House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Employment and Workplace Relations the Honourable Kevin Andrews MP)

Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) (Consequential Amendments) Bill 2006

OUTLINE

The Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) Act 2005 (Welfare to Work Act 2005) amended the social security law introducing a comprehensive reform of the welfare system for working age Australians. In doing so, it tackles the twin goals of lifting workforce participation and reducing welfare dependency, while maintaining a strong safety net for those who need it.

This Bill makes amendments as a consequence of the measures contained in the Welfare to Work Act 2005. The Bill removes references and terms in the social security law that from 1 July 2006 will be redundant or no longer relevant. In particular, amendments are made to reflect the new income support payment compliance framework.

Other amendments clarify intended policy and ensure that the social security law remains workable and continues to support the sustainability of the welfare system into the future.

FINANCIAL IMPACT STATEMENT

The total net Department of Employment and Workplace Relations and Department of Human Services administered and departmental costs associated with the measures in this Bill is $4.8m over 4 years.

NOTES ON CLAUSES

Clause 1 sets out how the Act is to be cited, that is, the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) (Consequential Amendments) Act 2006.

Clause 2 provides a table that sets out the commencement dates of the various sections in and schedules to the Act.

Clause 3 provides that each Act that is specified in a Schedule is amended or repealed as set out in that Schedule.

For ease of description, this explanatory memorandum uses the following abbreviations:

"Social Security Act" means the Social Security Act 1991; and

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

(A) SUMMARY

From 1 July 2006, the current breaching regime (under which people with participation requirements can incur lasting financial penalties regardless of subsequent efforts to meet their requirements) will be abolished and a new compliance regime will be implemented. Various terms relevant to the current breaching regime are used throughout the Social Security Act and Administration Act. Upon the commencement of the new compliance regime, this terminology will no longer be relevant and consequently needs to be repealed and in most cases replaced with terms reflecting the new compliance framework.

Principal carers

From 1 July 2006, people claiming parenting payment will only be able to qualify for payment if they have a child under 8 years of age (if the person is single) or under 6 years of age (if the person is partnered). After this time, people will be able to claim and, if eligible, receive another income support payment such as newstart allowance or youth allowance. To ensure consistent treatment between principal carers receiving parenting payment, newstart and youth allowance, this Bill amends the Social Security Act so principal carers who qualify for youth allowance or newstart allowance will be exempt from the newly arrived resident waiting period (of 104 weeks) if they are an Australian resident and become single (so long as they were not a lone parent at the start of their current period as an Australian resident).

Further, consistent with current parenting payment provisions, principal carers of children who are receiving newstart allowance or youth allowance and whose child dies will continue, for a period of 14 weeks following the death of the child, to access benefits, concessions and a payment rate as if the child had not died.

Mobility Allowance

From 1 July 2006, as provided by the Welfare to Work Act 2005 a new higher rate of mobility allowance will be available to certain income support recipients with disabilities to assist them participate in the work force. This Bill makes amendments to ensure that people who qualify for the new higher rate of mobility allowance during a lower rate advance period can acquit the advance period earlier.

Other amendments

Other amendments in this Bill ensure that the policy intention of the Welfare to Work changes are fully realised and consistently applied. This includes people continuing to be exempt from the income test rules for child care benefit and family tax benefit Part A and having access to concession cards and an employment entry payment during periods of non-payment due to compliance failures. The Bill also extends access to pharmaceutical allowance to partnered parenting payment recipients who have a temporary incapacity exemption.

SCHEDULE 1 - DEFINITIONS AND OTHER INTERPRETATIVE PROVISIONS

EXPLANATION OF CHANGES

Item 1 inserts new subsections 5(20A) and (20B) relevant to the new definition of 'principal carer' (inserted by the Welfare to Work Act 2005). The new 'principal carer' definition, in effect, replicates provisions relevant for the concept of a PP child in parenting payment. The PP child sections will be repealed from 1 July 2006. This is because the principal carer definition will not only apply to parenting payment but will be relevant for other payments such as newstart allowance and youth allowance. Similar to the operation of current section 500R (repealed by Item 5 of Schedule 2), new subsections 5(20A) and (20B) apply so that that only one member of a couple can be a principal carer.

