Senate

Supplementary Explanatory Memorandum relating to sheet TK324

(Circulated by the authority of the Minister for Social Services, the Hon Amanda Rishworth MP)

AMENDMENTS TO THE SOCIAL SECURITY (ADMINISTRATION) AMENDMENT (REPEAL OF CASHLESS DEBIT CARD AND OTHER MEASURES) BILL 2022

OUTLINE

These government amendments to the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Bill 2022 (the Bill) respond to matters arising from the Senate Community Affairs Legislation Committee's inquiry into the Bill (the Senate Inquiry) and continuing consultations with key stakeholders.

Family Responsibilities Commission

The amendments respond to concerns about the alignment of the Bill to the work of the Family Responsibilities Commission (FRC) (which is the body specified as a 'Queensland Commission' under the Social Security (Administration) Act 1999 (Administration Act)).

Section 123UF of the Administration Act recognises the role of the FRC, which is an independent statutory authority, in determining whether a person should be subject to the income management regime (IM) in particular community areas prescribed for the purpose of the Family Responsibilities Commission Act 2008 (Qld) (FRC Act). Elders and other respected local community members make decisions under the FRC Act about when a community member should be subject to IM on a case-by-case basis. Amendments to the Bill will ensure the important role of the FRC continues to be recognised in the new enhanced IM regime to be introduced by the Bill.

In its submission to the Senate Inquiry, the FRC welcomed this recognition and recommended that certain aspects of the Bill be amended to allow for a seamless continuation of the FRC's operations and to ensure that its decision-making powers set out in the FRC Act are not weakened. Specifically:

•

The FRC recommended that the Bill be amended to remove the ability for persons under the current Queensland Commission (FRC) measure to request that their Cashless Debit Card (CDC) participation cease.

•

The FRC also recommended removal of the exemption preventing former Northern Territory CDC participants from future referral to IM if they move to a community within the FRC's jurisdiction.

These amendments address both of the above concerns, and ensure that the FRC's decisions continue to be tailored appropriately to the needs and circumstances of the individual who is subject to an FRC notice.

The FRC also expressed concerns about being required to reissue notices despite the existence of valid IM and CDC decisions. Currently, the Bill requires the FRC to issue a new notice on or after the closure date to trigger entry or re-entry into IM for persons exiting the CDC program under the current Queensland Commission (FRC) measure. The FRC advised that this could cause uncertainty and administrative and cost burden on its operations, as well as intrusion to community members. The amendments address these concerns by ensuring that any current FRC notices that have triggered an individual onto CDC will continue to support those individuals while the FRC notice remains in force, by providing access to a contemporary card.

The amendments consolidate and continue existing powers available to the FRC and the Secretary under the Administration Act to ensure the FRC can continue its important role supporting those residing in prescribed community areas.

Contemporary card

The Senate Inquiry report raised concerns about the limited functionality and inferior technology of the BasicsCard, which is the basis of IM.

The amendments respond to those concerns by ensuring that a person who was on the CDC program and moves to IM will not return to the BasicsCard, but will have a contemporary card with more modern functionality, including increasing and maximising where they are able to shop, allowing for BPAY and online shopping. This provides individuals with more choice and control in the use of the qualified portion of their welfare payment while still ensuring that those funds are not spent on excluded goods or excluded services.

Individuals transitioning off CDC to IM will now transition to an enhanced income management regime (enhanced IM) under new Part 3AA of the Administration Act inserted in the Bill by these amendments.

Participants otherwise eligible for IM (under Part 3B of the Administration Act) in prescribed community areas will access enhanced IM, a BasicsCard bank account with a contemporary card that ensures modern technological functionality.

Participants on enhanced IM will have a BasicsCard bank account and will receive support from Services Australia, including all aspects of client interface, consistent with the services that agency provides for the BasicsCard.

Financial impact statement

The amendments will require the procurement and development of a card to support the enhanced IM program. These costs are subject to commercial negotiations and are not for publication.

Definitions

In this supplementary explanatory memorandum:

•

Administration Act means the Social Security (Administration) Act 1999.

•

Bill means the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Bill 2022.

•

CDC or CDC program means the cashless welfare arrangements established by Part 3D of the Administration Act.

•

closure day means the day that CDC will be closed to new entrants, that is, the later of 19 September 2022 and the day after the day the Bill is given the Royal Assent.

•

Competition and Consumer Act means the Competition and Consumer Act 2010.

•

Continuation Act means the Social Security (Administration) Amendment (Continuation of Cashless Welfare) Act 2020.

•

Department means the Commonwealth Department of State administering enhanced IM arrangements, which is currently the Australian Government Department of Social Services.

•

enhanced IM means the enhanced income management regime to be established under proposed Part 3AA of the Administration Act.

•

Family Assistance Act means the A New Tax System (Family Assistance) Act 1999.

•

Family Assistance Administration Act means the A New Tax System (Family Assistance) (Administration) Act 1999.

•

FRC means the Families Responsibilities Commission.

•

FRC Act means the Family Responsibilities Commission Act 2008 (QLD).

•

IM means the income management regime established by Part 3B of the Administration Act.

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NED Act means the National Emergency Declaration Act 2020.

•

Part 3B payment nominee has the same meaning as in section 123TC of the Administration Act.

•

prescribed community areas has the same meaning as "welfare reform community area" in section 8A of the FRC Act.

•

Secretary means the Secretary of the Department.

•

Social Security Act means the Social Security Act 1991.

Amendment 1 - new items 1A, 1B, 1C, 1D, 1E, 1F, 1G, 1H and 1J

Amendment 1 amends the Family Assistance Administration Act, the National Emergency Declaration Act and the Social Security Act to reflect the insertion of new Part 3AA dealing with enhanced IM in the Administration Act (proposed by Amendment 2, item 1R) and matters associated with those arrangements.

Amendments to the Family Administration Act

Amendment 1 inserts item 1A in the Bill to add new paragraph (fa) in subsection 66(2) of the Family Assistance Administration Act.

Subsection 66(1) of the Family Administration Act provides that specified family assistance payments are absolutely inalienable, whether by way of, or in consequence of, sale, assignment, charge, execution, bankruptcy or otherwise while subsection 66(2) states that the inalienability principle operates subject to specified provisions.

