House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Families, Community Services and Indigenous Affairs, the Hon Mal Brough MP)

Schedule 8 - Remote area allowance

Summary

The remote area allowance (RAA) provisions in the Social Security Act and the Veterans' Entitlements Act are amended from 1 July 2008 to ensure that an additional allowance is payable for each FTB child and regular care child of a person.

Background

As part of the child support reforms that come into effect from 1 July 2008, the concept of 'FTB child' will be redefined to mean a child in respect of whom an individual has 35 per cent or more care, provided the child also meets all other relevant eligibility criteria such as Australian residence. An individual with this level of care will continue to attract all relevant existing components of FTB (Parts A and B) including the child specific rates.

A child in respect of whom an individual has 14 per cent or more and less than 35 per cent care, where the child meets all other relevant eligibility criteria, will be a 'regular care child' of the individual.

These changes to the concept of FTB child and the introduction of the concept of a regular care child have implications for RAA.

For most social security income support payments, an additional RAA allowance is currently payable for each FTB child of the person. For youth allowance and austudy payment, an additional RAA allowance is currently payable for each FTB child that attracts more than the base rate of FTB. Without amendment, regular care children would not attract the additional allowance.

The RAA provisions are therefore amended to ensure that each FTB child and regular care child attracts an additional RAA allowance, consistent across all relevant payment types.

Similar amendments are made to the RAA provisions in the Veterans' Entitlements Act.

Explanation of the changes

Social Security Act amendments

RAA is a component of rate, provided for in a separate module in each relevant rate calculator. In broad terms, the amendments made by this Schedule ensure that an additional RAA allowance is also available in respect of each regular care child of the person, and ensure that the RAA provisions otherwise work in the same way, irrespective of whether a person has an FTB child or a regular care child.

Section 1064 of the Social Security Act sets out the rate calculation process for age pension, disability support pension, disability wage supplement (for people who have turned 21), wife pension, carer payment, mature age and mature age partner allowances.

The rules relating to RAA are set out in module H.

The rate of a person's RAA is worked out under point 1064-H2 and includes an additional allowance for each FTB child. Item 1 amends this provision so that an additional allowance is also available for each regular care child of the person.

Points 1064-H5 and H6 ensure that an FTB child of a person who is a member of a couple but who is not receiving a pension or benefit or an additional allowance in respect of the child is also an FTB child of the other member of the couple who is qualified for an amount by way of RAA. Items 2 to 6 amend these provisions so that these rules also apply in relation to a regular care child. Notes make the required consequential amendments to headings.

Point 1064-H7 enables the additional allowance to continue to be paid up to 14 weeks after the death of an FTB child, as if the child had not died. Item 7 amends this provision so that the same rule also applies in relation to a regular care child. A note amends the heading accordingly. Item 8 makes a consequential amendment to the note at the end of point 1064-H7.

The remaining items in this Schedule make comparable amendments to the other payment rate calculators.

For youth allowance and austudy payment, additional changes are made to align the RAA rules for these payments with the RAA rules that will apply in relation to other payment types, so that an additional amount of RAA can be paid for each FTB child and regular care child of the person, irrespective of whether or not the child attracts more than the base rate of FTB. The Youth Allowance Rate Calculator is amended by items 43 to 51 while the Austudy Payment Rate Calculator is amended by items 52 to 60 .

The concept of 'regular care child' is defined in subsection 23(1) of the Social Security Act as having the same meaning as in subsection 3(1) of the Family Assistance Act. This definition is inserted into the Social Security Act, from 1 July 2008, by Schedule 8 to the New Formula Act.

Veterans' Entitlements Act amendments

Item 80 inserts a new definition of 'regular care child' into subsection 5F(1) which has the same meaning as given by subsection 3(1) of the Family Assistance Act. This new definition is listed in the section 5 Index of definitions by item 79 .

In broad terms, subsections 5R(11) and (12) of the Veterans' Entitlements Act allow the Commission to make a written determination that has the effect of continuing to include RAA in a person's rate of service pension or income support supplement where the person is absent from a remote area in specified circumstances and while the person has an FTB child.

Items 81 to 86 amend these provisions by inserting references to regular care child wherever there is an existing reference to an FTB child. This would enable the Commission to make a similar determination where the person concerned has a regular care child.

Schedule 6 to the Veterans' Entitlements Act provides for the calculation of rates of service pension and income support supplement. A possible component of rate is RAA, the rules for which are set out in Module G. These rules are similar to the RAA rules that apply in relation to social security pensions.

Items 87 to 96 amend various provisions in Module G to ensure that an additional RAA amount is also payable for each regular care child of a person (as well as each FTB child) and that the RAA rules otherwise apply in the same way in relation to both FTB and regular care children. References to regular care child are inserted wherever an FTB child is referred to and the relevant headings are changed accordingly.

The changes made by this Schedule commence on 1 July 2008, at the same time as the relevant child support reform changes to FTB.