finances

The Government has agreed to restore funding to the Australian Renewable Energy Agency (ARENA) of $800 million over the five years to 2021-22.

While retaining significant grant funding for ARENA, this amendment contributes around $460 million as a Budget repair measure.

Dental services

Amendments 1 and 5 remove Schedule 9 to the Bill (Dental services). It is the Government intention that Schedule 9 be reintroduced as a standalone Bill for Parliamentary consideration.

Newly arrived resident's waiting period

There are no amendments to the text of this Bill for Schedule 10 - Newly Arrived Resident's Waiting Period. However, this supplementary explanatory memorandum provides an opportunity to clarify that access to special benefit will still be available to all newly arrived residents in financial hardship who have suffered a substantial change of circumstances beyond their control after they have first entered Australia.

As there are no amendments to the text of this Bill, there is no further financial impact, as the costs for this schedule already assume the above.

Psychiatric confinement

Amendments are made to repeal Schedule 20 to the Bill.

Closing carbon tax compensation to new welfare recipients

Amendments 7 to 18 amend Schedule 21 to the Bill. Schedule 21 contains amendments relating to closing carbon tax compensation to new welfare recipients.

Income limit for FTB Part A supplement

A new Schedule 21A is inserted into the Bill. This Schedule provides an income limit of $80,000 on payment of the family tax benefit (FTB) Part A supplement. If an individual's adjusted taxable income (which includes the adjusted taxable income of their partner if any) is more than $80,000 for the relevant income year, then the individual's FTB Part A supplement in relation to that year will be nil.

Chapter 1 Australian Renewable Energy Agency's finances (Chapter 5)

Outline of chapter (Amendment 4)

Subsection 64(1) of the ARENA Act specifies the amounts made available to ARENA for each of the years 2013-14 to 2021-22. ARENA accesses these amounts by making requests for payment to the Commonwealth under section 65. Payments are appropriated from the Consolidated Revenue Fund under section 66. Any unrequested amounts carry over to future financial years under subsection 64(2).

Amended item 1 to the Bill amends Schedule 5 to the Bill, with the effect that the table in subsection 64(1) of the ARENA Act is amended so that amounts available to ARENA for the years from 2017-18 onwards are in total $800 million greater.

The amendments made by revised item 1 do not affect the amounts that were available to ARENA for any of the years 2013-14 to 2016-17.

Chapter 2 Dental services (Chapter 9)

Outline of chapter

Amendments 1 and 5 remove Schedule 9 to the Bill (Dental services).

Chapter 3 Newly arrived resident's waiting period (Chapter 10)

Outline of chapter

There are no amendments to the text of the Budget Savings (Omnibus) Bill 2016 for Schedule 10 - Newly Arrived Resident's Waiting Period. However, this supplementary explanatory memorandum provides an opportunity to clarify and explain the contingency available for all newly arrived residents to access social security, in the form of special benefit, if they are suffering financial hardship and suffer a substantial change of circumstances beyond their control after they have first entered Australia.

Special benefit is payment for persons who are in severe financial hardship, are unable to support themselves or their dependants and are unable to receive another social security payment.

New subsection 739A(7) of the Social Security Act, as amended by item 42 of Schedule 10 to this Bill, provides that the newly arrived resident's waiting period for special benefit will not apply if in the Secretary's opinion, the person has suffered a substantial change of circumstances beyond their control after they have first entered Australia. This provision therefore provides a contingency that allows all newly arrived residents to access special benefit if they are in financial hardship and have suffered a substantial change of circumstances beyond their control after they have first entered Australia.

Chapter 4 Psychiatric confinement (Chapter 20)

Outline of chapter

Amendment 6 omits Schedule 20 from the Bill. Schedule 20 contains amendments to the social security law relating to psychiatric confinement.

Amendment 2 amends the commencement table as a consequence of the omission of Schedule 20.

Chapter 5 Closing carbon tax compensation to new welfare recipients (Chapter 21)

Outline of chapter

Amendments 7 to 18 amend Schedule 21 to the Bill. Schedule 21 contains amendments relating to closing carbon tax compensation to new welfare recipients.