New paragraph 66(2)(fa) of the Family Administration Act will provide that the inalienability of the family assistance payments specified in subsection 66(1) is subject to Part 3AA of the Administration Act dealing with enhanced IM.

Amendments to the National Emergency Declaration Act

Amendment 1 also inserts item 1B to add new paragraph (zba) into the definition of 'national emergency law' in the Definitions section (section 10) of the NED Act. The definition of 'national emergency law' is used in the NED Act as part of the test for the Prime Minister to request a declaration of a national emergency and to request the variation of a declaration to extend the duration of an emergency. In addition, the definition provides an authoritative list of provisions across the statute book that may be enlivened, or the operation of which may be modified, while a national emergency is in force.

New paragraph (zba) will provide that new section 123SJ of the Administration Act (also inserted by amendment 5 - see below) is a national emergency law for the purposes of the National Emergency Declaration Act. Section 123SJ of the Administration Act deals with the splitting of certain welfare payments into qualified and unqualified portions to ensure that expenditure of welfare payments prioritises spending on basic human needs.

This amendment is necessary to operationalise new subparagraph 123SJ(5)(a)(iii), which allows the Secretary to vary the percentages the qualified and unqualified portions under subsection 123SJ(4) in certain circumstances. Relevantly, qualified percentages may be varied if the Secretary is satisfied that the person is unable to use the person's debit card which is attached to the person's BasicsCard bank account or is unable to access their BasicsCard bank account as a direct result of a declared national emergency (where the applicable national emergency declaration remains in force).

Amendments to the Social Security Act

Amendment 1 will amend the Bill to insert new items 1C, 1D, 1E, 1F, 1G, 1H and 1J that will amend various provisions in the Social Security Act to ensure that their operation extends to new Part 3AA (to be inserted by Amendment 2, Item R).

Items 1C to 1J will amend the following provisions in the Social Security Act (to insert in each, after the word 'Part', the words '3AA,'):

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subsection 1061EK(1) providing that advanced payments of social security entitlements under section 238, Part 3B and Part 3D (and now Part 3AA) of the Administration Act are absolutely inalienable, whether by way of, or in consequence of sale, assignment, charge, execution, bankruptcy or otherwise ( item 1C )

•

paragraph 1222(1)(ba) relating to methods of debt recovery by the Commonwealth, including where a debt is due to the Commonwealth under Parts 3B and 3D (and now Part 3AA) of the Administration Act ( item 1D )

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subsection 1222(2) (table item 20, column 2) providing methods of recovery available for debts owing to the Commonwealth under Part 3B and Part 3D (and now Part 3AA) of the Administration Act ( item 1E )

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paragraph 1230(1)(a) relating to the recoverability of a debt where a garnishee debtor fails to comply with a notice ( item 1F )

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subsections 1230C(1) and (2) relating to methods of debt recovery including where a debt is due to the Commonwealth under Parts 3B and 3D (and now Part 3AA) of the Administration Act ( item 1G )

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paragraph 1234A(1)(a) allowing a consenting third party to agree to the Secretary of the Department deducting an amount from their social security payment for the purposes of repaying another person's social security payment debt ( item 1H )

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subsection 1237AB(1) allowing the Secretary, on behalf of the Commonwealth, to waive the Commonwealth's right to recover debts arising from Part 3B or Part 3D (and now Part 3AA) of the Administration Act, that are included in a class of debts specified by legislative instrument ( item 1J ).

Amendment 2 - new items 1K, 1L, 1M, 1N, 1P, 1Q and 1R

Amendments to the Administration Act

Amendment 2 amends the Administration Act to insert new Part 3AA dealing with enhanced IM and to ensure these arrangements operate effectively under the social security law. The amendment also makes minor consequential amendments.

Protection of social security payments

Amendment 2 amends the Bill to insert item 1K which will, in turn, insert a new paragraph 60(2)(aaa) into the Administration Act.

Subsection 60(1) of the Administration Act states that a social security payment is absolutely inalienable, whether by way of, or in consequence of, sale, assignment, charge, execution, bankruptcy or otherwise. The principle of inalienability operates subject to various provisions in Social Security Act including the IM regime and cashless welfare arrangements.

New item 1K inserts paragraph 60(2)(aaa) to ensure that the inalienability principle, as it applies to social security payments, is also subject to new Part 3AA.

Information notices to enhanced income management participants

Amendment 2 will amend the Bill to insert items 1L, 1M, 1N, 1P and 1Q each of which deals with requirements to give the Department certain information or statements that might affect the operation or prospective operation of Part 3AA in relation to the person.

Item 1L will insert new section 70AA into the Administration Act to allow the Secretary to give information notices to a person who is, or is likely to become, subject to enhanced IM under Part 3AA. Those notices may require the person to inform the Department about certain events and changes of circumstances that have occurred or the person knows are likely to occur, or to give one or more statements about a matter that might affect the operation or prospective operation of new Part 3AA in relation to the person.

New section 70AA is equivalent to the information sharing requirements set out in section 70A applicable to a person subject to IM under Part 3B of the Administration Act (dealing with requirements to give information about changes of circumstances etc.).

Item 1M will insert new paragraphs 72(3)(da) and (db) into the Administration Act. The new paragraphs provide that if a person has been given a notice under new paragraph 70AA(2)(a) to inform the Department of a specified event or change of circumstances or the likelihood of such an event or change of circumstances, the information must be given to the Department within 14 days of the occurrence or the person's awareness of its likelihood (as the case requires).

Where a person has been given a notice under new paragraph 70AA(2)(b) to give one or more statements to the Department about a matter that might affect the operation or prospective operation of new Part 3AA in relation to the person, the statement must be provided within 14 days after the day on which the Secretary's notice was given to that person.

These new subparagraphs are equivalent to subparagraphs 72(3)(e) and (f), relating to information sharing requirements applicable to a person subject to IM under Part 3B of the Administration Act.

Items 1N and 1P are consequential to items 1L and 1M. They amend paragraph 72(4)(a) and subsection 72(6) and (7) of the Administration Act, allowing for the variation of time for a person to comply with a notice given under section 70AA in certain circumstances. These items ensure that all persons who are subject to enhanced IM under new Part 3AA have the same reporting requirements as individuals subject to the existing IM under Part 3B.

