House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Family and Community Services, Senator the Hon. Jocelyn Newman)

Schedule 6 - transitional provisions associated with the establishment of a scheme for the payment of child care benefit

Overview of Schedule 6

This Schedule provides for the transition to the new child care benefit (CCB) system, particularly from the existing childcare assistance and child care rebate systems. The transitional provisions fall into the following broad groupings:

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definitions;

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the transition to CCB - claims, determinations, etc.;

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existing childcare assistance agreements; and

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the limited continuation of childcare assistance and child care rebate, etc.

Explanation of amendments

Definitions

Item 1 provides the definitions necessary for Schedule 6 . Transitional arrangements for CCB are only relevant to CCB by fee reduction, which is the only ongoing type of CCB. All other types involve claims retrospectively for closed periods.

"Childcare assistance" means fee reductions made for care provided before the transition date of 1 July 2000, or for care provided after that date, in the limited circumstances in which childcare assistance will remain available after that date, as provided by this Schedule. Such fee reductions may be available either under the Child Care Act 1972 , by way of the "fee relief guidelines" made under section 12A of that Act, or under a non-legislative Commonwealth program known generally as childcare assistance or fee relief.

"Childcare assistance agreement" means an agreement between the Commonwealth and another person that is made to provide grants to reimburse the costs of fee reductions. The agreement may be entered into under section 20 of the Child Care Act 1972 (such an agreement will generally cover long day care), or it may be another form of agreement (ie, without a legislative basis - such an agreement will generally cover other kinds of care, ie, occasional care, family day care and outside school hours care). The agreement may be solely for the provision of grants to reimburse the costs of fee reductions, or the provision of such a grant may be a part of the agreement.

"Childcare assistance scheme" means the Commonwealth program under which childcare assistance (whether based on legislation or not) is paid.

"Child care rebate" is the other type of current child care payment relevant to these transitional provisions. It is payable under the Childcare Rebate Act 1993 .

A "data collection form" is a written request from the Secretary to an individual for information relevant to establishing the scheme to pay CCB.

"Secretary", in relation to things that happen under particular legislation, means the Secretary to the Department administered by the Minister with portfolio responsibility for the legislation.

Other defined terms take their meanings from elsewhere in the family assistance or social security legislation, or are simply abbreviated family assistance Act names.

The transition to CCB - claims, determinations, etc.

Items 2 to 9 describe how claim, determination and certain other matters will operate in the transition to the new CCB arrangements.

Item 2 basically provides that, if an individual is formally entitled to childcare assistance (legislative or non-legislative) for a child immediately before 1 July 2000, and if the individual returns, completed and by the specified date, the data collection form given by the Secretary, then the individual is taken to be conditionally eligible for CCB by fee reduction as from the return of the form. For this to happen, the relevant Family Assistance Act provision is treated as having commenced early.

It will then be possible (on the strength of section 4 of the Acts Interpretation Act 1901 ) for the Secretary to make determinations, under the FA Admin Act, of conditional eligibility, the weekly limit of hours, CCB % and schooling % in relation to the individual and the child.

However, even if such determinations are made, ready to come into force on 1 July 2000, they will not come into force on that date if the individual does not remain entitled to childcare assistance right up to that date. This may apply, for example, if the parent marries someone whose income precludes them from getting childcare assistance.

If, prior to 1 July 2000, the individual has been given a 63 day period in which to meet the immunisation requirements, then the balance of that period is preserved on the transition to CCB and the requirement continues under the CCB provisions as if it had been made under them in the first place. For this to happen, the relevant family assistance provisions are treated as having commenced early.

Also, if the child is meeting the childcare assistance immunisation requirements immediately before 1 July 2000 (whether because of being immunised or because of an exemption such as conscientious objection), then this is also taken to be the case under CCB at the transition point. (Again, for this to happen, the relevant Family Assistance Act provision is treated as having commenced early.) From that point on, the Secretary will have the usual new powers to impose continuing immunisation requirements.