New subsection 5(20A) operates so that a person cannot be the principal carer of any child if the person is a member of a couple and the person's partner is a principal carer (or would be except for the operation of 5(20A)) and is receiving newstart allowance, youth allowance, parenting payment or special benefit. These are all payments that are affected by or based on a person being a principal carer of a child.

However, as provided by new subsection 5(20B), if both members of a couple could be a principal carer and are receiving or have claimed a social security payment that is or would be based on or affected by being a principal carer then the Secretary is to make a determination in writing that one of the members of the couple is the principal carer.

Under new subsection 5(20D) the Secretary must provide each member of the couple with a copy of the determination.

Item 2 sets out what is meant by 'applicable statutory conditions'. This definition is relevant for the purposes of determining when work is unsuitable for a person. The Welfare to Work Act 2005 amended the Social Security Act to reflect changes made to Australia's industrial relations system by the Workplace Relations Amendment (Work Choices) Act 2005 (the Work Choices Act). Part 7 of the Work Choices Act provides for the Australian Fair Pay and Conditions Standard (the Standard). The Standard sets minimum terms and conditions of employment for employees within the coverage of that Act. While many Australian employees will be covered by the Standard, Item 2 inserts a new section 16C to take account of the fact that some work will be covered by a pre-reform certified agreement, a preserved State agreement; a transitional award; a State or Territory industrial law; a State award; or a State employment agreement.

In reference to new subparagraph 16C(a)(ii), work could only be covered by both the Standard and a transitional award if the employer is an employer in Victoria within the meaning of section 858 of the Workplace Relations Act 1996 and if that employer is bound by a transitional award under Schedule 6 of that Act.

If more than one agreement, award or law could cover the work, subsection 16C(2) clarifies that regard is to be had to an agreement, award or law to the extent that it prevails over one or more of the others in relation to the work.

Subsection 16C(3) provides that transitional award means a transitional award within the meaning of Schedule 6 to the Workplace Relations Act 1986.

Items 3 to 7 repeal the following definitions from subsection 23(1) of the Social Security Act: activity test breach; activity test breach rate reduction; activity test non-payment period; activity test penalty period; administrative breach rate reduction period.

Item 8 inserts a new definition of applicable statutory conditions which has the meaning given by new section 16C (see Item 2 above).

A definition reflecting the new compliance framework is inserted into subsection 23(1) by Item 9 . The 'compliance penalty period' definition takes account of non-payment periods due to participation failures (which cease when an income support recipient re-engages) and 8-week non-payment periods applied to repeated participation or more serious failures. These non-payment periods are relevant for parenting payment, youth allowance, austudy payment, newstart allowance and special benefit.

Items 10 and 11 insert two new definitions of 'current period as an Australian resident' and 'lone parent'. These definitions are relevant for parenting payment, youth allowance and newstart allowance. A 'current period of an Australian resident' is where a person has been an Australian resident for an entire period and the person lodged a claim for youth allowance, newstart allowance or parenting payment during the period. A 'lone parent' is a person who is not a member of a couple and who has a dependent child. Currently, these definitions are contained at subsections 500(2) and (3) and apply to parenting payment for the purposes of the newly arrived resident waiting period exemption for single parents. However, with the extension of the exemption to single principal carer parents receiving youth and newstart allowance, these definitions are more appropriately located in subsection 23(1).

Items 12 to 14 repeal the following definitions: participation agreement; participation agreement breach non-payment period; and participation agreement breach rate reduction period'.

Currently, under section 28 newstart allowance recipients (other than very long term unemployed recipients) who participate in an approved program of work (colloquially known as Work for the Dole) cannot be required to participate in a program for more than 30 hours per fortnight.

