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)

Schedule 5 - Income management

Summary

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

Background

Matched savings scheme payment

The matched savings scheme payment is designed to assist those on compulsory income management to improve their financial literacy and to encourage saving. The payment is payable to people who are subject to compulsory income management, who undertake an approved financial management or money management course and accumulate savings.

To qualify for the matched savings payment, a person must be subject to income management, in the qualifying savings period, under the child protection, vulnerable welfare payment recipients, school enrolment, school attendance, disengaged youth or long-term welfare payment recipient measures under Subdivision A of Division 2 of Part 3B of the Social Security (Administration) Act 1999 (Social Security Administration Act).

The person must also maintain a pattern of regular savings throughout the qualifying savings period of at least 13 consecutive weeks. Currently, the qualifying savings period begins at any time after the person has commenced an approved course.

This Schedule makes changes to subparagraph 1061WG(1)(b)(i) of the Social Security Act to clarify that a person's qualifying savings period starts from the date of registration for, not commencement of, a course.

This change seeks to clarify the starting date for the commencement of the qualifying savings period for the matched savings scheme payment.

Nominees

This Schedule also makes changes to the income management measure with respect to nominees, including the concept of who is a nominee, the requirement for consent in certain circumstances, the giving of stored value cards to the principal or nominee, and the nominee's status if the nominee becomes subject to the income management measure under the child protection measure.

Currently, Part 3B of the Social Security Administration Act provides for two types of nominee, a 'designated nominee' and a 'payment nominee'. This has resulted in some inconsistency in the treatment of nominees in relation to 16 to 17 year old dependent youth allowance recipients. This Schedule simplifies the concept of nominee and resolves the inconsistency in the treatment of welfare recipients by combining designated and payment nominees into one entity.

Under subsection 123E(1A) of the Social Security Administration Act, if a payment nominee becomes subject to income management under the child protection measure, the Secretary must cancel the appointment of the nominee. This requirement could have some unintended consequences for youth allowance recipients, as cancellation of the youth allowance recipient's parent's nominee status would result in the youth allowance recipient's payment no longer being subject to income management. This was not the intention of the income management measure. This Schedule addresses this problem, although the Secretary will continue to have a general revocation power under subsection 33(3) of the Acts Interpretation Act 1901 .

Currently, a person who is a payment nominee must obtain the principal's permission to enter into a written agreement with the Secretary to be subject voluntarily to income management. This may result in parents having to obtain that permission from their child. While this may have been appropriate when voluntary income management was originally introduced as an alternative to the child protection measure, with the expansion of voluntary income management, and those people on voluntary income management no longer being considered inappropriate to act as nominees, this is no longer the case. This Schedule removes the requirement for the principal's consent.

Under Part 3B of the Social Security Administration Act, a person who is subject to income management (or the person's nominee) may, with the person's consent (or the nominee's consent), give a third person a stored value card that enables the third person to acquire goods or services. This Schedule makes amendments so that a nominee may consent to the principal, rather than the third person, being given a stored value card.

Debt recovery

Section 123ZF of the Social Security Administration Act currently provides that, if a person obtains the value of a cheque, which was issued to another person who is subject to income management, without the endorsement of the payee, this will result in a debt being due by that unauthorised person to the Commonwealth. Under section 123ZF, if the Commonwealth receives an amount, by way of reimbursement, from the unauthorised person, the customer's income management account is credited by the amount received, but only after the actual recovery of the funds. This can leave the customer out-of-pocket until the funds are actually recovered.

This Schedule seeks to remedy this situation by allowing the Secretary to credit the customer's income management account by the amount of any debt raised under section 123ZF prior to the debt actually being recovered. This will mean that the person will not have to wait for the funds to be actually recovered.

This Schedule also makes a minor technical amendment to the legislative instrument making power in paragraph 123YL(2)(b) of the Social Security Administration Act.

The amendments made by this Schedule commence on the day after Royal Assent.