Item 3 provides a special rule if an individual is both a child care rebate and a family allowance customer immediately before 1 July 2000. If the individual returns, completed and by the specified date, the data collection form given by the Secretary, then the individual is taken to have made an effective claim for CCB by fee reduction. For this to happen, the relevant FA Admin Act provision is treated as having commenced early.

Similarly to the current childcare assistance customers covered by item 2 , if the child is meeting the child care rebate immunisation requirements immediately before 1 July 2000, then this is also taken to be the case under CCB at the transition point (the relevant FA Admin Act provision being treated as having commenced early). From that point on, the Secretary will have the usual new powers to impose continuing immunisation requirements.

Item 4 simply allows an individual to make a claim for CCB by fee reduction before 1 July 2000. For this to happen, the relevant FA Admin Act provision is treated as having commenced early.

For the cases covered by items 3 and 4 , section 4 of the Acts Interpretation Act 1901 will allow the Secretary to make determinations early, ready to come into force on the commencement of the legislation on 1 July 2000.

Item 5 provides a special rule that will apply if an individual mentioned in item 2 or 3 objects, in the data collection form, to the use of the individual's tax file number (TFN), that is already in the system on the basis of his or her being a childcare assistance or family allowance customer, for CCB purposes. If this is the case, then the TFN will not be used, but the consequence is that the individual's CCB % (ie, the income tested component of CCB entitlement) must be determined at the minimum level, which applies regardless of income.

Items 6 and 7 and subitem 9(2) all preserve certain decisions currently in place under the childcare assistance scheme so that the individual concerned is treated as if the decision had been made under the new CCB provisions. For these purposes, the relevant provisions are treated as having commenced early.

The first situation ( item 6 ) relates to a decision that a child be treated as a dependent child of the individual under childcare assistance - the child will now be treated as an FTB child of the individual under CCB.

The second ( item 7 ) relates to a decision that an individual is a resident for childcare assistance - the individual will now be treated as an Australian resident for CCB.

The third ( subitem 9(2) ) relates to an individual being exempted from having to provide a TFN (eg, of a violent former partner) for childcare assistance - the exemption will be preserved for CCB.

Item 8 provides a general rule that a TFN of an individual already provided and in the system, because of the individual being a childcare assistance or family allowance customer, is taken to have been provided for CCB. However, this will not apply if the individual objects, in the data collection form, to the use of the TFN in this way. If that is the case, however, item 5 requires that the individual's CCB % be set at the minimum.

Subitem 9(1) preserves a 28 day period imposed under the childcare assistance scheme (during which the individual must meet the TFN requirements). If such a period is still being served immediately before 1 July 2000, then the balance of that period must be served under the CCB provisions.

Existing childcare assistance agreements

As a result of the fact that from 1 July 2000 all the matters that are currently dealt with under childcare assistance agreements will be included in the legislation relating to new CCB scheme, the following transitional arrangements will operate from 1 July 2000, as provided for by item 10 , in respect of a child care assistance agreement that was in force immediately before 1 July 2000:

Cessation of childcare assistance agreements

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all the terms of an agreement will cease to operate in respect of a grant to reimburse the costs of fee reduction, in relation to care provided on or after 1 July 2000 that is not the care provided for a session of care that started before 1 July 2000 and continues on the 1 July and is not the care provided by an outside school hours care service during the period of a school vacation that started before 1 July 2000 and continues on or after the 1 July ( subitem 10(2) refers);

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consequently, the obligations imposed on a service who is the party to an agreement will no longer operate after 1 July 2000 in relation to the care to which the agreement does not apply;

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from 1 July 2000, the Commonwealth will not make further grants under the agreement to reimburse the costs of fee reductions ( subitem 10(7) refers).