Item 15 amends subsection 28(3) to ensure that the 30-hour per fortnight cap will also apply to recipients of other payments (other than some people who are very long term unemployed) who will be required to participate in Work for the Dole.

The definitions referred to in Items 4 to 7 are referred to in the Welfare to Work Act 2005 in certain saving and transitional provisions. Item 16 sets out that the definitions repealed by Items 4 to 7 and 12 to 14 do not affect the operation of the provisions of the Welfare to Work Act 2005 that refer to those definitions.

SCHEDULE 2 - PARENTING PAYMENT

EXPLANATION OF CHANGES

Items 1 to 3 make amendments reflecting the relocation of the definitions of 'lone parent' and 'current period as an Australian resident' to subsection 23(1). (see Schedule 1 Items 10 to 11)

Item 4 makes a technical correction at subsection 500H(3).

Item 5 repeals section 500R. Item 1 of Schedule 1, in effect, relocates this section to subsections 5(20A) and (20B).

Item 6 repeals section 500Y. Clause 5 of Schedule 2 of the Administration Act provides for the same operation as section 500Y (that a payment of parenting payment is not payable during a period of non-compliance). However, as provided by Item 22 of Schedule 13 an amendment is made to clause 5 of Schedule 2 to ensure that the effect of subsection 500Y(3) (possible exemption from the non-payment rule for parenting payment) is retained.

Item 7 inserts the words 'reasonable excuse' at paragraph 500ZE(1)(e). The effect of this is that, if a person fails to comply with an approved program of income support requirement, it will not be considered a compliance failure if the person had a reasonable excuse for the non-compliance. This is consistent with other provisions relating to compliance failures.

Item 8 repeals paragraphs 502(4)(e) and (f) and substitutes a new paragraph 502(4)(e). The effect of this is that work, will be considered unsuitable if, in the Secretary's opinion, its terms and conditions are less generous than the applicable statutory conditions. Item 2 of Schedule 1 sets out what is meant by applicable statutory conditions taking account of changes made to Australia's industrial relations system by the Work Choices Act.

Item 9

Currently, qualification for pharmaceutical allowance is available to all newstart and youth allowance recipients who have a temporary incapacity exemption from their activity requirements. Single parenting payment recipients also currently access a pharmaceutical allowance. However, partnered recipients of parenting payment, unless over 60 years of age, cannot access a pharmaceutical allowance. Changes made by the Welfare to Work Act 2005 mean that current recipients of parenting payment will have participation requirements from the later of 1 July 2007 or when their youngest child turns 7. Item 9 amends point 1068B-E1 providing partnered parenting payment recipients who have been granted a temporary incapacity exemption from participation requirements access to a pharmaceutical allowance. The extension of the pharmaceutical allowance to partnered recipients of parenting payment who have temporary incapacity exemption will provide a consistent approach between all activity tested income recipients.

SCHEDULE 3 - YOUTH ALLOWANCE

(B) Explanation of changes

Item 1 repeals paragraphs 541D(1)(e) and (f) and substitutes a new paragraph 541D(1)(e). The effect of this is that work will be considered unsuitable if, in the Secretary's opinion, its terms and conditions are less generous than the applicable statutory conditions. Item 2 of Schedule 1 sets out what is meant by applicable statutory conditions taking account of changes made to Australia's industrial relations system by the Work Choices Act.

Item 2

A residence requirement for youth allowance eligibility is that newly arrived resident claimants are required to have been an Australian resident in Australia for a period of, or periods totalling 104 weeks. Item 2 inserts a new subsection 549D(6) which provides an exception to this basic rule. New subsection 549D(6) provides that a person will not have to meet the 104 week rule if the person is the principal carer of one or more children; and is not a member of a couple; is not undertaking full-time study nor is a new apprentice; and at the start of the person's current period of an Australian resident the person was not a lone parent.

The new notes direct readers to the definitions of principal carer at subsection 5(15) to (24); and lone parent and current period as an Australian resident at subsection 23(1) (see Items 10 and 11 of Schedule 1).

