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)

Schedule 1 - Baby bonus

Summary

This Schedule 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.

Background

Baby bonus is paid to eligible individuals following the birth or adoption of a child to assist with the upfront costs of having a child. Currently, baby bonus is a payment of $5,000.

The amendments made by this Schedule commence on 1 July 2013, apart from items 4 to 6 and item 9, which commence the day after Royal Assent.

Explanation of the changes

Amendments to the Family Assistance Act

Item 1 repeals and inserts a new section 66, which outlines the amount of baby bonus that an individual is entitled to receive in respect of a child.

General rule

Subsection 66(1) provides for the general rule in relation to the amount of baby bonus an individual is entitled to receive in respect of a child. If the individual satisfies paragraph 66(1)(a), (b), (c) or (d), then the amount of baby bonus is $5,000.

Otherwise, the amount of baby bonus is $3,000.

New paragraph 66(1)(a) applies to an individual who is a parent of the child and is eligible for baby bonus under subsection 36(2). If the child is the first child born alive to the mother who gave birth to the child, the amount of baby bonus is $5,000.

Example

A mother claims baby bonus for both the first and second children that she gives birth to (the children were not born as part of a multiple birth). A payment of $5,000 of baby bonus is made for the first child, and a payment of $3,000 for the second child.

New paragraph 66(1)(b) applies to an individual who has a child entrusted to the care of the individual or the individual's partner and is eligible for baby bonus under subsection 36(3). If the child is the first child who becomes entrusted to the care of the individual, which occurred at any time within the period of 26 weeks starting on the day of the child's birth, the amount of baby bonus is $5,000. Alternatively, if the individual is a member of a couple at any time within the period of 26 weeks starting on the day of the child's birth and the child becomes entrusted to the care of the individual's partner at that time, the amount of baby bonus is $5,000.

Examples

A carer is eligible for baby bonus for a child entrusted to her or his care under subsection 36(3) (for example, through a foster care arrangement). The birth mother had care of the child until the child was 10 weeks old, and then the carer took on care of the child, intending to be the primary carer of the child for at least 26 weeks. Both wish to claim baby bonus. In this situation, a pro-rated payment of $5,000 of baby bonus is apportioned between the birth mother for her first born child and the carer as this is the first child entrusted to her or his care.

A child is born of a surrogacy arrangement between a surrogate mother and a commissioning couple. The commissioning couple have not taken on care of any other child of a surrogacy arrangement previously. The child enters their care four weeks after birth, and the individual who is the primary carer of the child receives an amount of $5,000 for baby bonus.

New paragraph 66(1)(c) applies to an individual who has a stillborn child and is eligible for baby bonus under subsection 36(4). If the child is the mother's first stillborn child and the mother has not given birth to any other children (including stillborn children), the amount of baby bonus is $5,000.

Examples

A birth mother has a stillborn child and she receives an amount of $5,000 for baby bonus.

A birth mother has a first live-born birth, followed by a stillbirth. In this situation, the mother will be entitled to receive baby bonus amounts of $5,000 and $3,000 respectively.

A birth mother who firstly has a stillborn child, followed by a first live-born child, will receive $5,000 for the stillborn child and then $5,000 again to assist with the upfront costs of raising her child.

New paragraph 66(1)(d) applies to an individual who has an adopted child and is eligible for baby bonus under subsection 36(5). If the child is the first child who becomes entrusted to the care of the individual or the individual's partner as part of the process of adoption by an authorised party, and the child is aged under 16 at the time, the amount of baby bonus is $5,000.

Examples

A couple adopts a child and has not adopted before. The adopting father claims baby bonus and receives $5,000 for the child.

A couple adopts a second child. The adopting mother claims baby bonus, and receives $3,000 as the couple had adopted a child previously.

Multiple children cases

New subsection 66(2) provides for an exception to the general rule for multiple children - for example, twins. Subsection 66(2) provides that the amount of baby bonus for an individual in respect of each child born during the same multiple birth is $5,000. This amount also applies to any stillborn child born in a multiple birth.

New subsection 66(3) provides that, if an individual is eligible for baby bonus under subsection 36(3) of the Family Assistance Act in respect of two or more children who become entrusted to the care of the individual or the individual's partner within 26 weeks of birth, as part of the same entrustment to care process, the amount of baby bonus in respect of each child is $5,000. For example, if twin babies become entrusted to the care of a foster mother, the foster mother would be entitled to receive an amount of $5,000 in baby bonus for each of the twin children.

New subsection 66(4) provides that, if an individual is eligible for baby bonus under subsection 36(5) as part of the process for adoption by an authorised party, in respect of two or more children who become entrusted to the care of the individual as part of the same adoption process, the amount of baby bonus in respect of each child is $5,000. For example, if a couple adopted two siblings as part of the same adoption process and the children are both under 16 years of age, either member of the couple would be entitled to receive an amount of $5,000 in baby bonus for each of the children.