Item 1Q amends subsection 74(1) of the Administration Act to make it an offence not to comply with a notice given under section 70AA. This is consistent with the consequences of a failure to comply with any notice given under Subdivision B of Division 6 of Part 3 of the Administration Act, including notices given for the purposes of IM.

Amendment 2 amends the Bill by inserting new item 1R . This item inserts new 'Part 3AA-Enhanced income management regime' into the Administration Act. The individual provisions are described below.

Part 3AA - Enhanced income management regime

New Part 3AA will contain 5 divisions dealing with, in order: introductory matters; criteria for determining who is subject to the enhanced IM; deductions from welfare payments; information disclosures; and other matters.

Division 1 - Introduction

There will be a new Division 1, which will contain a simplified outline for new Part 3AA and definitions that will apply in respect of the new Part.

New section 123SA contains the simplified outline, which is provided to assist the reader in navigating the provisions of the new Part 3AA. The new Part establishes an enhanced income management regime for recipients of certain welfare payments.

New section 123SB provides definitions for the following new terms for the purposes of Part 3AA:

balance of the qualified portion , of a category B welfare payment, which is defined to mean:

(a)

if a deduction is to be made from, or an amount is to be set off against, the payment under:

(i)

section 61, 61A, or 238 of this Act; or

(ii)

section 1231 of the Social Security Act; or

section 84, 84A, 92, 92A, 225, 226, 227 or 228A of the Family Assistance Administration Act;

the amount of the qualified portion of the payment less the amount of the deduction or the amount of the set-off; or

(b)

in another other case-the amount of the qualified portion of the payment.

This term is used in new sections 123SJ, 123SK and 123SL to recognise the portion of a welfare payment that will be deposited into a person's BasicsCard bank account once deductions and set-offs are made against welfare payments that are to be used for the recipients priority needs such as food, shelter, clothing and utility bills.

The example below illustrates how the definition will work in practice.

EXAMPLE:

Jay is subject to enhanced IM and entitled to category G welfare payments totalling $1000 per fortnight. Jay has set up a Centrepay or RDS deduction of $200 per fortnight for rent. The FRC has identified that Jay's qualified portion and unqualified portion of the category B welfare payments are, respectively, 80% and 20% (equating to a qualified portion of $800 per fortnight and an unqualified portion of $200 per fortnight).

After Jay's rent deduction, Services Australia will pay the balance of the qualified portion of Jay's category B welfare payments-being an amount of $600-into Jay's BasicsCard bank account while the remaining $200 will be paid into Jay's normal bank account for discretionary spending.

BasicsCard bank account means a bank account of a kind determined by a legislative instrument made under section 123SU.

This definition refers to section 123SU, which allows the Secretary to determine a kind of bank account to be maintained by a person who is subject to enhanced IM for the receipt of payments under new Part 3AA and, also, for the instrument to prescribe terms and conditions relating to the establishment, ongoing maintenance and closure of the bank account. This legislative instrument will be subject to parliamentary oversight, including committee scrutiny, as discussed below in relation to section 123SU.

cash-like product is defined to include the following:

(a)

a gift card, store card, voucher or similar article (whether in a physical or electronic form);

(b)

a money order, postal order or similar order (whether in a physical or electronic form);

(c)

digital currency.

The term 'cash-like product' is used in sections 123SL and 123SV and identifies the types of products that, if not barred from spending of qualified payment portions, could be used to purchase excluded goods and excluded services including alcohol, tobacco, pornographic material and gambling services.

The definition section also contains new groupings of welfare payment types (that is, compared to welfare payment groupings under Part 3B). The purpose of this to ensure that the right people may be subject to enhanced IM and their welfare payments are appropriately apportioned between qualified portions (not available for excluded goods or excluded services or cash-like products) and unqualified portions.

This definition of ' category A welfare payment ' identifies the type of welfare payment that a person must receive in order to enter enhanced IM.

This definition of ' category B welfare payment ' identifies the types of welfare payment that will be subject to welfare quarantining under Part 3AA. If a payment is not mentioned in the definition, 100% of that payment will be outside of Part 3AA and paid in full to the recipient.

New section 123SB also cross-references the following terms in Part 3B dealing with the income management regime which, in some cases, incorporate matters specified in existing legislative instruments made for the purpose of the income management regime under Part 3B:

excluded goods , which is defined in section 123TC as having the meaning given by subsection 123TI(1). This subsection provides each of the following goods are excluded goods:

(a)

alcoholic beverages;

(b)

tobacco products;

(c)

pornographic material;

(d)

goods specified in a legislative instrument made by the Minister.

excluded service , which is defined in section 123TC as having meaning given by subsection 123TI(2). This section provides each of the following services is an excluded service:

(a)

gambling;

(b)

a service specified in a legislative instrument made by the Minister.

Part 3B payment nominee , which is defined in section 123TC to mean:

(a)

a person who is, by virtue of an appointment in force under section 123B of this Act or section 219TB of the Family Assistance Administration Act, the payment nominee of another person; or

(b)

a person to whom payment of another person's service pension or veteran payment is made by virtue of an approval in force under section 58D of the Veterans' Entitlements Act 1986; or

(c)

a person to whom payment of another person's service pension or veteran payment is made by virtue of an appointment in force under section 202 of the Veterans' Entitlements Act; or

(d)

a person to whom another person's instalments of youth allowance are to be paid in accordance with subsection 45(1) of the Administration Act.

Queensland Commission , which is defined in section 123TC to mean a body or agency that:

(a)

is established by a law of Queensland; and

(b)

is specified in a legislative instrument made by the Minister for the purposes of Part 3B.

Currently, the FRC is specified for the purposes of paragraph (b) of the definition of 'Queensland Commission' in section 123TC of the Administration Act in the Social Security (Administration) - Queensland Commission (Family Responsibilities Commission) Specification 2015.

The definition in section 123TC is applied to new Part 3AA to ensure the important role of the FRC as the Queensland Commission continues to be recognised, and allow for a seamless approach across Parts 3AA, 3B and 3D without the need for unnecessary instruments.

New section 123SB also points the reader to the new Part 3AA provisions in which the terms are defined:

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qualified portion of a category B welfare payment, which has the meaning given by section 123SJ.

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subject to the enhanced income management regime which has the meaning given by Division 2.