This rule is similar to the exception provided to newly arrived resident parents who qualify for parenting payment when, following their Australian residency, they become single.

Item 3 amends subsection 550A(1) so that a youth allowance recipient who is required to apply for advertised job vacancies is able to meet that requirement in less than 14 days. This is to the benefit of the job seeker because resumption of payment may be contingent upon meeting that requirement.

Item 4 inserts the words 'reasonable excuse' at paragraph 551(1)(e) of the Social Security Act. The effect of this is that if a person fails to comply with an approved program of income support requirement it will not be considered a compliance failure if the person had a reasonable excuse for the non-compliance. This is consistent with other provisions relating to compliance failures.

From 20 September 2006, Item 5 repeals subsection 553(2) and substitutes a new subsection. The effect of this is that students and new apprentices claiming youth allowance will be subject to a seasonal worker preclusion period. This is consistent with the amendments made by the Welfare to Work Act 2005 extending the application of a seasonal worker preclusion period to any person who claims carer payment; disability support pension; sickness allowance; pension PP (single) and austudy payment.

Subsections 556(2) to (4) currently set out how to calculate a person's youth allowance if an administrative breach rate reduction or activity test breach rate reduction applies to the person. As the administrative and activity test breach rate reduction scheme will no longer be relevant, Item 7 repeals subsections 556(2) to (4) and Items 6 and 11 make amendments to reflect the new numbering of section 556.

Item 9 inserts a new Subdivision heading before section 567.

Item 10 makes amendments to provide for the continuation of youth allowance for principal carers following the death of a child. New section 567G sets out that if a person is the principal carer of a child who dies, and the person's rate would reduce because the person would no longer be the principal carer of a child, then the person's rate of youth allowance for 14 weeks following the death of the child is to be worked out as if the child had not died. This allows people who are receiving a higher rate of payment because of the child to retain the higher rate for the 14 weeks. Other amendments made by the Bill also allow for benefits and concessions that are received by principal carers to be retained for the 14-week period, (see Schedules 10, 11 and 12). These only apply to people who are not undertaking full-time study or who are not new apprentices.

The new note directs readers to the definition of 'principal carer' contained at subsections 5(15) to (24).

SCHEDULE 4 - AUSTUDY PAYMENT

(A) Explanation of changes

Subsections 581(2) to (4) currently set out how to calculate a person's austudy payment if an administrative breach rate reduction or activity test breach rate applies to the person. As the administrative and activity test breach rate reduction scheme will no longer be relevant Item 2 repeals subsections 581(2) to (4) and Items 1 and 3 make amendments to reflect the new numbering of section 581.

SCHEDULE 5 - NEWSTART ALLOWANCE

(B) Explanation of changes

Item 1 repeals paragraphs 601(2A)(e) and (f) and substitutes a new paragraph 601(2A)(e). The effect of this is that work will be considered unsuitable if, in the Secretary's opinion, its terms and conditions are less generous than the applicable statutory conditions. Item 2 of Schedule 1 sets out what is meant by applicable statutory conditions taking account of changes made to Australia's industrial relations system by the Work Choices Act.

Item 2

A residence requirement for newstart allowance eligibility is that newly arrived residents are required to have been an Australian resident in Australia for a period of, or periods totalling 104 weeks. Item 2 inserts a new subsection 623A(7), which provides an exception to this basic rule. New subsection 623A(7) provides that a person will not have to meet the 104 week rule if the person is the principal carer of one or more children; and is not a member of a couple; and at the start of the person's current period of an Australian resident the person was not a lone parent.

The new notes direct readers to the definitions of principal carer at subsection 5(15) to (24); and lone parent and current period as an Australian resident at subsection 23(1) (see Items 10 and 11 of Schedule 1).

This rule is similar to the exception provided to newly arrived resident parents who qualify for parenting payment when, following their Australian residency, they become single.

Item 3 inserts the words 'reasonable excuse' at paragraph 629(1)(e) of the Social Security Act. The effect of this is that if a person fails to comply with an approved program of income support requirement, it will not be considered a compliance failure if the person had a reasonable excuse for the non-compliance. This is consistent with other provisions relating to compliance failures.