Explanation of the changes

Part 1 - General amendments

Amendments to the Family Assistance Administration Act

Item 1 repeals subsection 219TE(1A). This subsection was originally inserted by the Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007 . The requirement to cancel the appointment of a nominee under subsection 219TE(1A) has unintended consequences if a person, who is a payment nominee of a family assistant recipient, becomes subject to income management under the child protection measure. In these circumstances, the person's nominee status must be cancelled, with the result that the family assistance recipient's payment is no longer subject to income management. This was not the intention of subsection 219TE(1A). The Secretary does, however, under section 219TO, have the general power to revoke, vary or amend under subsection 33(3) of the Acts Interpretation Act 1901 (due to the reference to 'writing' in section 219TB) the instrument appointing a nominee.

Amendments to the Social Security Act

Item 2 removes the word 'commenced' in subparagraph 1061WG(1)(b)(i) and replaces it with 'is registered for'. This makes it clear that the relevant date that a person's qualifying savings period starts from is the day the course operator registers the person, not the day the person takes action to become registered for the course. For example, where the course provider sends out a confirmation letter in response to a customer's application to undertake an approved course, the date of the letter would be taken to be the date of acceptance for the course. The start date would, therefore, be the date of the letter.

Amendments to the Social Security Administration Act

Item 3 repeals subsection 123E(1A). As with item 1 , this subsection was inserted by the Social Security and Other Legislation Amendment (Welfare Payment Reform) Act 2007 . The requirement to cancel the appointment of a nominee under subsection 123E(1A) has unintended consequences if a parent, who is a payment nominee of a youth allowance recipient, becomes subject to income management under the child protection measure. In these circumstances, the parent's nominee status must be cancelled, with the result that the youth allowance recipient's payment is no longer subject to income management. This was not the intention of subsection 123E(1A). The Secretary does, however, under section 123P have the general power to revoke, vary or amend under subsection 33(3) of the Acts Interpretation Act 1901 (due to the reference to 'writing' in section 123B) the instrument appointing a nominee.

Item 4 repeals the definition of designated nominee in section 123TC because the amendment made by item 7 below makes the definition redundant.

Item 5 inserts into section 123TC a definition of excluded Part 3B payment nominee , which means the Public Trustee of a State or Territory or a Part 3B payment nominee who is not subject to the income management measure.

Item 6 repeals the definition of excluded payment nominee in section 123TC because the amendment made by item 5 above makes the definition redundant.

Item 7 inserts into section 123TC a definition of Part 3B payment nominee , which means:

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a person who, by virtue of an appointment in force under section 123B of the Social Security Administration Act or under section 219TB of the Family Assistance Administration Act, is a payment nominee; or

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a person to whom payment of another person's service pension is made by virtue of an approval under section 58 of the Veterans' Entitlements Act or an appointment under section 202 of the Veterans' Entitlements Act; or

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a person to whom another person's instalments of youth allowance are to be paid in accordance with subsection 45(1) of the Social Security Administration Act.

Item 8 repeals the definition of payment nominee in section 123TC because the amendment made by item 7 above makes the definition redundant.

Item 9 makes a minor technical amendment to section 123UC.

Item 10 adds new subsection 123UC(2). New subsection 123UC(2) provides a further rule for when a person is subject to income management under the child protection measure. It provides that a person is subject to income management under this measure at a particular time if the person is not otherwise subject to income management under any other provision of Subdivision A of Division 2 of Part 3B of the Social Security Administration Act, and the person has a payment nominee who is subject to income management under subsection 123UC(1).

Item 11 repeals paragraph 123UM(3)(c) and replaces it with a new paragraph 123UM(3)(c) due to the amendment made by item 5 .

Items 12, 13 and 14 repeal paragraph 123UM(3)(d) and subparagraphs 123UN(1)(a)(iv) and 123UO(3)(b)(iv) respectively. These provisions relate to the requirement that a person, who is a payment nominee, must obtain the principal's permission under section 123UP (which is being repealed by item 15 ) to enter into a written agreement with the Secretary to be subject voluntarily to income management.

Item 15 repeals section 123UP.