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unqualified portion of a category B welfare payment, which has the meaning given by section123SJ.

Division 2 - Persons subject to the enhanced income management regime

Division 2 of new Part 3AA will establish the criteria for determining when a person is subject to the enhanced IM regime in prescribed community areas and how this relates to other provisions in the Act, notably Part 3B (dealing with traditional income management) and Part 3D (dealing cashless welfare arrangements).

Queensland Commission

Division 2 will apply to persons who at the test time are subject to certain notices issued by the FRC (as the specified Queensland Commission). The amendments made by this division directly address concerns raised by the FRC during the Senate Inquiry and ensure that the FRC retains its independence and authority in prescribed community areas. The amendments ensure the important role of the FRC continues to be recognised seamlessly through the introduction of the new enhanced IM program.

In this context, "prescribed community areas" covers the following locations, which are specified for the purpose of section 8A of the Family Responsibilities Commission Act 2008:

(a)

the area of the Aurukun Shire Council;

(b)

the Coen area;

(c)

the area of the Doomadgee Aboriginal Shire Council;

(d)

the Hope Vale area;

(e)

the Mossman Gorge area.

New section 123SC establishes the criteria for becoming subject to enhanced IM where a person is subject to an FRC notice given to the Secretary requiring that a person be subject to IM under Part 3B of the Administration Act, and the notice has not been revoked or withdrawn and has not expired.

This section applies to 2 groups: new entrants to enhanced IM on and after 6 March 2023; and CDC program participants who are automatically moved to the enhanced IM regime on 6 March 2023.

New subsection 123SC(1) deals with the new entrant group, that is, a category A welfare payment recipient who becomes subject to enhanced IM due to meeting certain criteria. This section provides that a person is subject to enhanced IM on or after 6 March 2023 if:

(a)

at the test time, the person or their partner is an eligible recipient of a category A welfare payment; and

(b)

on or after 6 March 2023, the FRC gives the Secretary a written notice requiring that the person be subject to the income management regime under Part 3B; and

(c)

the notice was given under a law of Queensland; and

(d)

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

(e)

if, at the test time, the person had a Part 3B payment nominee-that nominee is subject to enhanced IM (under Part 3AA) or is subject to IM (under Part 3B).

New subsection 123SC(2) deals with the individuals who will be automatically transitioned to enhanced IM due to being a CDC program participant under section 124PGD of the Administration Act. It provides that a person is subject to the enhanced income management regime on or after 6 March 2023 if:

(a)

at the test time, the person or their partner is an eligible recipient of a category A welfare payment; and

(b)

new subsection 123SC(3) applies in relation to the person; and

(c)

if, at the test time, the person had a Part 3B payment nominee-that nominee is subject to enhanced IM (under Part 3AA) or is subject to IM (under Part 3B).

For the purpose of new paragraph 123SC(2)(b), new subsection 123SC(3) applies in relation to a person if:

(a)

immediately before 6 March 2023, sub-item 97(2) or (4) of Schedule 1 to the Continuation Act applies in relation to the person and a notice; and

(b)

immediately before 6 March 2023, the person was a program participant under section 124PGD.

Subsection 123SC(3) ensures that FRC notices that are in force immediately before 6 March 2023 are effective to trigger the enhanced IM regime even though those notices initially triggered a person to be a CDC program participant.

A notice given by the FRC cannot be in force for more than 12 months. This means that by 6 March 2024, no individuals will be subject to enhanced IM under subsection 123SC(2) of the Administration Act. Individuals may continue to be subject to enhanced IM where a new FRC notice is issued under section 123SC(1).

Subsection 123SC(4) states that subsection 123SC(3) ceases to apply in relation to the person if on after 6 March 2023, the notice given by the FRC in relation to a transitioning CDC program participant is revoked or withdrawn by the FRC or expires. This confirms that enhanced IM will cease to apply to a person when the governing FRC notice ceases to have effect (unless the person remains subject to enhanced IM due to a new FRC notice).

Subsection 123C(5) states that section 123SC applies on and after 6 March 2023 despite item 97 of Schedule 1 to the Continuation Act. This is a machinery provision that is required to override earlier reforms establishing the CDC trial measures.

Relationship with other provisions

New section 123SI provides that if a person is subject to enhanced IM at a particular time, the person cannot be subject to IM under Part 3B and cannot be a CDC program participant or a voluntary participant under Part 3D at that time. This provision makes it clear that a person can only be subject to the enhanced IM regime at any given time, therefore cannot have a traditional BasicsCard and BasicsCard bank account at the same time.

Division 3 - Deductions from welfare payments

Item 1R also inserts new Division 3 of Part 3AA, which outlines the rules regarding deductions from welfare payments for individuals in prescribed community areas.

Subdivision A - Persons subject to the enhanced income management regime-Queensland Commission

New section 123SJ provides for the qualified and unqualified portion percentages that apply if an instalment of a category B welfare payment is payable to a person who is subject to the enhanced income management regime because the FRC has given the Secretary a notice requiring that a person be subject to enhanced IM. The section requires consultation with the FRC to respect and recognise the important role the Commissioner and community members hold in prescribed community areas.

New subsection 123SJ(1) provides that if an instalment of a category B welfare payment is payable to a person who is subject to enhanced IM under new section 123SC:

•

the percentage of the gross amount of the qualified portion, is a percentage determined by the Secretary under subsection (2), after consultation with the FRC; and

•

the percentage of the gross amount of the unqualified portion, is the percentage that is equal 100% minus the percentage to be determined by Secretary after consultation with the FRC.

The notice provided by the FRC will include a recommendation for the qualified portion to be applied after a comprehensive assessment of the individual's circumstances has been undertaken by the FRC. It is anticipated receipt of this notice will ordinarily be sufficient consultation from the Secretary's perspective..

There is a note at the end of subsection 123SJ(1) to inform the reader that the qualified and unqualified portion percentages may be varied under subsection (4).

Subsection 123SJ(2) permits the Secretary to determine a percentage in relation to a person, for the purposes of determining the gross amount of the qualified portion with the FRC, under paragraph 123SJ(1)(a). The Secretary's determination will be based on the notice provided by the FRC.

