House of Representatives

Explanatory Memorandum

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

Schedule 4 - Rent assistance amendments

This Schedule is divided into the following Parts:

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Part 1 - Duplicate rent assistance payments;

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Part 2 - Rent Certificates.

Each Part is addressed separately below.

Part 1 - Duplicate rent assistance payments

Summary

Amendments are made to ensure that rent assistance cannot be paid as part of both family assistance and social security or veterans' affairs entitlements at the same time.

Background

Duplicate rent assistance payments can occur when a customer receives arrears of FTB Part A that include an amount of rent assistance at a time when they, or their partner, have already received rent assistance with a social security or veterans' entitlements payment. Duplicate payments can also occur where a person, or their partner, is incorrectly paid rent assistance with both their ongoing family assistance and social security or veterans' entitlements payments. Essentially, this means that the customer gets double the rent assistance to which they are otherwise entitled.

Explanation of the changes

This Part addresses duplicate rent assistance payments as follows:

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by amending the Family Assistance Act to ensure that any rent assistance paid as part of a social security or veterans' entitlements payment in respect of a particular day is taken into account in calculating a customer's entitlement to arrears of FTB Part A in respect of that day; and

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by amending the social security law and the Veterans' Entitlements Act to ensure that where a customer has an entitlement to rent assistance through the family assistance system, any duplicate payment of rent assistance through the social security system or by the Department of Veterans' Affairs can be recovered, and to make some other related consequential amendments.

Division 1 - Amendments

Amendments to the Family Assistance Act

Schedule 1 to the Family Assistance Act outlines the rate calculation process for FTB. An individual's annual rate of FTB comprises a Part A rate and a Part B rate. An individual's Part A rate can be worked out under method 1 or 2, depending on whether the individual's adjusted taxable income exceeds the higher income free area and whether the individual or the individual's partner is receiving a social security pension, a social security benefit or a service pension.

In accordance with the method statement in clause 3 of Schedule 1, an individual's 'maximum rate' of FTB Part A (method 1) is made up of a number of components including, potentially, rent assistance. The eligibility conditions for rent assistance are, in turn, set out in Division 3 of Part 2 of Schedule 1 to the Family Assistance Act.

Item 3 inserts new clauses 4A and 4B into Schedule 1 to deal with the issue of duplicate rent assistance payments.

In broad terms, new clause 4A outlines an offsetting arrangement to deal with duplicate rent assistance under the family assistance and social security laws.

Subclause 4A(1) outlines the situation in which the offsetting arrangement applies. The situation is where:

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a social security decision was made to include rent assistance in an individual's or an individual's 'eligible partner's' rate of social security payment for a day (the reference to an eligible partner in this context means an eligible partner on the relevant day);

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at the time that social security decision was made, there was no family assistance decision that included rent assistance when calculating an individual's Part A rate for that day;

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a family assistance decision was then made to include rent assistance as part of the individual's Part A rate (this criterion would not be satisfied if the decision involved an increase in the amount of rent assistance already included in the individual's Part A rate); and

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the relevant day comes before the day on which the family assistance decision was made (ie, the individual is entitled to arrears of FTB including rent assistance).

A note refers the reader to the definition of 'eligible partner' in subclause 4A(5).

An individual is an eligible partner of another individual if they are members of a couple other than an 'illness separated couple', a 'respite care couple' or a 'temporarily separated couple'. The relevant definitions, which cross reference the Social Security Act, are in subsection 3(1) of the Family Assistance Act. The exceptions acknowledge that in some situations members of a couple must live apart and have separate housing costs. In these cases, each member of the couple may receive rent assistance for their respective home and it would be inappropriate to reduce the payment to one member of the couple because their partner is entitled to assistance for a separate home.

Subclause 4A(2) outlines the offsetting rules. Where the conditions in subclause 4A(1) are satisfied, the individual's Part A rate for the relevant day is to be reduced by the 'individual's annual social security RA amount' for the day and then by the 'individual's eligible partner's annual social security RA amount' for that day.