Continuation of childcare assistance agreements

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all the terms of an agreement will continue to operate in respect of a grant to reimburse the costs of fee reduction, in relation to care provided before 1 July 2000 and in respect of care provided after 1 July 2000 if it is the care provided for a session of care that started before 1 July 2000 and continues on the 1 July or it is the care provided by an outside school hours care service during the period of a school vacation that started before 1 July 2000 and continues on or after the 1 July ( subitems 10(5), (3) and (4) respectively refer);

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consequently, all the obligations and responsibilities imposed on a service who is the party to an agreement will continue to operate after 1 July 2000 in relation to the care to which the agreement continues to apply (eg the service, after 1 July 2000, will continue to be under obligation to reduce fees in relation to care to which the agreement continues to operate, to provide accountability statement in respect of that care, etc);

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as all the terms of the agreement will continue to be in force in so far as they relate to the care to which the agreement continues to apply, a further example of the consequence of the continuation of the agreement may be that after 1 July 2000 a debt may be raised, or money may become repayable by the service, or may become payable by the Commonwealth to the service, in respect of the relevant care;

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if a childcare assistance agreement in force immediately before 1 July 2000 provides for grants other than the grants to reimburse the cost of fee reductions, after 1 July 2000 the agreement continues in force in respect of the other grants ( subitem 10(6) refers);

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for the purposes of an agreement that continues to operate after 1 July 2000 in relation to a grant to reimburse the costs of fee reductions, subitem 10(8) provides that the Acts, documents, handbooks etc that were in operation on 30 June 2000 for the purposes of the agreement at the time are treated as operating on and after 1 July 2000.

Transfer of services to the CCB scheme

Item 11, ( subitems (1), (2), (3) and (4) ) , provides for transfer of long day care, family day care, occasional care and outside school hours care services in respect of whom a childcare assistance agreement was in force on 30 June 2000 to a new CCB scheme. Those services will be treated as being approved as a service of a comparable kind under section 195 of the Family Assistance Admin Act that provides for the approval of services as an approved child care service of a particular kind.

The services taken to be so approved will not be issued with a certificate of approval ( subitem 11(5) refers).

If on 30 June 2000 a long day care service was subject to a sanction (other than suspension), the sanction continues to apply under the new CCB scheme and is treated as if it was a sanction under the relevant provisions of the Family Assistance Admin Act ( subitem 11(6) refers).

In a service is taken, under item 11 , to be approved as an approved child care service, the service is under an obligation, as a condition of continued approval under section 195 of the Family Assistance Admin Act, to comply with the terms of the agreement that continues in force after 1 July 2000 in respect of a grant to reimburse the costs of fee reductions ( item 12 refers).

Debts under childcare assistance agreements

Item 13 provides for the following debts to be recoverable under subsection 82(2) of the Family Assistance Admin Act that provides for setting off the amount of a service's debt against amount of advances paid to the service under section 219R of that Act, legal proceedings and garnishee notice. This is in effect the same procedure that now applies.

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a child care service's debt arising under a childcare assistance agreement in respect of a grant to reimburse the costs of fee reductions for care before 1 July 2000 or for the care after 1 July 2000 for which the agreement continues in operation (whether the debt arises before or after 1 July 2000); or

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money repayable by a child care service under the agreements in respect of a grant to reimburse the costs of fee reductions for care before 1 July 2000 or for the care after 1 July 2000 for which the agreement continues in operation; or

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a child care service's debt under section 20B of the Child Care Act 1972 as far as it relates to debts relevant to grants to reimburse the costs of fee reductions (whether the debt arises before or after 1 July 2000).

Termination of the agreements that continue after 1 July 2000

Item 14 provides that the agreements relating to grants to reimburse the costs of fee reduction may be terminated after 1 July 2000 by the ministerial direction made in writing. This will occur after the matters relating to childcare assistance have all been dealt with.

