Senate

Revised Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)

Chapter 21 Closing carbon tax compensation to new welfare recipients

Outline of chapter

Schedule 21 to the Bill introduces the following 2016-17 Budget measures:

1.

National Disability Insurance Scheme Savings Fund - abolish the Energy Supplement for all new recipients.

2.

Disability Insurance Scheme Savings Fund - Single Income Family Supplement cessation for new customers.

Background

In the 2016-17 Budget the Government announced the National Disability Insurance Scheme Savings Fund - abolish the Energy Supplement for all new recipients measure.

Parts 1-6 of this Schedule implement this measure by amending the Family Assistance Act, Social Security Act, Social Security Administration Act and Veterans' Entitlements Act.

The amendments made by Parts 1 to 6 of this Schedule to these Acts prevent new recipients of family tax benefit or new holders of seniors health cards from being paid the energy supplement from 20 March 2017. The amendments made in this Schedule also ensure that recipients who are paid the energy supplement with their family tax benefit or seniors health card prior to 20 September 2016 who satisfy the requirements set out in this Schedule will continue to receive the energy supplement with their payment or card from 20 March 2017 onwards.

For family tax benefit recipients and seniors health card holders who first receive the energy supplement on or after 20 September 2016, the energy supplement can only be paid to them until 19 March 2017 and this is subject to the person satisfying the current legislative criteria for receiving the supplement. From 20 March 2017 onwards they can no longer receive the energy supplement.

Part 6 of this Schedule makes consequential amendments to provisions in the Social Security Act and Social Security Administration Act regarding qualification for telephone allowance and the rate of telephone allowance. These amendments are intended to prevent telephone allowance becoming payable to holders of a seniors health card as a result of the cessation of the energy supplement for new card holders.

In the 2016-17 Budget the Government also announced the National Disability Insurance Scheme Savings Fund - Single Income Family Supplement cessation for new customers measure.

Part 7 of this Schedule implements this measure by amending the Family Assistance Act to ensure that from 1 July 2017, the single income family supplement will not be paid to new recipients. Existing recipients may continue to receive the supplement if they remain eligible in accordance with new section 57GDA contained in Part 7 of this Schedule.

The amendments made by Parts 1 to 6 of this Schedule commence on 20 March 2017.

The amendments made by Part 7 of this Schedule commence on 1 July 2017.

Explanation of the changes

Part 1 - Energy supplement under the family assistance law

Amendments to the Family Assistance Act

Item 1 adds a note at the end of subsection 58(2) that explains that paragraph 58(2)(b) does not apply to certain approved care organisations as a result of new subsections 58(2C) and (2D).

Item 2 inserts new subsections (2C) and (2D) into section 58.

New subsection 58(2C) provides that paragraph 58(2)(b), which includes an amount of energy supplement in an approved care organisation's annual rate of family tax benefit, does not apply in relation to an approved care organisation on or after the commencement of this subsection unless the organisation was entitled to be paid family tax benefit in respect of 19 September 2016.

However, new subsection 58(2D) then provides that if the organisation was entitled to be paid family tax benefit in respect of 19 September 2016 and then ceases to be entitled to be paid family tax benefit in respect of a day on or after 20 September 2016 then paragraph 58(2)(b) does not apply, and never again applies, to the organisation from:

•

if the cessation occurred before the commencement of subsection 58(2D)-the start of the day subsection 58(2D) commences; or

•

if the cessation occurred on or after the commencement of subsection 58(2D)-the start of the day of that cessation.

Item 3 inserts new subsection 58A(1A) which provides that an individual cannot make an election to receive energy supplement quarterly under subsection 58A(1) on a day on or after the commencement of subsection 58A(1A) unless energy supplement is used to work out the rate of the individual's family tax benefit in respect of that day.

Item 4 inserts new subsection 58A(3AA) which provides that an election ceases to be in force if disregarding the election, energy supplement would cease to be used to work out the rate of the individual's family tax benefit.

Item 5 inserts an application provision, providing that new subsection 58A(3AA) of the A New Tax System (Family Assistance) Act 1999 , as inserted by this Part, applies on and after the commencement of this item in relation to elections made before, on or after that commencement.

Item 6 amends clause 3 of Schedule 1 to include a reference to new clause 6A of Schedule 1.

Item 7 adds a note at the end of step 1 of the method statement in clause 3 of Schedule 1. This note explains that paragraph (cb) of step 1 of the method statement in clause 3 does not apply to certain individuals as a result of new clause 6A of Schedule 1.

Item 8 adds new clause 6A at the end of Division 1 of Part 2 of Schedule 1. New subclause 6A(1) provides that paragraph (cb) of step 1 of the method statement in clause 3 of Schedule 1 does not apply to an individual, meaning energy supplement is not payable, on or after the commencement of clause 6A unless:

a)

the individual was entitled to be paid family tax benefit in respect of 19 September 2016; and

b)

the individual's Part A rate of family tax benefit in respect of 19 September 2016 was not worked out under Part 3A of Schedule 1.