An individual's annual social security RA amount is worked out using the method statement in subclause 4A(3). The process involves working out the individual's actual rate of social security payment for the day (step 1) and the individual's notional rate of social security payment for the day assuming that rent assistance was not included in that calculation of rate (step 2). The difference between the two rates is referred to as the 'individual's daily social security RA amount' for the relevant day (step 3). As the individual's FTB Part A rate for the day is an annual rate and social security rates are daily rates, step 4 converts the individual's daily social security RA amount into an annual amount that can then be subtracted from the annual Part A rate for the day in accordance with subclause 4A(2).

Subclause 4A(4) provides a similar process for calculating the individual's eligible partner's annual social security RA amount for the relevant day.

There are some limits on how much an individual's Part A rate can be reduced under the new offsetting arrangements. These are set out in paragraphs 4A(2)(c) and (d).

Where rent assistance is included in an individual's Part A rate for the first time under an original entitlement determination (for example, a determination under section 17 of the Family Assistance Administration Act that the individual is entitled to be paid FTB for a past period), then the individual's Part A rate can be reduced to nil if appropriate.

Where an individual's Part A rate has been recalculated to include rent assistance, then the individual's Part A rate cannot be reduced to less than the Part A rate as it was immediately before the recalculation. This ensures that only an arrears payment can be subject to reduction.

New clause 4B outlines equivalent offsetting arrangement for duplicate rent assistance under the family assistance and veterans' entitlements laws. There are only minor differences in this provision that reflect different rules that apply under the Veterans' Entitlements Act.

The relevant veterans' entitlements payments (service pension and income support supplement) are annual rates based on a 364 day year. The FTB Part A rate is also an annual rate but based on a 365 day year. The conversion process in step 4 in the method statements in subclauses 4B(3) and (4) ensures that annual rates that are deducted from each other under subclause 4B are similarly based. There are some necessary differences in the labels used in the method statements for similar reasons.

The other difference is in the definition of 'eligible partner' in subclause 4B(5). There is no concept of 'temporarily separated couple' in the Veterans' Entitlements Act and this is reflected in this definition.

Items 1, 2, 4 and 5 make some related and consequential changes.

Item 1 inserts a definition of income support supplement into subsection 3(1) of the Family Assistance Act. The new definition adopts the meaning provided for in the Social Security Act. Item 5 makes a technical amendment to clause 17 as a result of the insertion of this definition.

Item 2 inserts a reference to the new clauses 4A and 4B into clause 3 of Schedule 1. Clause 3 outlines the calculation process for FTB Part A - this process is made subject to the reductions provided for in new clauses 4A and 4B.

Under clause 5 of Schedule 1 to the Family Assistance Act, an individual's Part A rate can be reduced to repay an FTB advance. However, a reduction under clause 5 happens after any relevant reduction is made under clause 4A and/or clause 4B. Item 4 amends clause 5 to reflect this.

Amendments to the Social Security Act

Item 6 inserts a definition of 'Part A rate of family tax benefit' into subsection 23(1) of the Social Security Act and refers to the rate worked out under Part 2 or 3 of Schedule 1 to the Family Assistance Act.

Items 7 to 18 clarify that a person remains qualified for the rent assistance paid as part of their social security entitlement where their amount of FTB has been reduced by the offsetting mechanism in clause in 4A or 4B of Schedule 1 to the Family Assistance Act.

