House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP)

Outline

The Bill contains three election commitments and two non-Budget measures, as described below.

Work bonus

As one of its election commitments, the Government committed to expanding the existing seniors' work bonus, which was introduced in September 2009 as part of its Secure and Sustainable Pension Reform package, to increase incentives for age pension recipients, and veterans' affairs income support pensioners of qualifying age, who work. The Bill extends the existing work bonus to enable people of age pension age, or qualifying age, who take up paid work, including occasional or variable work, to keep more of their pension when they are working.

Increasing FTB child rates for certain teenagers in secondary study

In a further election commitment, the Government announced significant improvements in family assistance for families with teenagers at school. From 1 January 2012, the maximum rate of family tax benefit (FTB) Part A paid to families with a child aged 16 to 19 in full-time secondary school or vocational education equivalent, or who are exempt from this requirement, will be aligned with the rate paid to families with a child aged 13 to 15. This means that, if the child remains in school, the family will not experience a drop in assistance when their child turns 16. The system of government assistance for families with children aged under 18 is also simplified by making FTB Part A the primary payment for children aged under 18 who are in full-time secondary school study or vocational education equivalent and under the primary care of their family. Eligibility for FTB Part B and multiple birth allowance will be limited to FTB children who are undertaking full-time secondary study, or are exempt from this requirement. Changes to the youth allowance parental income test will protect the entitlement of youth allowance recipients with a sibling aged 16 to 19 who remains in, or transfers to, the FTB system as a result of these new measures.

Baby bonus

The Bill provides for eligible baby bonus claimants to have a larger portion of their baby bonus paid to them upfront, from 1 July 2011, to assist them in meeting the initial costs of welcoming a child into the family. This is one of the measures in the Government's Better Access to Family Payments election commitment.

Thalidomide payments

The Bill ensures that payments made from the Thalidomide Australia Fixed Trust to beneficiaries of the Trust, or in respect of a beneficiary of the Trust, are exempt from income tax and from social security and veterans' affairs income tests. The Bill also ensures that Commonwealth ex gratia payments, made to beneficiaries of the Trust in respect of social security and veterans' affairs payments, forgone due to the income test exemption currently not being in effect, are also exempt from income tax.

Income management

The Bill makes some minor improvements to the income management provisions, including the matched savings scheme payment, debt recovery and nominee arrangements.

Financial impact statement

Work bonus

Increasing FTB child rates for certain teenagers in secondary study

Baby bonus

Nil impact.

Thalidomide payments

This includes impacts for the Department of Families, Housing, Community Services, and Indigenous Affairs in relation to the payment of ex gratia payments prior to the commencement of the legislation.

Income management

Nil impact.