House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families, Community Services and Indigenous Affairs, Minister for Disability Reform, the Hon Jenny Macklin MP)

Outline

Baby bonus

This Bill implements the Government's changes to the baby bonus announced in the 2012-13 Mid-Year Economic and Fiscal Outlook. These changes will maintain support for new parents with the upfront costs of having a baby, while ensuring the family payments system is sustainable into the future.

The amount of baby bonus for second and subsequent children who come into a family from 1 July 2013 will be reduced to $3,000. The change will generally apply regardless of whether the child is born into the family, adopted by the family, or entrusted to the family's care within 26 weeks of birth (for example, under a foster care arrangement). Baby bonus will continue to be paid at the rate of $5,000 for a family's first child, and for each child who comes into the family in a multiple birth, adoption or entrustment to care.

This change recognises that families generally do not face the same upfront costs for a second or later child as they do for their first child, with the more expensive items usually already purchased.

The saving from this measure will support the future sustainability of the family payments system, which continues to deliver substantial assistance for low and middle-income families - including through paid parental leave, dad and partner pay, the schoolkids bonus and family tax benefit and child care payments.

Family tax benefit and double orphan pension

This Bill also makes amendments to ensure families can continue to receive family tax benefit until the end of the calendar year that the child finishes secondary study or its equivalent. Additionally, the qualification period for double orphan pension is being extended so that it aligns with eligibility for family tax benefit. This means, for example, that a carer can continue to receive double orphan pension for a young person in their care until the end of the calendar year in which the young person turns 19 if they are still in secondary study, or until their 18th birthday if they have already completed secondary study.

Other amendments

This Bill also makes some clarifying and technical amendments to portfolio legislation, consistent with intended policy.

Financial impact statement

The baby bonus changes are expected to provide savings of $505.9 million over four years from 2012-13 to 2015-16. The remaining amendments have negligible financial impact.

Statements of compatibility with human rights

The statements of compatibility with human rights appear at the end of this explanatory memorandum.