Item 4 makes amendments to provide for the continuation of newstart allowance for principal carers following the death of a child. New section 660M sets out that if a person is the principal carer of a child who dies and the person's rate would reduce because the person would no longer be the principal carer of a child, then the person's rate of newstart allowance for 14 weeks following the death of the child is to be worked out as if the child had not died. This allows people who are receiving a higher rate of payment because of the child to retain the higher rate for the 14 weeks. Other amendments made by the Bill also allow for benefits and concessions that are received by principal carers to be retained for the 14-week period. The new note directs readers to the definition of 'principal carer' contained at subsections 5(15) to (24).

SCHEDULE 6 - EMPLOYMENT ENTRY PAYMENT

(C) Explanation of changes

Item 1 inserts a new section 665AB which sets out a new deemed receiving provision. This new section operates so that if a person is subject to a compliance penalty period then, despite the non-payment, for the purposes of employment entry payment the person will be taken to have been receiving or to be receiving a social security pension or social security benefit.

This amendment will provide income support recipients a continued incentive to participate in the paid labour market despite not having access to their primary payment.

SCHEDULE 7 - SPECIAL BENEFIT

EXPLANATION OF CHANGES

Item 1 makes amendments reflecting changes made to parenting payment by the Welfare to Work Act 2005.

As a consequence of the new compliance framework, Items 2 to 5 make amendments to the qualification provisions for special benefit

Item 6 repeals paragraphs 731B(1)(e) and (f) and substitutes a new paragraph 731B(1)(e). The effect of this is that work will be considered unsuitable if, in the Secretary's opinion, its terms and conditions are less generous than the applicable statutory conditions. Item 2 of Schedule 1 sets out what is meant by applicable statutory conditions taking account of changes made to Australia's industrial relations system by the Work Choices Act.

Items 7 and 8 insert additional words at paragraphs 745(1)(b) and (1)(c). The effect of this is that special benefit recipients who have participation requirements will be subject to a period of non-payment if they voluntarily become unemployed or become unemployed due to misconduct and as a result are unable to earn a sufficient livelihood for themselves and their dependants.

Item 9 inserts the words 'reasonable excuse' at paragraph 745(1)(e) of the Social Security Act. The effect of this is that, if a person fails to comply with an approved program of income support requirement, it will not be considered a compliance failure if the person had a reasonable excuse for the non-compliance. This is consistent with other provisions relating to compliance failures.

Item 10 repeals sections 745J and 745K. However, Item 11 ensures that these 2 sections continue to apply in relation to activity test penalty periods and administrative breach rate reduction periods, which were incurred by a person prior to 1 July 2006, but following 1 July will continue to apply

Item 12 omits the words "a requirement of the Secretary under section 731A of with".

Item 13 amends subsection 746(3) so that when working out the rate for special benefit any amount by which the rate would be increased because of point 1067G-D1 (Youth Disability Supplement) of the Youth Allowance Rate Calculator is to be disregarded.

SCHEDULE 8 - PARTNER ALLOWANCE

EXPLANATION OF CHANGES

While partner allowance is a closed payment, it is still received by some income support recipients. To ensure consistency of terminology throughout the Social Security Act, Items 1 to 10 make amendments to the qualification for partner allowance to reflect the introduction of the new compliance framework. In particular, references to the new definition of 'compliance penalty period' replace the references to non-payment under particular parts of the Social Security Act.

SCHEDULE 9 - MOBILITY ALLOWANCE

EXPLANATION OF CHANGES

As provided by the Welfare to Work Act 2005, from 1 July 2006 a new qualification for a higher rate of mobility will be available to certain recipients of newstart allowance, youth allowance and disability support pension.

