House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Family and Community Services, Senator the Hon Kay Patterson)

Schedule 2 - Maternity payment

Summary

This Schedule addresses a 2005 Budget measure, expanding the maternity payment eligibility criteria for adopting parents to cover children adopted under age two, including from overseas. Amendments are also being made to clarify that maternity payment is not available if the former maternity allowance has already been paid for the child.

Background

Maternity payment was introduced from 1 July 2004, replacing the former maternity allowance with a payment currently valued at $3079 for families with new children, and increasing by 1 July 2008 to $5000.

In the case of adoptions, the child must be entrusted to the care of the adopting parent, as part of the adoption process, within the child's first 26 weeks of life. Maternity payment must generally be claimed in these cases no later than 26 weeks after the child is entrusted to care.

These arrangements have prevented maternity payment from being available to many families adopting children from overseas (with most current adoptions in Australia in fact being from overseas). This is because the lengthy processes involved in overseas adoptions frequently prevent the child from being placed with the adopting family within the child's first 26 weeks of life. Alternatively, the child may be placed with the adopting family within the first 26 weeks but in the child's country of origin, with the parents and child not arriving in Australia in time to claim maternity payment within 26 weeks after the child is entrusted to care.

With the former baby bonus no longer available since the advent of the new maternity payment, these families have no access to a suitable payment to support them at this important time of taking a baby or toddler into their family. Therefore, this Schedule expands the maternity payment eligibility criteria so that the payment will be available to families taking on, as part of an overseas adoption, the care of a child who is aged under two and who arrives in Australia before turning two. These families will have 26 weeks from the child's arrival in Australia to claim maternity payment. This measure recognises that families who adopt children under the age of two face similar costs to families with newborns who attract maternity payment.

The age basis for local adoptions will also change so that maternity payment will be available for children adopted within Australia before turning two.

These changes, for both overseas and local adoptions, will commence on 1 July 2005, but will be backdated to the commencement of maternity payment on 1 July 2004. Therefore, for overseas adoptions, children entrusted to care, and arriving in Australia, on or after that date and while they were still under two will attract maternity payment. For local adoptions, children entrusted to care on or after that date and while they were still under two will attract maternity payment. (However, if maternity payment has already been paid for these children, no further payment will flow from these changes.) In these backdated cases, families will have at least 26 weeks from commencement of these changes to claim maternity payment.

Further amendments made by this Schedule will make clear the longstanding policy that only one maternity entitlement is available for each child. While this is already clear in relation to maternity payment itself (ie, the total maternity payment of, currently, $3079 cannot be exceeded for each child), it has not been explicit in the transition between the former maternity allowance and the new maternity payment. Therefore, it has been possible, for example, for a natural parent to have been paid maternity allowance for a child born before 1 July 2004 and for the same child, adopted after that date, to attract maternity payment for an adopting parent. Therefore, these amendments will ensure that, if maternity allowance has already been paid for a child, maternity payment is not also available.

Explanation of changes

Part 1 - Amendments

Part 1 of the Schedule provides for the main maternity payment amendments, increasing the age limit for the child.

Amendments to the Family Assistance Act

Item 1 amends paragraph 36(5)(b) of the Family Assistance Act, which currently provides the child's upper age limit (26 weeks) in order for the adopting parent to be eligible for maternity payment. The item increases the age limit for both overseas and local adoptions. It will now be the case that a child entrusted to care, as part of an overseas or local adoption process, while aged under two will fulfil the basic age criterion for maternity payment eligibility on the part of the adopting parent.

Item 2 inserts a new paragraph 36(5)(ba), to introduce the new maternity payment eligibility requirement that a child being adopted from overseas must arrive in Australia while aged under two. Therefore, a child being adopted from overseas must meet both age-related criteria - being entrusted to care and arriving in Australia while aged under two.

Amendments to the Family Assistance Administration Act

Item 3 amends subsection 39(2) of the Family Assistance Administration Act, relating to the claim requirements for maternity payment. The new paragraph 39(2)(c) preserves, for local adoptions only, the general rule in the current paragraph 39(2)(b) that a claim is not effective if it is made later than 26 weeks after the child is entrusted to the care of the adopting parent. The new paragraph 39(2)(b) sets up a new general rule so that a claim for maternity payment in relation to a child being adopted from overseas is not effective if it is made later than 26 weeks after the child's arrival in Australia.

Part 2 - Application, transitional and other provisions

Part 2 of the Schedule provides application and transitional provisions for the main maternity payment amendments, and also provides for the preclusion of maternity payment if maternity allowance has already been paid for a child.

Item 5 provides for the age increase and related amendments described under items 1 to 3 to apply with backdated effect to 1 July 2004, when maternity payment commenced. Therefore, the amendments will apply not only in relation to children entrusted to care, as part of an overseas or local adoption process, after the amendments commence, but also to those entrusted to care on or after 1 July 2004, as long as maternity payment has not already been paid for the child. This retrospective application is purely to the benefit of customers.

The usual claim requirements could undermine this backdating by making it impossible for an adopting parent to make an effective claim for maternity payment if the 26 week claim period after the date the child was entrusted to care expires before these amendments commence. Therefore, subitems 6(1) to (3) provide special transitional arrangements so that the claim period for affected cases will be extended to 26 weeks after commencement of the amendments. This will apply to children who, as part of an overseas adoption process, both are entrusted to care and arrive in Australia before the amendments commence. It will also apply to children who, as part of a local adoption process, are entrusted to care before the amendments commence. In other cases, the new ongoing rules provided by item 3 will give a better (later-ending) claim period and the transitional arrangements need not apply. The transitional arrangements have been designed so that no customer will have less than 26 weeks in which to make an effective maternity payment claim.

In a minor, related amendment, subitem 5(4) makes sure that subsection 39(3) of the Family Assistance Administration Act takes account of the extended, transitional claim period. That subsection provides for the Secretary to extend the usual 26 week claim period if satisfied that a maternity payment claimant could not claim within the usual period because of severe illness associated with the child's birth. It will remain open to the Secretary to extend the already extended, transitional claim period for customers encountering severe illness at the child's birth.

For the purposes of these application and transitional rules, item 4 sets up a definition of 'commencement' as meaning the commencement of items 1 to 3 on 1 July 2005.

Lastly, item 7 makes it clear that an individual is not eligible for maternity payment for a child if maternity allowance has already been paid for the same child. This will apply prospectively, in relation to a child entrusted to the care of the individual after commencement of this item on Royal Assent.