Subsection 123SJ(3) provides that if a category B welfare payment is payable, otherwise than by instalments, to a person who is subject to enhanced IM under section 123SC, 100% of the gross amount of the payment is qualified (the qualified portion). There is a note at the end of subsection 123SJ(3) to inform the reader that the qualified and unqualified portion percentages may be varied under subsection (4).

Subsections 123SJ(4) and 123SJ(5) provide that in certain circumstances the Secretary can determine that no amount of a category B welfare payment to a person subject to enhanced IM is qualified. These circumstances are that:

(a)

the Secretary is satisfied that the person is unable to use the person's debit card which is attached to the person's BasicsCard bank account or is unable to access their BasicsCard bank account, as a direct result of:

(i)

a technological fault or malfunction with that card or account; or

(ii)

a natural disaster; or

(iii)

if a national emergency declaration (within the meaning of the National Emergency Declaration Act) is in force-an emergency to which the declaration relates; or

(b)

the person's category B welfare payment is payable in instalments and the Secretary is satisfied that any part of the payment is payable:

(i)

at a time determined under subsection 43(2) of the Administration Act, where that determination is made because the person is in severe financial hardship as a result of exceptional and unforeseen circumstances; or

(ii)

under a determination under subsection 51(1) of the Administration Act relating to advance payments in cases of severe financial hardship.

Determinations to vary the qualified portion of a payment under section 123SJ will be made sparingly and will follow consultation with the FRC. The Secretary will notify the FRC of any determinations made under section 123SJ(4) and (5).

Subsection 123SJ(6) provides that a determination under subsection 123SJ(3) will take effect on the date specified in the determination. This must not be earlier than the day on which the determination is made. This provides certainty to the welfare recipient and the administering agency.

To avoid doubt, subsection 123SJ(7) confirms that a notice given under subsection 123SJ(3) is not a legislative instrument. This provision is merely declaratory of the law and does not prescribe a substantive exemption from the requirements of the Legislation Act 2003.

Payment of the balance of qualified portion of category B welfare payment

New section 123SK provides for the manner of paying the balance of a qualified portion a category B welfare payment that is payable to a person subject to the enhanced IM regime under section 123SC. This new section provides that the Secretary must pay the balance of the qualified portion of the welfare payment to the credit of a BasicsCard bank account maintained by the recipient. The requirements for BasicsCard bank accounts are to be established by legislative instrument made under proposed section 123SU (discussed further below).

Recipient's use of funds from category B welfare payment

New section 123SL provides that the balance of the qualified portion of a person's category B welfare payment may be used to purchase goods and services other than excluded goods or excluded services or a cash-like product that could be used to obtain excluded goods or excluded services.

Excluded goods and excluded services have the same meaning as Part 3B of the Administration Act and are therefore consistent with the IM regime. Excluded goods are alcoholic beverages, tobacco products, pornographic material and goods specified in a legislative instrument made by the Minister. Excluded services are gambling or a service specified in a legislative instrument made by the Minister.

The unqualified portion paid to the person may be used at the person's discretion. This is the essence of welfare quarantining which aims to ensure that expenditure is prioritised towards satisfying basic human needs (such as food, clothing and shelter) and ensuring that the welfare recipient and their dependants benefit from this prioritisation.

Division 4 - Information

New Part 3AA will contain Division 4 to provide clear criteria for information exchanges with financial institutions and the FRC and thereby allow welfare recipients to experience a seamless banking and welfare environment. The powers are also essential to assist the Secretary in making arrangements for welfare payment recipients to have amounts paid to BasicsCard bank accounts subject to welfare apportionment as set in consultation with the FRC. Clear rules about, and limitations on, information disclosures are required to protect individual privacy yet ensure that welfare recipients have uninterrupted access to goods and services that meet their basic needs.

The powers to be included in new Division 4 take a similar approach to like provisions in Parts 3B and Part 3D of the Administration Act, but represent only a subset of the range of information sharing provisions in those parts. For example, Division 4 does not include any provisions related to community bodies as these are not needed for people who will be subject to enhanced IM due to a notice issued by the FRC (as an example, information exchange provisions dealing with community bodies have not been included).

Due to the importance of the Division 4 provisions for ensuring people have seamless access to welfare payments and are appropriately income managed under the FRC's oversight, the amendments concerning information exchanges are be reasonable, necessary and proportionate.

Disclosure of information to the Secretary - financial institution

New section 123SS will facilitate the exchange of information between the Secretary and a financial institution for the purposes of enhanced income management under Part 3AA. This will facilitate an effective information exchange so that people maintain seamless access to their welfare payments to the greatest possible extent consistent with arrangements for all people who use financial services in Australia.

Under subsection 123SS(1), despite any law in force in a State or Territory, an officer or employee of a financial institution may give the Secretary information about a person if the person is subject to the enhanced IM regime and the disclosed information is relevant to Part 3AA. There is a note at the end of subsection 123SS(1) to inform the reader that subsection 202(8A) of the Administration Act allows a person to disclose information about a BasicsCard bank account to a financial institution.

Under new subsection 123SS(2), if information about a person is disclosed by the financial institution under subsection 123SS(1), the Secretary may disclose information about the person to an officer or employee of the financial institution for the purposes of the performance of the functions and duties, or the exercise of the powers, of the officer or employee.

Disclosure of information to the Secretary - Queensland Commission

New section 123ST will support the provision of information by the FRC for the purposes of enhanced IM. This will ensure that the FRC can monitor the welfare needs of people in its communities to ensure that they benefit from enhanced IM subject to the specific circumstances and needs. It will also allow the Secretary and Services Australia to respond appropriately and in a timely manner to the person's or the FRC's representations. This section is consistent with the information sharing arrangements between the FRC and the Secretary for IM set out in sections 123ZD and 123ZEA of the Administration Act.

Subsection 123ST(1) provides that despite any law in force in Queensland, the FRC may give the Secretary information about a person if the person is subject to the enhanced IM regime under new section 123SC or the FRC is considering issuing a notice (referred to in paragraph 123SC(1)(b)) in relation to the person, and the disclosed information is relevant to the operation of Part 3AA.

Subsection 123ST(2) provides that if information about a person is disclosed by the FRC, the Secretary may disclose information about the FRC for the purposes of the performance of the functions and duties, or the exercise of the powers, of the FRC.