Old sanctions taken into account for the purposes of approval under section 194

Item 15 modifies subsection 195(2) of the Family Assistance Admin Act that specifies when the Secretary may refuse to approve a child care service for CCB purposes. As a result of the modification, the Secretary will be able to refuse to approve a service applying for approval under section 194 of that Act if the person operating the service was subject to a sanction while operating a child care service under the childcare assistance scheme.

The limited continuation of childcare assistance and child care rebate, etc.

Items 16 to 22 generally allow for the winding up of outstanding entitlements, etc., under the current child care payments.

Item 16 continues in force the childcare assistance scheme for the purpose of dealing with claims that were undetermined immediately before 1 July 2000 and for dealing with claims lodged on or after that date in respect of care provided during a particular period before that date.

Item 17 provides a special rule so that, if one session of care falls on both 30 June and 1 July 2000, ie, crossing midnight (some sessions, especially those falling within 24 hour care may be in this situation), then the childcare assistance scheme continues in force to deal with claims in respect of the session.

Similarly, item 18 provides a special rule so that, if a period of vacation care under the childcare assistance scheme falls both before, and on and after, 1 July 2000, then the childcare assistance scheme continues in force to deal with claims in respect of the vacation care. This arrangement is to avoid disruption to services providing vacation care, and only applies to the one vacation that spans the transition point. At this stage, only Victoria and the Northern Territory are likely to have vacations over this period.

Item 19 relates to registered carers under the Childcare Rebate Act 1993 . By and large, if an individual (not a body) is currently a registered carer under that Act, then the individual is to be treated as being approved as a registered carer under the new CCB provisions. (Only individuals may be registered carers under the new provisions.) However, some individuals may not be so treated - those operating a child care service, either under a childcare assistance agreement, or that was receiving Commonwealth funding outside childcare assistance agreement, since they will get the additional funding directly (eg, some Aboriginal child care services), or family day care carers.

The item also continues in force the Childcare Rebate Act 1993 for the purpose of concluding applications for registration as a carer that were undetermined immediately before 1 July 2000. It is also continued in force to deal with applications lodged on or after that date, but before 1 January 2001, for care provided either before that date, or for care provided on or after that date in the session of care or vacation care situation, as mentioned in subitem 20(2), (3) or (4) .

Item 20 relates to claims by families for child care rebate that need to be resolved under the current legislation. Again, the basic principle is that claims that were undetermined immediately before 1 July 2000 are to be determined under the Childcare Rebate Act 1993 as continued in force under these provisions. Also, claims lodged on or after that date, but before 1 January 2001, are to be determined under that Act as so in force if they relate to care provided during a period commencing 2 years before the claim was lodged and ending on 30 June 2000 (child care rebate is payable for periods up to 2 years before claim).

Furthermore, there are comparable rules to those for childcare assistance so that one session of care that falls on both 30 June and 1 July 2000, and vacation care that spans 1 July 2000, are to be dealt with under the Childcare Rebate Act 1993 as continued in force for the purpose.

Item 21 deals with the last scenario in which that Act must be continued in force - to deal with applications for registration of a family under section 19 of the Act. Again, applications undetermined at the transition point, together with applications lodged later, but before 1 January 2001, in respect of care mentioned in subitem 20(2), (3) or (4) , are to be determined under that Act as continued in force by these provisions.

Item 22 makes sure that the Health Insurance Commission remains able, up to 31 December 2000, to deal with claims on or after 1 July 2000 for child care rebate, as envisaged by these transitional provisions. This must be done to work around the repeal of the Childcare Rebate Act 1993 and the Commission's child care rebate functions in the Health Insurance Commission Act 1973 that have effect from 1 July 2000 (see the A New Tax System (Family Assistance) (Consequential and Related Measures) Act (No. 2) 1999 ).

In particular, the Commission may continue to exercise the particular powers in the Childcare Rebate Act 1993 that allow the extension of the period within which an application may be made for reconsideration of a specified decision. However, the Commission may only extend such a period until 30 June 2001. Item 23 provides a regulation making power to deal with any remaining transitional matters.