House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Employment Participation and Childcare, the Honourable Kate Ellis MP)

Schedule 2 - Child care absences

Summary

This Schedule makes amendments to the Family Assistance Act to clarify the provisions concerning the effect of a child's absence from the care of an approved child care service (other than an occasional care service) on the eligibility of an individual for CCB in respect of that child.

The amendments authorise the Minister to specify, by a legislative instrument, the circumstances relating to absences of a child from a session of care that would otherwise have been provided, in which the service will be taken to have permanently ceased providing care.

The amendments also clarify that, where an approved child care service has permanently ceased providing care to a child, it means that the service has done so on the day the child last physically attended a session of care provided by the service. This ensures that, where the care has permanently ceased or has been taken to have permanently ceased, CCB eligibility does not arise in respect of any day after the child last physically attended the care.

A minor amendment is also made to a provision of the Family Assistance Administration Act dealing with child care services' reporting requirements.

Background

CCB eligibility arises in respect of a session of care provided to a child by a child care service approved for the purposes of the family assistance law (under section 195 of the Family Assistance Administration Act). In certain circumstances, CCB eligibility also arises when a child is absent from a session or sessions of care that would otherwise have been provided to the child.

Subsection 10(2) of the Family Assistance Act provides for up to 42 days of a child's absence from care in a financial year ('initial absence') for which CCB eligibility arises. This subsection specifies the conditions that need to be met for a day of absence from care to be an 'initial absence', including that the absence does not fall on a day that is 'after the day the service has stopped providing care for the child (otherwise than temporarily)' (subparagraph 10(2)(b)(ii) refers).

Ordinarily, whether a service has stopped providing care to a child or not, is a matter of fact. For example, if an individual who made an arrangement for the provision of care to a child by the service has terminated the arrangement as of a particular day, and the child attended care up to that day, it is clear that any next day on which the child is absent is not an 'initial' absence as it is after the day on which the service has stopped providing care to the child.

However, there are many situations where a child is absent from care (that would otherwise have been provided, for example, under an arrangement for care that did not specify the end date of the arrangement) for long periods and it is not clear, at the time the absence occurs, whether it is permanent or temporary (because it is not clear, or it is not known, whether the child will, or will not, return to the care). As an approved child care service is required (under section 219N of the Family Assistance Administration Act) to provide a report for each week in which the service provided care to a child or have been taken (under section 10 of the Family Assistance Act) to have provided care, a service in such situations frequently reports an extended period of absences as 'initial absences', sometimes until the 42 day allowance of initial absences for a child is exhausted. The report triggers calculation of CCB fee reductions and payment of the calculated amounts to the service, which is then required to pass the amount onto the individual who arranged the care by the service. Once it becomes clear that the absence is permanent, the fee reduction amounts paid for the period of the absence becomes a debt due to the Commonwealth by the individual.

To clarify the operation of the existing provisions relating to 'initial' absences, the amendments made by this Schedule provide the power for the Minister to specify in a legislative instrument circumstances in which a service will be taken to have permanently ceased providing care to a child ( Item 2 , new subsections (2A) and (2B)). An amendment is also made to make it clear that if the service has permanently ceased providing care to the child, in the ordinary course of events, as arranged for, or in the circumstances specified in the instrument, it means that it has done so on the last day on which the child was physically provided with care by the service ( Item 2 , new subsection (2C)). Any subsequent day of absence is not an 'initial absence day' and CCB eligibility does not arise for that absence.

Explanation of the changes

A New Tax System (Family Assistance) Act 1999

Item 1 - Subparagraph 10(2)(b)(ii)

Subsection 10(2) operates to the effect that an individual may be eligible for CCB for up to 42 days in a financial year of a child's 'initial' absence from sessions of care provided by an approved child care service.

Subsection 10(2) specifies the conditions that need to be met for a day of absence from care to be an initial absence, including that the absence does not fall on a day that is 'after the day the service has stopped providing care for the child (otherwise than temporarily)' (subparagraph 10(2)(b)(ii) refers). In other words, the day in question cannot be a day after the service has permanently stopped providing care to the child. To better express the meaning of this condition, Item 1 makes a stylistic change to the wording of subparagraph 10(2)(b)(ii) so that it refers to an absence which does not fall on a day: 'after the day the service has permanently ceased providing care for the child'. This amendment does not change the operation of subparagraph 10(2)(b)(ii).