Subsection 123ST(3) provides that if a person ceases to be subject to enhanced IM under section 123SC because of the cancellation of a category A welfare payment of the person or the person's partner, and immediately before the cancellation the relevant notice had not been withdrawn or revoked and had not expired, the Secretary must give the FRC written notice as soon as practicable after the cancellation.

Division 5 - Other matters

There will be a new Division 5 of Part 3AA to deal with other matters, including the establishment of BasicsCard bank accounts and to specifically authorise certain exclusions from the operation of Part IV of the Competition and Consumer Act dealing with restrictive trade practices.

BasicsCard bank accounts

New subsection 123SU(1) empowers the Secretary to determine, by legislative instrument, a kind of bank account to be maintained by a person subject to enhanced IM for the receipt of payments under Part 3AA.

Subsection 123SU(2) provides that the Secretary may also prescribe, by legislative instrument, terms and conditions relating to the establishment, ongoing maintenance and closure of the bank account so determined. For example, one prescribed condition may be that the financial institution will not allow a person to withdraw cash from the qualified portion of the payment in the person's bank account. This will ensure that the person cannot use that cash to purchase excluded goods or excluded services.

As the determination of bank accounts and prescription of their terms and conditions are to be given effect by a legislative instrument, these matters will be subject to the oversight of the parliament, including through committee consideration and the disallowance process.

Exceptions to Part IV of the Competition and Consumer Act

New section 123SV provides a specific authorisation, for the purposes of subsection 51(1) of the Competition and Consumer Act, with respect to the circumstances in which a financial institution or supplier of goods and services is authorised to decline a transaction involving money in a BasicsCard bank account and associated debit card. This exception is required by the Competition and Consumer Act to give effect to an effective system of welfare quarantining. It will reduce the legal risk to financial institutions and suppliers who decline transactions under new Part 3AA.

Subsection 123SV(1) specifies, for the purposes of the Competition and Consumer Act, that the declining of transactions involving money in a BasicsCard bank account and a business of a kind specified by legislative instrument under subsection 123SV(2) is authorised. This section is to ensure that such actions by the financial institution will not be in breach of the Competition and Consumer Act.

Subsection 123SV(2) empowers the Secretary, by legislative instrument, to specify kinds of businesses, whether by reference to merchant category codes, terminal identification codes, card accepted identification codes or otherwise in relation to which transactions involving funds in a welfare restricted bank account may be declined by a financial institution.

This legislative instrument will be subject to parliamentary oversight, including through committee consideration and the disallowance process.

Subsection 123SV(3) specifies and specifically authorises for the purposes of the Competition and Consumer Act, the declining of a transaction by a supplier of goods or services if it involves money in a BasicsCard bank account and the obtaining of excluded goods or excluded services or cash-like products that could be used to obtain excluded goods or excluded services. This ensures that action by merchants to decline transactions involving these elements will not result in the merchants being in breach of the Competition and Consumer Act.

To avoid doubt, subsection 123SV(4) provides that is does not matter whether money in a BasicsCard bank account represents the qualified portion or unqualified portion of a category B welfare payment.

Other provisions

New section 123SW provides that Part 3AA has effect despite other provisions in specified Acts, particularly the Administration Act, the Social Security Act, the Family Assistance Act or the Family Assistance Administration Act. This confirms that provisions in Part 3AA cannot be overridden by other provisions dealing with the same or similar subject matter. It is particularly intended to target provisions relating to the manner of payment of entitlements, deductions and set-offs.

Amendments 3 to 13

Amendment 3 will amend item 1 of Schedule 1 to the Bill to omit the definition of repeal day in section 123TC. The term 'repeal day' will still be defined in section 123TC of the Administration Act in the same terms. This amendment is necessary due to Amendment 4 (below), which amends the definition of 'excluded Part 3B payment nominee'. This is a re-ordering exercise given the insertion of new items 1S and 1T.

Amendment 4 inserts new items 1S and 1T into the Bill to allow for an amendment to the definition of 'excluded Part 3B payment nominee'.

Item 1S will amend the definition of 'excluded Part 3B payment nominee' by inserting a new sub-paragraph (ia). The new subparagraph will provide that a person is an excluded Part 3B payment nominee if, among other things they are not 'subject to the enhanced income management regime (with the meaning of Part 3AA)'. This amendment is necessary to ensure that a person who is subject to the IM regime under Part 3B does not cease to be so subject merely because their Part 3B payment nominee has transitioned from the CDC program to enhanced IM.

Item 1T will re-enact the definition of 'repeal day' that has been omitted by Amendment 3. This amendment is required solely for drafting purposes. The definition of 'repeal day' will be, as per current item 1 of Schedule 1 to the Bill, which is in the following terms:

repeal day means the day on which Part 2 of Schedule 1 to the Social Security (Administration) Amendment (Repeal of Cashless Debit Card and Other Measures) Act 2022 commences.

Amendment 5 opposes items 20 to 26 of Schedule 1 of the Bill, which relate to the Queensland Commission (FRC) IM measure in section 123UF of the Administration Act.

Items 20 to 25 were included in the Bill to facilitate the transition of CDC program participants under the Queensland Commission (FRC) measure to IM under Part 3B of the Administration Act. These items are no longer required because CDC participants under the Queensland Commission (FRC) measure will instead be transitioned to enhanced IM under new Part 3AA. This responds to feedback received during the Senate Inquiry and ensures that individuals who have been on the CDC will not return to the limited functionality of the existing BasicsCard. Individuals will have access to technology that maximises where they can shop and spend the qualified portion of their welfare payment, providing them with more choice and control while ensuring that those funds are not spent on excluded goods or excluded services.

Amendment 5 also responds to the FRC's specific request that item 26 of Schedule 1 be removed from the Bill. Item 26 provided an exemption to former NT CDC participants who had received a welfare exemption or a financial capability exit from being subject to IM. The FRC expressed concern to the Senate Inquiry that this amendment, if passed, may pose an operational risk and impact on its jurisdiction within prescribed community areas.

Amendment 6 amends item 37 of Schedule 1 of the B to omit the phrase 'the closure day' and substitute it with the phrase '6 March 2023' with respect to a written notice given under a law of Queensland from the FRC to the Secretary, requiring a person to be a CDC program participant under section 124PGD. The amendment will ensure that there will be no new participants entering CDC under Part 3D of the Administration Act under the Queensland Commission (FRC) measure on or after 6 March 2023.