Item 7 repeals and substitutes a new subsection 1070D(3) of the Social Security Act. This provision sets out the specific requirement in relation to a person's qualification for rent assistance as part of a carer payment as well as certain age, disability support and wife pensions. The new specific requirement is that the person, or any partner of the person, should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A or 4B of Schedule 1 to the Family Assistance Act applies to reduce the person's, or any partner's, rate of FTB to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 8 amends section 1070E of the Social Security Act, which sets out the specific requirement for a person to qualify for rent assistance as part of their bereavement allowance, widow B pension and certain parenting payments. The new requirement is that the person's rate of FTB does not include rent assistance or that, if it does, clause 4A of Schedule 1 to the Family Assistance Act applies to reduce the person's rate of FTB to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 9 amends paragraph 1070F(2)(c) of the Social Security Act, which applies to a single person, including a member of an illness separated couple, respite care couple or a temporarily separated couple who is under 18 years of age. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of certain disability support pensions. The new specific requirement is that the person should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A of Schedule 1 to the Family Assistance Act applies to reduce the person's rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 10 amends paragraph 1070F(2)(d) of the Social Security Act, which applies to a person who is a member of a couple and is under 18 years of age. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of certain disability support pensions. The new specific requirement is that the person, or the partner of the person, should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A or 4B of Schedule 1 to the Family Assistance Act applies to reduce the person's, or their partner's, rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 11 amends paragraph 1070F(3)(c) of the Social Security Act, which applies to a single person, including a member of an illness separated couple, respite care couple or a temporarily separated couple, who is 18 years of age or over. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of certain disability support pensions. The new specific requirement is that the person should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A of Schedule 1 to the Family Assistance Act applies to reduce the person's rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 12 amends paragraph 1070F(3)(d) of the Social Security Act, which applies to a person who is a member of a couple and who is 18 years of age or over. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of certain disability support pensions. The new specific requirement is that the person, or the partner of the person, should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A or 4B of Schedule 1 to the Family Assistance Act applies to reduce the person's, or the partner's, rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 13 amends paragraph 1070G(1)(c) of the Social Security Act, which applies to a single person or a person who is a member of an illness separated couple, respite care couple or a temporarily separated couple. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of youth allowance. The new specific requirement is that the person should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A of Schedule 1 to the Family Assistance Act applies to reduce the person's rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 14 amends paragraph 1070G(1)(d) of the Social Security Act, which applies to a person who is a member of a couple. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of youth allowance. The new specific requirement is that the person, or the partner of the person, should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A or 4B of Schedule 1 to the Family Assistance Act applies to reduce the person's, or the partner's, rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 15 amends paragraph 1070H(2)(c) of the Social Security Act, which applies to a single person, including a person who is a member of an illness separated couple, respite care couple or a temporarily separated couple. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of mature age allowance under Part 2.12B of the Social Security Act, newstart allowance, partner allowance, sickness allowance and widow allowance. The new specific requirement is that the person should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A of Schedule 1 to the Family Assistance Act applies to reduce the person's rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 16 amends paragraph 1070H(2)(d) of the Social Security Act, which applies to a person who is a member of a couple. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of mature age allowance under Part 2.12B of the Social Security Act, newstart allowance, partner allowance, sickness allowance and widow allowance. The new specific requirement is that the person, or the partner of the person, should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A or 4B of Schedule 1 to the Family Assistance Act applies to reduce the person's, or the partner's, rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 17 amends paragraph 1070J(b) of the Social Security Act, which applies to a person who is a member of an illness separated couple, respite care couple or a temporarily separated couple. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of certain parenting payments. The new specific requirement is that the person should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A of Schedule 1 to the Family Assistance Act applies to reduce the person's rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Item 18 amends paragraph 1070J(c) of the Social Security Act, which applies to a person who is a member of a couple. This item amends the specific requirement in relation to a person's qualification for rent assistance as part of certain parenting payments. The new specific requirement is that the person, or the partner of the person, should not be in receipt of another payment of rent assistance in conjunction with a payment of FTB, unless clause 4A or 4B of Schedule 1 to the Family Assistance Act applies to reduce the person's, or the partner's, rate of FTB, to take the double payment of rent assistance into account, whether or not any reduction in fact occurs.

Amendment to the Social Security Administration Act

Item 19 inserts new subsection 118(12A) into the Social Security Administration Act. This provision deals with the date of effect of an adverse determination. This new subsection applies where a person is receiving a social security payment that includes rent assistance as a component, contrary to Part 3.7 of the Social Security Act, which precludes a person from receiving a payment of rent assistance in conjunction with a social security payment where that person, or their partner, is already receiving rent assistance as a component of their FTB payment (see, in particular, Division 2 of Part 3.7). This new provision applies so that, where such a situation is detected and a new determination is made in relation to the person's rate of social security payment, which removes the payment of rent assistance from the person's rate of social security payment, this determination can be backdated to the start of any period where the person, or their partner, was receiving rent assistance through both the social security and family assistance systems.

Amendments to the Veterans' Entitlement Act 1986

Item 20 inserts a listing in the section 5 index of definitions for the placement of the definition of 'maximum Part A rate of family tax benefit' in subsection 5F(1).