Item 2 - After subsection 10(2)

Item 2 inserts new subsections (2A), (2B) and (2C) into section 10.

New subsection (2A) provides that an approved child care service is taken to have permanently ceased providing care for a child in the circumstances specified by the Minister in a legislative instrument.

New subsection (2B) provides the Minister with the power to make such an instrument. It is intended that a continuous period of absence of, for example, 6 weeks will be specified in the instrument as the circumstance in which a service will be taken to have permanently ceased providing care to the child, irrespective of whether there might have been an intention for the child to return to care at a later date. Different periods may be specified to cater for different circumstances. It is intended that the commencement of the instrument will coincide with the commencement of this Schedule.

New subsection (2C) provides that, if an approved child care service has permanently ceased providing care to a child, including in the circumstances specified in a legislative instrument, then, for the purposes of subparagraph 10(2)(b)(ii), the service is taken to have done so on the day the child last physically attended a session of care by the service. New subsection (2C) operates in relation to the cessations that occur as a matter of fact (that is, where it is sufficiently clear that the arrangement relating to the care for a child has ended) and to the cessations in the circumstances specified in the instrument. This clarifies that a day of absence after that day cannot be an 'initial' absence day for which CCB eligibility arises. For example, if, as it is intended, the Minister specifies in a legislative instrument a period of continuous absence of, for example, 6 weeks, as a circumstance in which the service is taken to have permanently ceased care for a child, then after that period of absence has elapsed, the service will be taken to have permanently ceased care to the child on the last day before the period of absence started.

Items 3 - Application

Item 3 is an application provision. It provides that the amendments made by Items 1 and 2 apply in relation to working out whether an approved child care service has permanently ceased providing care for a child on or after commencement of those items (regardless of whether the absences from sessions of care occurred before, on or after that commencement).

If, as it is intended, the Minister specifies in a legislative instrument, a particular period of continuous absence as a circumstance in which the service is taken to have permanently ceased care for a child, the amendments will apply to the making of a decision about the permanent cessation of care for a child if the child has been absent from care for the period specified in the instrument and the last day of that period occurs after the commencement of Items 1 and 2 (and after the commencement of the instrument, which is intended to occur at the commencement of the Schedule), regardless of whether that period started before or after the commencement.

A New Tax System (Family Assistance) (Administration) Act 1999

Item 4 - At the end of section 219N

Item 4 amends section 219N. Section 219N imposes an obligation on an approved child care service to give the Secretary a report about matters relevant to the CCB eligibility and entitlement for each week of care provided to a child enrolled by the service. The report must be provided in accordance with the requirements set out in this section. Once a report relating to a week of care for a child is given, the Secretary calculates the amount of fee reduction for the week for the child (based on the information provided in that report) and pays the amount to the service to pass on to the individual who is conditionally eligible for CCB by fee reduction for the child (sections 50Z and 219Q refer).

Subsection 219N(7) provides that an approved child care service may substitute a report it has given with an updated report at any time (for example, when the service made a mistake in the report already given) or withdraw the report that was given where it was not required to be given (for example, where a report was given in respect of a child for a week in which the service did not provide any sessions of care to the child and was not taken to have provided such sessions). If a service substitutes or withdraws a report for a week for a child, the Secretary may recalculate the amount of fee reduction for the child for that week and adjust the amount previously paid to the service (section 50ZA and 219Q and 219QA refer).

An approved child care service is required, as a condition of its continued approval for the purposes of the family assistance law, to comply with the rules specified in a legislative instrument made under paragraph 205(1)(b). The rules may impose requirements relating to substitution and withdrawal of a report given under section 219N in the circumstances specified in the rules.

Item 4 inserts new section 219N(8) to provide that subsection 219N(7) (about the discretionary substitution or withdrawal of reports) does not prevent rules under paragraph 205(1)(b) making provision for, and in relation to, child care services substituting and/or withdrawing a report given under section 219N. This amendment does not affect the operation of subsection 219N(7).