Any new entrants to welfare quarantining who reside in prescribed community areas from 6 March 2023 will instead be subject to enhanced IM under new section 123SC in Part 3AA of the Administration Act.

Amendment 7 opposes item 38 of Schedule 1 of the Bill. Item 38 allowed CDC program participants under the Queensland Commission (FRC) measure (section 124PGD of the Administration Act) to request to cease to be a CDC program participant. The FRC submitted to the Senate Inquiry that this interfered with the work of the FRC and its independent decision making powers. For this reason, the FRC requested that item 38 be removed from the Bill. This amendment implements the FRC's request.

Item 38 of Schedule 1 of the Bill also facilitated the transfer of CDC participants under the Queensland Commission (FRC) measure onto IM under Part 3B of the Administration Act. This is no longer required because CDC participants under the Queensland Commission (FRC) measure will be transitioned to enhanced IM under new Part 3AA. This responds to feedback from the FRC that individuals who have been on the CDC should not return to the limited functionality of the existing BasicsCard.

Amendments 8 and 9 will consequentially amend items 45 and 47 of Schedule 1 to the Bill to omit from each the phrase '124PGD(4)'. These amendments are consequential to Amendment 7, which opposes item 38 of Schedule 1 to the Bill. Due to item 38 being opposed, CDC program participants under the Queensland Commission (FRC) measure (section 124PGD of the Administration Act) will not be able to request to exit CDC. Accordingly, the Secretary will not need to be given power to decide that individuals should exit CDC under subsection 124PGD(4). As there is no decision-making power, it will be unnecessary to exclude decisions from internal or Administrative Appeals Tribunal review.

Amendment 10 will insert new items 47A to 47F into Part 1 of Schedule 1 of the Bill.

New item 47A will insert a new paragraph 192(daaa) after paragraph 192(da) of the Administration Act to ensure that the general information gathering powers in section 192 also apply in respect of the operation of new Part 3AA dealing with enhanced IM.

New item 47B will insert a new paragraph 195(1)(caa) after paragraph 195(1)(ca) of the Administration Act to ensure that the information gathering power to verify claims in section 195 also applies to facilitate the administration of new Part 3AA dealing with enhanced IM.

New item 47C will insert new subsection 202(8A) after subsection 202(8) of the Administration Act relating to protection of information about BasicsCard bank accounts. Specifically, the new provision will provide that if protected information relates to the establishment or ongoing maintenance of a BasicsCard bank account (within the meaning of new section 123SB), a person may do any of the following:

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obtain the information;

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make a record of the information;

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disclose the information to a financial institution;

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otherwise use the information.

This amendment is essential to ensure that a person who is engaged in the establishment, maintenance and closure of BasicsCard bank accounts in accordance with the Administration Act will be able to obtain, make a record of, disclose or otherwise use the information without committing an offence under Division 3 of Part 5 of the Act. In this light, this provision is reasonable, necessary and proportionate having regard to the impact on the individual's privacy.

Amendments to the Continuation Act

New item 47D will amend sub-item 97(3) of Schedule 1 of the Continuation Act. Sub-item 97(2) of the Continuation Act provides a mechanism for recognising a written notice, given by the FRC in compliance with section 123UF of the Administration Act, requiring a person to be subject to IM to have effect as if it had been given under section 124PGD. Sub-item 97(3) then states that if this written notice is withdrawn or revoked, it ceases to apply. This new item will add the phrase 'before 6 March 2023' to take into account the transition from CDC to enhanced IM.

New item 47E will amend paragraph 97(4)(a) of Schedule 1 of the Continuation Act. Sub-item 97(4) provides a mechanism for recognising a written notice, given by the FRC on or after the commencement of item 97, in compliance with section 123UF of the Administration Act, requiring a person to be subject to IM to have the effect as if it had been given under section 124PGD. New item 47E will amend this item to include the phrase 'and before 6 March 2023' to take into account the timing of the transition from CDC to enhanced IM.

New item 47F will amend sub-item 97(5) of the Schedule 1 of the Continuation Act, which provides that notice under sub-item 97(4) ceases to apply if the notice is withdrawn or revoked. This new item will add the phrase 'before 6 March 2023' to take account the timing of the transition from CDC to enhanced IM.

Amendments to Part 2 of Schedule 1 to Bill

Amendments 11 to 13 make amendments to Part 2 of Schedule 1 to the Bill. Part 2 of Schedule 1 repeals Part 3D of the Administration Act on a day to be fixed by proclamation, or the day that is 6 months after the day the Act is given the Royal Assent. This abolishes the CDC program in its entirety. Amendments 11 to 13 make consequential amendments to reflect the repeal of Part 3D of the Administration Act.

Amendment 11 will consequentially amend items 51 to 57 of Schedule 1 to the Bill to ensure that these items take account of new Part 3AA.These items all relate to the stage 2 amendments, which repeal 3D of the Administration Act in full.

The following provisions of the Social Security Act will be amended to insert appropriate references:

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subsection 1061EK(1) providing that advanced payments of social security entitlements under section 238, Part 3B and Part 3D of the Administration Act are absolutely inalienable, whether by way of, or in consequence of sale, assignment, charge, execution, bankruptcy or otherwise ( item 51 );

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paragraph 1222(1)(ba) relating to methods of debt recovery by the Commonwealth, including where a debt is due to the Commonwealth under Parts 3B and 3D of the Administration Act ( item 52 );

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subsection 1222(2) (table item 20, column 2) providing methods of recovery available for debts owing to the Commonwealth under Part 3B and Part 3D of the Administration Act ( item 53 );

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paragraph 1230(1)(a) relating to the recoverability of a debt where a garnishee debtor fails to comply with a notice ( item 54 );

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subsections 1230C(1) and (2) relating to methods of debt recovery including where a debt is due to the Commonwealth under Parts 3B and 3D ( item 55 );

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paragraph 1234(1)(a) allowing a consenting third party to agree to the Secretary deducting an amount from their social security payment for the purposes of repaying another person's social security payment debt ( item 56 );

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subsection 1237AB(1) allowing the Secretary, on behalf of the Commonwealth, to waive the Commonwealth's right to recover debts arising from Part 3B or Part 3D of the Administration Act, that are included in a class of debts specified by legislative instrument ( item 57 ).