Item 21 inserts a definition of the term 'maximum Part A rate of family tax benefit' into subsection 5F(1). The 'Part A rate of family tax benefit' is defined as the Part A rate of family tax benefit worked out in step 1 of the method statement in clause 3 of Schedule 1 to the Family Assistance Act.

Item 22 amends subsection 56H(3) by replacing the reference to subsection 56H(8) and substituting a reference to subsections 56H(8), (9) and (10).

Subsection 56H(3) provides that an adverse determination not taking effect on the day that it is made has to take effect on a later day. However, an exception can be made in certain circumstances so that the date of effect may be earlier than the date the determination is made.

The amendment adds a reference to subsections 56H(9) and (10) to the list of exceptions that will allow for an earlier date of effect for an adverse determination.

Item 23 inserts new subsections 56H(9) and (10). The combined effect of the new subsections is to provide that the date of effect of a determination to either reduce or cancel the rate of service pension or income support supplement payable to a person who has received a duplicate payment of rent assistance will be the first day of the period in which duplicate rent assistance was received.

New subsection 56H(9) sets out the three conditions to be met for such a determination to be made. The first condition is that there has been a decision (referred to as the 'veterans' entitlements decision') to include rent assistance in the person's service pension or income support supplement for the period.

The second condition set out in subsection 56H(10) must be met for each day of the period.

The final condition is that the adverse determination to reduce or cancel the person's rate of service pension or income support supplement arises because the person was ineligible for rent assistance as part of the person's rate of service pension or income support supplement.

In these circumstances, the person was ineligible for rent assistance because point SCH6-C3 precludes the payment where the person or the person's partner's maximum Part A rate of FTB includes rent assistance and the FTB rent assistance is not reduced by rent assistance payable under social security law or the Veterans' Entitlement Act.

New subsection 56H(10) sets out in paragraphs (a), (b) and (c) the circumstances in which the second condition referred to in subsection 56H(9) will be satisfied for each day of the period for which duplicate rent assistance was payable.

Paragraph 56H(10(a) is applicable for the period in which a person was a member of a couple other than an illness separated couple or a respite care couple and, when the decision to include rent assistance in the person's service pension or income support supplement was made, a determination was in force that rent assistance was to be included in the person's or the person's partner's Part A rate of FTB.

Paragraph 56H(10)(b) is applicable for the period in which a person was not a member of a couple or was a member of either an illness separated couple or a respite care couple and, when the decision to include rent assistance in the person's service pension or income support supplement was made, a determination was in force that rent assistance was to be included in the person's Part A rate of FTB.

Paragraph 56H(10)(c) is applicable in the circumstances where neither paragraph 56H(10)(a) or (b) applies. It provides that the second condition in subsection 56H(9) is met if the decision to include rent assistance in the Part A rate of FTB is made after the decision to include rent assistance in the payment of service pension or income support supplement and the period for which duplicate rent assistance was payable either commenced on the day the determination was made or on a later day.

Item 24 repeals and substitutes paragraph SCH6-C3(f). Point SCH6-C3 provides the requirements to be met before a person will be eligible for rent assistance to be included in their service pension or income support supplement.

Repealed paragraph SCH6-C3(f) had provided that a person would not be eligible for rent assistance where either the person or the person's partner was entitled to be paid FTB and the Part A component of the FTB included rent assistance.

New paragraph SCH6-C3(f) provides that rent assistance will be payable to a person if, in addition to satisfying paragraphs SCH6-C3(a) to (e), the person also satisfies the requirements of either point SCH6-C3A or SCH6-C3B.

Item 25 inserts new points SCH6-C3A and SCH6-C3B.

New point SCH6-C3A is applicable to a person entitled to be paid FTB who is not a member of a couple other than an illness separated couple or a respite care couple.

It provides that a person will be eligible for rent assistance where the person is entitled to be paid FTB and the Part A component of the FTB does not include rent assistance. It also provides that a person will also be eligible for rent assistance where rent assistance has been included in the Part A component of the FTB and clause 4B of Schedule 1 to the Family Assistance Act has been applied to reduce the person's Part A rate of FTB.

New point SCH6-C3B is applicable to a person who a member of a couple other than an illness separated couple or a respite care couple and who is entitled to be paid FTB or whose partner is entitled to be paid FTB.