Parts 1 and 7 of the Schedule relate to energy supplement under the family assistance law and single income family supplement. These parts are unchanged. However, the explanatory memorandum to the Bill did not reflect the insertion of an application provision at item 5 of Part 1. Item 5 provided that new subsection 58A(3AA), which was inserted by item 4, applies in relation to elections made before, on or after that commencement. This insertion should have resulted in all item numbers after item 4 being increased by one. The explanatory memorandum for this Schedule should be read from item 5 as if each item explanation relates to the subsequent item.

Part 2 of the Schedule relates to energy supplement under the social security law. Amendment 7 omits items 26 to 35, and amendment 10 omits items 39 to 85 of this Schedule. Items 36, 37 and 38 are retained, relating to energy supplement paid to holders of a seniors health card under the Social Security Act or the Veterans' Entitlements Act. Note that these items are referred to as items 35, 36 and 37 respectively in the explanatory memorandum

Amendments 8 and 9 amend item 38 to omit paragraph (i). Paragraph (i) related to the main amendments in proposed section 22, identifying ongoing welfare recipients who would continue to receive energy supplement. This reference is no longer necessary as proposed section 22 is omitted by amendment 7 above. The explanatory memorandum refers to item 38 as item 37.

Amendment 11 omits Part 3 of Schedule 21, which related to Energy supplement under the Farm Household Support Act.

Amendment 12 omits items 90 to 103 of Part 4 of Schedule 21 to the Bill.

Those items had provided for the cessation of the payment of energy supplement to new recipients of income support and compensation payments under the Veterans' Entitlements Act from 20 March 2017.

Amendment 13 omits item 105 of Part 4 to Schedule 21 to the Bill.

That item had provided for the cessation of the payment of energy supplement to new Gold Card holders under the Veterans' Entitlements Act from 20 March 2017.

Amendment 14 is a consequential amendment to item 106 as a result of the omission of item 105 Amendment 13.

Amendments 15 and 16 amend item 107 of Part 4 to Schedule 21 of the Bill.

Item 107 is a transitional provision which was applicable to a person who was paid energy supplement with their income support payment which ceased within a period of 6 weeks that ends on 19 September 2016.

The amendments include a technical amendment to paragraph 107(h) to reflect the amendment which omits paragraph 107(i). Paragraph 107(i) had referred to provisions omitted by Amendment 9.

Amendment 17 omits items 108 to 118 of Part 4 of Schedule 21 to the Bill.

Those items had provided for the cessation of the payment of energy supplement to new recipients of income support under the Veterans' Entitlements Act from 20 March 2017.

Amendment 18 omits Part 5 of Schedule 21 of the Bill.

Those items had provided for the cessation of the payment of energy supplement to new recipients of certain compensation payments under the Military Rehabilitation and Compensation Act from 20 March 2017.

Part 6 of Schedule 21 is retained, making amendments to various telephone allowance provisions consequential upon ceasing payment of energy supplement to new seniors health care card holders.

Chapter 6 Income limit for FTB Part A supplement (Chapter 21A)

Outline of chapter

Amendment 19 inserts a new Schedule 21A into the Bill.

Schedule 21A amends the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act) to introduce an income limit of $80,000 on payment of the FTB Part A supplement.

Clause 38A of Schedule 1 to the Family Assistance Act currently provides for the rate of the FTB Part A supplement. The FTB Part A supplement is a component of the rate of FTB that is added in calculating an individual's rate of FTB when FTB is reconciled at the end of the relevant income year.

Item 1 in Schedule 21A of the Bill inserts a new subclause 38A(1A) into Schedule 1to the Family Assistance Act. Under this new provision, an individual's FTB Part A supplement for a given income year is nil if the individual's adjusted taxable income for that year is more than $80,000.

A note at the end of new subclause 38A(1A) informs the reader that where an individual is a member of a couple, the individual's adjusted taxable income also includes their partner's adjusted taxable income. The relevant rule is in clause 3 of Schedule 3 to the Family Assistance Act.

Item 2 is an application provision that ensures that the amendment made by item 1 applies in relation to working out the rate of FTB for days on or after commencement. The effect is that the income limit will apply in working out an individual's rate of FTB for the 2016-17 and later income years.

Amendment 3 inserts a new item 24A into the commencement table. This new item provides for the commencement of Schedule 21A from the 2016-17 financial year.