Items 1,2 and 5 clarify the wording in the new higher rate of mobility allowance provisions. These items amend subparagraphs 1035A(3)(b)(ii), (6)(b)(ii) and 1046(2)(b)(iv) with the broad effect that to qualify for the new rate of $100, newstart allowance, youth allowance and disability support pension recipients will need to, among other things, undertake job search activities under an agreement between the Secretary and the person for work of 15 hour per week. The agreement referred to in these provisions will not be between the Secretary and the employment service provider.

Item 4

Currently, people can qualify for an advance payment of mobility allowance. The advance is for a period of 26 weeks. During this period no further mobility allowance is payable. In addition to the current rate of mobility allowance, from 1 July 2006 a new higher rate of mobility allowance under section 1035A of the Social Security Act will be available to assist people with disabilities to participate in the workforce.

Item 4 ensures that people who qualify for the higher rate of mobility allowance during an advance period of the lower rate will be able to acquit the lower rate advance period earlier.

Item 4 provides a method statement for working out the early acquittal of the advance period. The first step is to work out the number of days that remain of the 26-week advance payment period.

For example, if a person qualifies for the higher rate after 10 weeks of the advance payment period then there would be 16 weeks remaining, which is 112 days. The next step requires the number of days remaining to be multiplied by an equation where the lower rate of mobility allowance is divided by the higher rate of mobility allowance.

$71.30 (the lower rate) / $100 (the higher rate)


.713 x 112 days = 79.85.


This result is then rounded down to the next whole day, which provides 79 days. This number is then taken away from the number of days that were remaining at the time of qualification for the higher rate: 112 days - 79 days = 33 days. This provides the number of days by which the advance period has been reduced. To determine the total advanced period commencing from the beginning of the entitlement period (the first day of the advance payment period) the 33 days is taken away from 182 (being 26 weeks x 7 days) to provide the new advance payment period of 149 days.

SCHEDULE 10 - PENSIONER EDUCATION SUPPLEMENT

(D) Explanation of changes

Items 1 and 2 insert new flags at 1061PJ(2A) and (2B) to new subsection (2C).

Item 3 inserts new subsection 1061PJ(2C). New subsection (2C) applies to people who are receiving newstart allowance and youth allowance and are the principal carer of a child and are receiving a pensioner education supplement. If the person's child dies (for whom the person is the principal carer) then the person is taken for the purposes of subparagraphs (2A)(b)(i) and (2B)(b)(i) to be a principal carer for 14 weeks following the child's death. During this period, newstart and youth allowance recipients can continue to access their pensioner education supplement.

SCHEDULE 11 - TELEPHONE ALLOWANCE

EXPLANATION OF CHANGES

Items 1 to 3 insert references to new subsection (2C) at the notes contained in section 1061Q.

Item 4 inserts new subsection 1061Q(2C). New subsection (2C) applies to people who are receiving newstart allowance and youth allowance and are the principal carer of a child and are receiving a telephone allowance. If the person's child dies (for whom the person is the principal carer) then the person is taken for the purposes of subparagraphs (2)(d)(i) and (2A)(b)(ii) and paragraph (2B)(b) to be a principal carer for 14 weeks following the child's death. During this period, newstart and youth allowance recipients can continue to access a telephone allowance.

Items 5 and 6 amend the notes contained in subsections 1061Q(3E) and (3H) to include references to new subsection (3K).

Item 7 inserts new subsection 1061Q(3K), which in effect is a deemed principal carer provision. Under this subsection newstart and youth allowance principal carers whose child dies can continue to access the extended telephone allowance qualification rules for 14 weeks following the child's death.

SCHEDULE 12 - CONCESSION CARDS

EXPLANATION OF CHANGES

Items 1 and 2 insert references to new subsection (2C) in the section 1061ZA notes.

Item 3 inserts new subsection 1061ZA(2C). New subsection (2C) applies to people who are receiving newstart allowance and youth allowance and are the principal carer of a child and are receiving a pensioner concession card. If the person's child dies (for who the person is the principal carer) then the person is taken for the purposes of subparagraphs (2A)(c)(ii) and (2B)(b)(ii)) to be a principal carer for 14 weeks following the child's death. During this period eligible newstart and youth allowance recipients can continue to access a pensioner concession card.