Shared baby bonus

New subsection 66(5) provides clarification that, if the Secretary has determined (under paragraph 37(3)(b)) the percentage that is to be an individual's percentage of baby bonus in respect of a child, the amount of baby bonus for the individual in respect of that child is that percentage of the amount worked out under subsections 66(1) to (3).

Item 2 omits 'subsection 66(1)' and substitutes 'paragraphs 66(1)(a), (b), (c), (d) and (e) and subsections 66(2), (3) and (4)' in table item 17AD of clause 2 of Schedule 4. This item is consequential to item 1, and makes reference to the provisions in the Family Assistance Act that state the monetary amount of baby bonus that is to be indexed and adjusted under Schedule 4.

Item 3 repeals the note to subclause 3(9) of Schedule 4 and substitutes a new note. The new note provides clarification that the indexation of baby bonus resumes on 1 July 2015.

Amendments to the Family Assistance Administration Act

Claims for baby bonus - time limits

Item 4 omits 'if it is made later than 52 weeks after', and substitutes 'unless it is made before the end of the period of 52 weeks beginning on' in subsection 39(2). This amendment to wording clarifies the policy intent that a baby bonus claim must be made within the period of 52 weeks beginning on the day of the birth of the child or the day the child becomes entrusted to the care of the claimant as part of the process for adoption.

Item 5 omits 'the birth', and substitutes 'the day of the birth' in paragraph 39(2)(a). This amendment clarifies that the claim period for baby bonus in relation to eligibility under any of subsections 36(2) to (4) of the Family Assistance Act begins on the day of the birth of the child.

Item 6 omits 'the time', and substitutes 'the day' in paragraph 39(2)(b). This amendment clarifies that the claim period for baby bonus in relation to eligibility under subsection 36(5) of the Family Assistance Act begins on the day the child becomes entrusted to the care of the claimant as part of the process for adoption.

'Upfront part' of baby bonus

Item 7 repeals paragraphs 47(2A)(b) and (c) and substitutes new paragraphs 47(2A)(b) to (f), which make amendments to the 'upfront part' of the baby bonus so that the baby bonus amount for second and subsequent children will remain at $3,000 until 1 July 2015, at which time it will be indexed in line with Consumer Price Index increases.

New paragraph 47(2A)(b) provides that, if the claimant becomes eligible for baby bonus between 1 September 2012 and 30 June 2013, the upfront part of baby bonus is $846.20.

New paragraph 47(2A)(c) provides that, if the claimant becomes eligible for baby bonus between 1 July 2013 and 30 June 2015 and the amount of baby bonus is the amount applicable under paragraph 66(1)(a), (b), (c) or (d), or subsection 66(2), (3) or (4), of the Family Assistance Act, the upfront part of baby bonus is $846.20.

New paragraph 47(2A)(d) provides that, if the claimant becomes eligible for baby bonus between 1 July 2013 and 30 June 2015 and the amount of baby bonus is the amount applicable under paragraph 66(1)(e) of the Family Assistance Act, the upfront part of baby bonus is $692.40.

New paragraph 47(2A)(e) provides that, if the claimant becomes eligible for baby bonus on or after 1 July 2015 and the amount of baby bonus is the amount applicable under paragraph 66(1)(a), (b), (c) or (d), or subsection 66(2), (3) or (4), of the Family Assistance Act, the amount of the upfront part of baby bonus is worked out using the formula in this paragraph - that is, 16.92 per cent multiplied by the amount of baby bonus the claimant is entitled to.

New paragraph 47(2A)(f) provides that, if the claimant becomes eligible for baby bonus on or after 1 July 2015 and the amount of baby bonus is the amount applicable under paragraph 66(1)(e) of the Family Assistance Act, the amount of the upfront part of baby bonus is worked out using the formula in this paragraph - that is, 23.08 per cent multiplied by the amount of baby bonus the claimant is entitled to.

Item 8 is an application provision. It provides that the amendments made by item 1 apply in relation to individuals who become eligible for baby bonus on or after 1 July 2013.

Item 9 is an application provision. It provides that the amendments made by items 4 to 6 apply in relation to claims for payment of baby bonus that are made on or after the commencement of those items - that is, the day this Act receives the Royal Assent.

Item 10 is a transitional provision. It provides that, in working out the indexed amount for baby bonus on 1 July 2015 under Schedule 4 to the Family Assistance Act, the following applies:

•

the current figure for baby bonus, in relation to the amount specified in paragraph 66(1)(a), (b), (c) or (d), or subsection 66(2), (3) or (4), of that Act, immediately before that day is taken to be $5,000; and

•

the current figure for baby bonus, in relation to the amount specified in paragraph 66(1)(e) of that Act immediately before that day is taken to be $3,000.

Amendments to the Family Assistance and Other Legislation Amendment Act 2012

Item 11 repeals item 6 of Schedule 2 to the Family Assistance and Other Legislation Amendment Act 2012 , which is a transitional provision applying to the indexed amount for baby bonus. New transitional provisions will apply to the amount of baby bonus, as provided for in item 10.