Item 16 repeals paragraph 123YE(2)(b).

Item 17 makes a minor technical amendment to subparagraph 123YE(2)(c)(ii) due to the amendment made by item 18 .

Item 18 repeals paragraph 123YE(2)(d).

Item 19 makes a minor technical amendment to paragraph 123YE(2)(e) due to the amendment made by item 16 above.

Item 20 makes a minor technical amendment to paragraph 123YE(2)(f) due to the amendment made by item 18 above.

Items 21, 22, 23 and 25 remove the words 'or a third person' from the provisions identified in these items.

Items 24, 26, 43 and 54 remove the words 'or the third person, as the case may be' from the provisions identified in these items.

Item 27, 44 and 55 remove the words 'a third person a stored value card that enables the third person' from the provisions identified in these items and replaces them with 'the first person a stored value card that enables the first person'.

Items 28 to 32, 34, 45, 48 and 56 remove the words 'a third person' from the provisions identified in these items and replaces them with 'the first person'.

Items 33, 35, 47, 49 and 57 remove the words 'the first person or the third person' from the provisions identified in these items and replaces them with 'or the first person'.

Item 36 removes the word 'Minister' from subparagraph 123YL(2)(b)(ii) and replaces it with 'Secretary'. This gives the power to make a legislative instrument for the purposes of this subparagraph to the Secretary, which is consistent with other provisions in section 123YL.

Item 37 makes a minor technical amendment to paragraph 123YM(2)(h) due to the amendment made by item 38 .

Item 38 repeals paragraph 123YM(2)(i).

Item 39 makes a minor technical amendment to paragraph 123YM(2)(k) due to the amendment made by item 38 above.

Items 40 and 42 remove the words 'or (i), the Secretary gives the first person or a third person' from the provisions identified in these items and replaces them with ', the Secretary gives the first person'.

Item 41 removes the words 'or a third person a stored value card under paragraph (2)(h) or (i)' from subsections 123YM(4) and (6) and replaces them with 'a stored value card under paragraph (2)(h)'.

Item 46 removes the words 'the designated nominee' from subsection 123YN(8) and replaces them with 'the Part 3B payment nominee or the first person'.

Item 50 makes a minor technical amendment to paragraph 123YO(2)(g) due to the amendment made by item 51 .

Item 51 repeals paragraph 123YO(2)(h).

Item 52 makes a minor technical amendment to paragraph 123YO(2)(j) due to the amendment made by item 51 above.

Item 53 removes the words 'or (h), the Secretary gives the first person or a third person' from the provisions identified in this item and replaces them with the phrase ', the Secretary gives the first person'.

Item 58 makes a minor technical amendment to section 123ZC due to the amendment made by item 9 above.

Item 59 makes a minor technical amendment to section 123ZE due to the amendment made by item 9 above.

Item 60 repeals subsections 123ZF(3) and (4) and replaces them with new subsections 123ZF(3) and (4). These provisions relate to the misuse of cheques.

New subsection 123ZF(3) provides that, where a customer has been issued with a cheque and, without the person's consent, the cheque has been used by a third party, then the Secretary may re-credit the person's income management account by an amount equal to the value of the cheque.

New subsection 123ZF(4) provides that, where the Secretary decides to re-credit a person's income management account under subsection (3), then the value of the cheque in question is credited to both the Income Management Record and the person's income management account.

Item 61 is an application provision for item 60 . It provides that item 60 applies to the use of a cheque after the commencement of that item, or to its use prior to the commencement of that item where no amount has yet been recovered by the Secretary from the unauthorised person.

Part 2 - Part 3B payment nominee amendments

Items 62 to 96 remove the words 'payment nominee' and 'designated nominee' (wherever they occur) from the provisions identified in these items and replace them with 'Part 3B payment nominee'.

A note after each of items 73, 76, 81, 84, 89, 92 and 95 signposts that the heading to the provision identified in each note is altered by removing the reference to 'designated nominee' and replacing it with 'Part 3B payment nominee'.