It provides that a person will be eligible for rent assistance where the person or the person's partner is entitled to be paid FTB and the Part A component of the FTB does not include rent assistance. It also provides that a person will be eligible for rent assistance where rent assistance has been included in the Part A component of the FTB and either clause 4A or 4B of Schedule 1 to the Family Assistance Act has been applied to reduce the person's or the person's partner's Part A rate of FTB.

Division 2 - Application of Amendments

Item 26 provides an application provision for the substantive amendments made to the Family Assistance Act (items 2 to 4 of Division 1) to deal with the issue of duplicate payments of rent assistance.

The relevant amendments will apply to a decision made after commencement (the later of 1 July 2005 or Royal Assent) to make or vary a determination to include rent assistance when calculating an individual's Part A rate for a day that occurs before or after commencement. This means that, following the commencement date, when a decision is made to pay arrears of FTB that include rent assistance, an adjustment may be made for amounts of rent assistance already paid with a social security or veterans' entitlements payment.

Item 27 provides an application provision for the amendments made to the Social Security Act (items 7 to 18) that deal with the issue of duplicate payments of rent assistance.

The relevant amendments will apply to a decision made after commencement (the later of 1 July 2005 or Royal Assent) to make or vary a determination to include rent assistance when calculating an individual's rate of social security entitlement for a day that occurs before or after commencement.

Item 28 provides an application provision for the amendment made to the Social Security Administration Act (item 19) that deals with the issue of duplicate payments of rent assistance.

The relevant amendment will apply to an adverse determination made after commencement (the later of 1 July 2005 or Royal Assent) that reduces the rate of, or cancels, a person's social security payment in regard to a day that occurs after commencement.

Item 29 provides an application provision for the amendments made to the Veterans' Entitlements Act (items 22 and 23 of Division 1) that deals with the issue of duplicate payments of rent assistance.

The relevant amendment will apply to an adverse determination made after commencement (the later of 1 July 2005 or Royal Assent) that reduces the rate of, or cancels, a person's service pension or income support supplement in regard to a day that occurs after commencement.

Item 30 provides an application provision for the amendments made to the Veterans' Entitlements Act (items 24 and 25 of Division 1) that deals with the issue of duplicate payments of rent assistance.

The relevant amendments will apply to a decision made after commencement (the later of 1 July 2005 or Royal Assent) to make or vary a determination to include rent assistance when calculating an individual's rate of service pension or income support supplement for a day that occurs before or after commencement.

Part 2 - Rent certificates

Summary

Amendments are made to provide for cancellation of the rent assistance portion of a person's FTB or social security payment for failing to submit a rent certificate review (rather than cancellation of the whole payment as currently provided).

Background

Rent assistance is an amount added to a person's standard rate of FTB Part A, or to a person's maximum basic rate of social security payment, to assist low-income customers with their home rental costs. It is not a separate payment in its own right, but there are qualification/eligibility and rate provisions for rent assistance that are separate to the similar provisions for the customer's main payment.

A customer's ongoing entitlement to rent assistance is reviewed regularly, using a system of rent certificates, which gathers information necessary to confirm the customer's ongoing entitlement to, and rate of, rent assistance.

The legislation as it stands permits the suspension or cancellation of the customer's whole FTB or social security payment for failure to return a rent certificate as required. However, a more appropriate response would be to allow the suspension or cancellation of the rent assistance alone. Technically, this means that the customer's total rate of FTB or social security payment should be reduced by no longer adding rent assistance as part of the rate calculation for the whole payment. Any remaining components of the total rate should continue to be paid.

This measure ensures that the less onerous response of a rate reduction is available if a customer should fail to give the necessary information via their rent certificate.

Explanation of changes

Items 31 to 35 give effect to this measure in relation to FTB paid by instalment, and items 36 to 41 in relation to social security payments.