Under section 1061ZEA extended qualification is provided to certain income support recipients to their pensioner concession card for a period of 12 weeks after they leave payment because of employment income. Under section 1061ZEA to access the extended qualification for the pensioner concession card, among other things, people need to continue to qualify for their social security payment but for the employment income. Qualification for newstart and youth allowance requires that a person is unemployed. Upon receiving or deriving employment income some people will no longer meet this qualification requirement. Item 4 clarifies the policy intention that these provisions are to align with pension (PP single) recipients. Therefore, principal carers who leave payment because of employment income can continue to receive a pensioner concession card for the period of 12 weeks despite not meeting the qualification requirement in newstart allowance or youth allowance to remain unemployed and meet activity test requirements. Item 5 provides a note which references the principal carer definition at subsections 5(15) to (24).

Item 6 inserts new subsection 1061ZEA(2A). New subsection (2A) applies to people who are receiving newstart allowance and youth allowance. If the person's child dies (for who the person is the principal carer) then the person is taken for the purposes of subparagraphs (2)(ga)(iia) and (iib) to be a principal carer for 14 weeks following the child's death. During this period eligible newstart and youth allowance recipients can continue to access the extended qualification rules under section 1061ZEA.

Item 7 inserts a new section 1061ZEC that sets out a deemed receiving provision. This new section operates so that if a person is subject to a compliance penalty period then despite the penalty period for the purposes of retaining access to a pensioner concession card a social security payment is taken to be payable. Where a reference is made in the concession card provisions to a payment having ceased to be payable, then new subsection 1061ZEC(2) operates so that if (apart from the compliance penalty period) the payment would have ceased to be payable for the reasons set out in the relevant pensioner concession card provision (usually because of employment income) then a person still retains the benefit of the pensioner concession card provisions.

Subsection (3) clarifies that a reference to a social security payment being payable or ceasing to be payable, where appropriate, includes a reference to a person receiving the payment or ceasing to receive the payment.

Item 8 clarifies that newstart allowance recipients who from 1 July 2006 have access to a pensioner concession card will also not have access to a health care card.

Items 9 to 11 clarify that youth allowance recipients who are new apprentices will not have access to an automatic health care card after leaving income support.

Item 12 inserts a new section 1061ZNA that sets out a deemed receiving provision. This new section operates so that if a person is subject to a compliance penalty period, then for the purposes of retaining access to a health care card the person will be taken to have been receiving or to be receiving his or her payment despite the application of the non-payment period. Where a reference is made in the automatic health care card provisions to a person having ceased to receive a pension or benefit, then new subsection 1061ZNA(2) operates so that if (apart from the compliance penalty period) the payment would have ceased to be received for the reasons set out in the relevant health care card provision (usually because of employment income) then a person still retains the benefit of the health care card provisions.

SCHEDULE 13 - ADMINISTRATION

EXPLANATION OF CHANGES

Items 1, 2, 4, 6 to 20 and 23 to 24 make amendments reflecting the new compliance framework. In particular, references to non-payment periods due to administrative breaches, activity test failure and participation agreement breaches have been replaced with references to the application of a 'compliance penalty period'. Item 9 of Schedule 1 inserts a new definition of 'compliance penalty period' which incorporates non-payment periods due to participation failures and repeated or more serious failures.

Other amendments include substituting references to 'participation agreements' for parenting payment recipients with 'Parenting Payment Activity Agreements'.

Item 3 ensures that, similar to other income support payments, people who claim special benefit but are subject to a seasonal work preclusion period will still have their claim granted.

Item 5 clarifies that new apprentices cannot access automatic issue health care card.

Item 21 makes it clear that the subsection 23(1) reference at subsection 234(7) is to the 1991 Act (being the Social Security Act not the Administration Act).