In each case, the provisions currently apply with respect to the income management regime under Part 3B of the Administration Act and cashless welfare arrangements under Part 3D of the Administration Act. The amendments will ensure that Part 3AA is mentioned for the purposes of these provisions when references to Part 3D are removed.

Amendment 12 will insert a new item 60A into the Bill to amend new section 123SI, which deals with the relationship of Part 3AA with Parts 3B and 3D of the Administration Act. This amendment will commence when Part 2 of Schedule 1 to the Bill commences. It is necessary to reflect the insertion of section 123SI by these amendments and the repeal of Part 3D under Part 2 of Schedule 1. That is, following the repeal of Part 3B, section 123SI will be amended to remove the phrase 'and cannot be a program participant or a voluntary participant under Part 3D at that time'.

This consequential amendment is required because the references to Part 3D will become redundant with the repeal of that Part.

Amendment 13 will omit existing item 61 in the Bill and substitute it with a new item 61 that will repeal paragraph (b) of the definition of 'excluded Part 3B payment nominee' in section 123TC in Division 1 of Part 3B of the Administration Act. New item 61 will remove subparagraph (b)(ii) which refers to a Part 3B payment nominee who 'is not a program participant under Part 3D' as this sub-paragraph will become redundant with the repeal of Part 3D. The remaining paragraphs will be re-numbered and re-lettered.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

SOCIAL SECURITY (ADMINISTRATION) AMENDMENT (REPEAL OF CASHLESS DEBIT CARD AND OTHER MEASUERS) ACT 2022

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

The Bill delivers the Australian government's election commitment to abolish the Cashless Debit Card (CDC). The Bill will also facilitate a transition to the new enhanced Income Management (IM) arrangements in certain cases. This Statement of Compatibility with Human Rights addresses the Bill amendments that establish enhanced IM in prescribed community areas.

Human rights implications

This Bill and amendments engages the following human rights or freedoms:

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the rights of equality and non-discrimination

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the right to self-determination

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the right to an adequate standard of living, including food, water and housing

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the right to social security.

These rights and a number of other considerations are addressed in turn below.

General safeguards

A number of general safeguards that will help to protect human rights have been incorporated into the proposal to abolish the CDC program and reform IM.

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The Bill amendments ensure that people in prescribed community areas who were on the CDC program will transition to enhanced IM and be able to access a contemporary debit card that provides modern functionality.

The amendments affirm the role of the FRC in prescribed community areas as a community-led model, which enables community-controlled decision-making and promotes self-determined decision making at a local level. The FRC will decide whether its community members should be placed on the enhanced IM program, which will ensure continuity for participants whom the FRC considers should be subject the enhanced IM program after the CDC program ceases.

The rights of equality and non-discrimination

The rights of equality and non-discrimination are provided for in a number of the seven core international human rights treaties to which Australia is a party, most relevantly the International Covenant on Civil and Political Rights (ICCPR) and the Convention on the Elimination of All Forms of Racial Discrimination (the CERD).

The rights to equality and non-discrimination are not affected by the abolition of the CDC program and reform of traditional IM. The removal of the CDC program will not apply on the basis of race or cultural factors. All CDC program areas including those under the Queensland Commission (FRC) measure are included in the program removal. The arrangements will apply to a high proportion of First Nations people but are being sought by those communities to assist with addressing and curtailing passive welfare, antisocial behaviour and entrenched disadvantage.

The right to self-determination

Article 1 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) states that all people have the right of self-determination, which includes the right to 'freely pursue their economic, social and cultural development'.

By ensuring the continuation of the FRC referral model, the amendments ensure that IM in prescribed community areas can continue as intended to address and curtail passive welfare, antisocial behaviour and entrenched disadvantage. FRC commissioners will be able to determine how much of a participant's payment should be qualified, based on an assessment of the participant's holistic situation. A commissioner can also vary the qualified portion if required which allows for a level of discretion, as opposed to a 'one size fits all' approach. Therefore, self-determination is maintained as this is a community-endorsed model to address concerns relating to those most vulnerable to social harms.

The right to an adequate standard of living, including food, water and housing

Article 11(1) of the ICESCR states that everyone has the right to an adequate standard of living, including adequate food, clothing and housing, and the continuous improvement of living conditions. Further to this, article 11(2) of the ICESCR states that the fundamental right of everyone to be free from hunger should be recognised.

Those who transition to enhanced IM in prescribed community areas will still have their rights to an adequate standard of living, including food, water and housing maintained. The only limits placed on those who transition will be in relation to excluded goods and services (i.e. alcohol, gambling services, tobacco and pornographic material), or cash like products that could be used to obtain excluded goods and services. Excluded goods and services are not essential for maintaining an adequate standard of living, and their exclusion is critical to realising the objective of the IM program, which is to ensure welfare payments are directed towards priority goods and services, such as housing, food and bills.

The right to social security

Article 9 of the ICESCR recognises the right of everyone to social security. In accordance with Article 4 of the ICESCR, the State may limit this right only in so far as such limitations may be compatible with the nature of these rights and solely for the purpose of 'promoting the general welfare in a democratic society'.

The amendments made by this Bill do not detract from the eligibility of a person to receive welfare, nor reduce the amount of a person's social security entitlement. Rather, by transitioning individuals in prescribed community areas onto the enhanced IM program, the amendments provide a mechanism to ensure that recipients of social security entitlements use a percentage of their payment to acquire essential items only. To the extent that the right to social security may be limited by the amendments, the limitations are reasonable, necessary and proportionate to prioritise basic living needs and are an essential element of the Government's election commitment to support First Nations people to make their own decisions about the way forward. Further, the measures proposed are 'promoting the general welfare' of people through the prioritisation of their expenditures.

Conclusion

The Bill is compatible with human rights because to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate. Whilst the Bill may limit human rights for participants in prescribed community areas, the Bill also ensures that IM in prescribed community areas can continue as intended to address and curtail passive welfare, antisocial behaviour and entrenched disadvantage. Retaining the FRC model in prescribed community areas also allows the Commission to meet its statutory obligations under the FRC Act. The measures introduced via the Bill are reasonable, necessary and proportionate to achieving the objectives of abolishing the CDC program and reforming the traditional IM regime in Australia.