Amendments to the Family Assistance Administration Act

Item 31 inserts a new subsection 29(2A) into the Family Assistance Administration Act. This will provide a new rate reduction capacity if a claimant fails to give required information or documents that relate to eligibility for, or the amount of, rent assistance (ie, fails to return the rent certificate). This is an alternative to the existing capacity in subsection 29(2) to reduce the claimant's entitlement to nil for failure to give required information or documents. For a relatively small number of claimants, whose rate of FTB without rent assistance would be nil because of the income test, the existing capacity to reduce the entitlement to nil will remain the most appropriate response. Generally, however, new subsection 29(2A) will provide the correct outcome in these cases, which is to allow the reduction of the claimant's rate of FTB to a rate that does not add rent assistance to the standard rate of FTB Part A as part of the overall rate calculation.

The rate reduction will take effect from the beginning of the instalment period in which the rate reduction variation takes place, or from a later specified day.

Item 32 makes sure that subsection 29(3) applies to the new rate reduction variation as well as to the existing nil entitlement variation under section 29. Therefore, if the claimant eventually gives the rent certificate, after the rate reduction but before the end of the following income year, the rate reduction variation must be further varied to undo the rate reduction. That is, the former rate would be restored. If it were then necessary to change the rate as a result of the information gained from the rent certificate (either to reflect a different amount of rent assistance being added in the rate calculation or to withdraw rent assistance altogether), a further variation under section 31 would be necessary.

Items 33, 34 and 35 make minor refinements to subsections 31(3), 31A(3) and 31B(3) respectively of the Family Assistance Administration Act. These subsections currently identify a series of variation provisions (including section 29) that are capable of varying a claimant's entitlement to nil and that might otherwise clash with a variation under one of sections 31, 31A and 31B that would, instead, have the effect that the claimant is entitled. In that case, any variation under one of the identified series of variation provisions will prevail over a variation under section 31, 31A or 31B.

The purpose of these amendments is to maintain the current effect of these prevalence provisions by making sure that the rule as it applies to section 29 is restricted to the existing, nil entitlement variation capacity in subsection 29(2). Because the rate reduction variation capacity in new subsection 29(2A) will not clash with any 'entitled' variation capacity in section 31, 31A or 31B, there is no need for a variation under new subsection 29(2A) to prevail over an 'entitled' variation under section 31, 31A or 31B, nor vice versa.

Amendments to the Social Security Administration Act

Item 36 inserts a new section 81A into the Social Security Administration Act. This provides a rate reduction alternative to the cancellation or suspension capacity already present for social security payments in section 81. The new rate reduction capacity will apply if a person whose social security payment is currently calculated to include rent assistance fails to give a required statement, information or document that relates to qualification for, or amount of, rent assistance (ie, fails to return the rent certificate).

Through the amendment made by item 40, this rate reduction will take effect under the existing rules for adverse determinations. Therefore, subsection 118(12) of the Social Security Administration Act would apply so that the rate reduction would apply from the date of the reduction determination or a later specified day.

Item 37 inserts a new section 85A. This provides a new rule allowing the person's rate of social security payment to be increased if he or she subsequently gives the rent certificate and if the information gained from it suggests that the rate of social security payment that is being, or has been, paid is lower than the social security law provides. The rate in these circumstances would be increased to reflect the person's correct entitlement in light of the rent certificate information, and not necessarily to the previous rate. This new rule is equivalent to existing section 85, which allows resumption of payment following cancellation or suspension of a person's whole social security payment under section 81 (among other provisions).

Similarly, the same date of effect rules would apply to the new section 85A as apply to section 85, through the amendment made by item 39 to include the new section within the favourable determination date of effect rules. Therefore, section 114 would generally provide for the rate increase to take effect from the date of the increase determination, or a later specified day, or a specified day that is up to 13 weeks earlier. Alternatively, if the rate increase were to be triggered by the person applying for review of the rate reduction determination, section 109 would provide the date of effect rules, including allowing for backdating if the review was sought within 13 weeks of the decision being notified. These rules will accommodate the policy of backdating a person's rate increase in these circumstances if the rent certificate is given within 13 weeks after it was originally required to be given.

Item 38 changes a relevant subdivision heading to refer to new sections 81A and 85A. Item 41 amends paragraph 123(3)(a) so that a determination made under either of the new sections correctly brings to an end whatever previous rate determination was in effect for the person. The new rate determination will then remain in effect until brought to an end by a further rate determination or the operation of another specified provision of the social security law.