Section 500Y is repealed in Schedule 2 of the Bill and Item 22 amends clause 5 of Schedule 2 so new subsection (1A) reflects current subsection 500Y(3) and provides an exemption for parenting payment recipients from the rules in clause 5 relating to start dates.

SCHEDULE 14 - OTHER AMENDMENTS

EXPLANATION OF CHANGES

A New Tax System (Family Assistance) Act 1999

Under the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act) income support recipients are exempt from the income test rules applying to child care benefit (CCB) and family tax benefit Part A (FTB Part A)

Currently subsection 3(1) of the Family Assistance Act provides that parenting payment recipients can continue to be exempt from the income test rules applying to CCB and FTB Part A during non-payment periods due to participation breaches.

As a consequence of amendments made by the Welfare to Work Act 2005, the references in the definition of receiving at subsection 3(1) to participation agreement breach non-payment periods and participation agreement breach rate reduction period are now redundant and require repealing. Additionally, the changed qualification to parenting payment means that it is appropriate that the subsection 3(1) exemption from the CCB and FTB Part A income tests apply more generally rather than focussing on parenting payment. Item 1 inserts a new definition of compliance penalty period into the Family Assistance Act. This definition has the same meaning that it has in the Social Security Act (see Item 9 of Schedule 1).

Item 2 makes the amendments to expand the application of the income test exemptions by repealing the current definition at subsection 3(1) and inserting a new definition of receiving which applies to people receiving social security pensions and benefits.

However, as provided by Item 3 new subsection 3(8) operates so the deemed 'receiving' rules only apply to compliance penalty periods that do not exceed 8 weeks. Where payment is not resumed at the end of this 8 week period, then the FTB Part A and CCB income test generally apply from the first day that the person's pension or benefit was not payable.

As provided by new subsection 3(9) an exception to the general rule in new subsection 3(8) applies where the maximum 8 week period overlaps two financial years. For example, an 8 week compliance penalty period applies from 20 June 2007 to 14 August 2007 inclusive. If the person resumes payment on 15 August 2007, the deemed 'receiving' rules would apply for the whole 8 week period. However, if the person does not resume payment on 15 August 2007, the deemed 'receiving' would apply for the period 20 June 2007 to 30 June 2007 inclusive. Therefore, the FTB Part A and CCB income tests would apply from 1 July 2007. This exception will avoid delaying or revisiting decisions about the person's FTB Part A or CCB entitlements for the previous financial year.

Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) Act 2005

Items 4 and 5 clarify the policy intention that any breach determined prior to 1 July should be served out under the current rules, which include the capacity to have the breach waived at any time during the breach period. Currently, for the purposes of newstart allowance, youth allowance and special benefit, activity penalty periods and administrative penalty periods cease to apply when a person commences participation in an approved program of income support or becomes a CDEP participant (newstart and youth allowance only). To ensure that the provisions continue to operate as intended, Items 4 and 5 make amendments to ensure the relevant newstart allowance provisions are captured by the Welfare to Work Act 2005 saving and transitional provisions. Amendments for the purposes of youth allowance are already provided for in the Welfare to Work Act 2005 and Item 11 of Schedule 7 captures special benefit provisions.

Items 6 to 10 clarify the application of the new provisions relevant for income maintenance periods inserted by the Welfare to Work Act 2005. The new income maintenance period provisions are to apply to termination payments or, where applicable, leave payments to which a person becomes entitled or that a person receives after 20 September 2006. The provisions are not limited to claims made after this date but apply to any person irrespective of when a claim was made.

Item 11 and 12 make technical corrections to the Welfare to Work Act 2005.

Social Security (International Agreements) Act 1999

Item 13 makes a consequential amendment to the Social Security International Agreements Act 1999 to reflect changes made to parenting payment provisions in the Social Security Act. Subparagraph 10(1)(d)(iii) refers to provisions relevant for parenting payment that deal with the absence of a PP child from Australia; children born outside of Australia and children who subsequently depart Australia. From 1 July 2006 these provisions will be repealed, but in effect will be relocated to subsections 5(21) to (24) of the Social Security Act.