New subclause 6A(2) then applies to determine when a person ceases to be paid the energy supplement in their rate of family tax benefit. This subclause provides that energy supplement won't be added to the person's rate under paragraph (cb) of step 1 of the method statement in clause 3 of Schedule 1 if:

a)

the individual ceases to be entitled to be paid family tax benefit in respect of a day (the applicable day) on or after 20 September 2016; or

b)

the individual's Part A rate of family tax benefit is worked out under Part 3A of Schedule in respect of a day (the applicable day) on or after 20 September 2016.

New paragraphs 6A(2)(c) and (d) then provide that paragraph (cb) of step 1 of the method statement in clause 3 of Schedule 1 does not apply, and never again applies, to the individual from:

a)

if the applicable day is before the commencement of clause 6A-the start of the day clause 6A commences; or

b)

if the applicable day is on or after the commencement of clause 6A-the start of the applicable day.

Item 9 makes a consequential amendment to clause 24HA of Schedule 1.

Item 10 adds new subclause 24HA(2) at the end of clause 24HA of Schedule 1. The new subclause provides that an individual's above base energy supplement amount for the purposes of method 1 of the maintenance income ceiling test in Subdivision C of Division 5 of Part 2 of Schedule 1 is nil if the person's rate of family tax benefit energy supplement does not include an amount of energy supplement because of new clause 6A.

Item 11 makes a consequential amendment to clause 24RA of Schedule 1.

Item 12 adds new subclause 24RA(2) at the end of clause 24RA of Schedule 1. The new subclause provides that an individual's energy supplement amount for the purposes of method 2 of the maintenance income ceiling test in Subdivision D of Division 5 of Part 2 of Schedule 1 is nil if the person's rate of family tax benefit energy supplement does not include an amount of energy supplement because of new clause 25C.

Item 13 amends clause 25 of Schedule 1 to include a reference to new clause 25C of Schedule 1.

Item 14 adds a note at the end of step 1 of the method statement in clause 25 of Schedule 1. This note explains that paragraph (e) in step 1 of the method statement in clause 25 does not apply to certain individuals as a result of new clause 25C.

Item 15 adds new clause 25C at the end of Division 1 of Part 3 of Schedule 1. New subclause 25C(1) provides that paragraph (e) of step 1 of the method statement in clause 25 of Schedule 1 does not apply to an individual, meaning energy supplement is not payable, on or after the commencement of clause 25C unless:

a)

the individual was entitled to be paid family tax benefit in respect of 19 September 2016; and

b)

the individual's Part A rate of family tax benefit in respect of 19 September 2016 was not worked out under Part 3A of Schedule 1.

New subclause 25C(2) then applies to determine when a person ceases to be paid the energy supplement in their rate of family tax benefit. This subclause provides that energy supplement won't be added to the person's rate under paragraph (e) of step 1 of the method statement in clause 3 of Schedule 1 if:

a)

the individual ceases to be entitled to be paid family tax benefit in respect of a day (the applicable day) on or after 20 September 2016; or

b)

the individual's Part A rate of family tax benefit is worked out under Part 3A of Schedule 1 in respect of a day (the applicable day) on or after 20 September 2016.

New paragraphs 25C(2)(c) and (d) then provide that paragraph (e) of step 1 of the method statement in clause 25 of Schedule 1 does not apply, and never again applies, to the individual from:

a)

if the applicable day is before the commencement of clause 25C-the start of the day clause 25C commences; or

b)

if the applicable day is on or after the commencement of clause 25C-the start of the applicable day.

Item 16 amends subclause 29(1) of Schedule 1 to include a reference to new clause 29AA of Schedule 1.

Item 17 adds a note at the end of subclause 29(1) of Schedule 1. This note explains that paragraph 29(1)(c) of Schedule 1 does not apply to certain individuals as a result of new clause 29AA of Schedule 1.

Item 18 adds a note at the end of step 1 of the method statement in subclause 29(2) of Schedule 1. This note explains that paragraph (c) in step 1 of the method statement in subclause 29(2) does not apply to certain individuals as a result of new clause 29AA of Schedule 1.

Item 19 adds new clause 29AA at the end of Subdivision A of Division 1 of Part 4 of Schedule 1. New subclause 29AA(1) provides that paragraph 29(1)(c) of Schedule 1, or paragraph (c) of step 1 of the method statement in subclause 29(2) of Schedule 1, does not apply to an individual, meaning energy supplement is not payable, on or after the commencement of clause 29AA unless:

a)

the individual was entitled to be paid family tax benefit in respect of 19 September 2016; and

b)

the individual's Part A rate of family tax benefit in respect of 19 September 2016 was not worked out under Part 3A of Schedule 1.

New subclause 29AA(2) then applies to determine when a person ceases to be paid the energy supplement in their rate of family tax benefit. This subclause provides that energy supplement won't be added to the person's rate under paragraph 29(1)(c) of Schedule 1, or paragraph (c) of step 1 of the method statement in subclause 29(2) of Schedule 1 if:

a)

the individual ceases to be entitled to be paid family tax benefit in respect of a day (the applicable day) on or after 20 September 2016; or

b)

the individual's Part A rate of family tax benefit is worked out under Part 3A of Schedule 1 in respect of a day (the applicable day) on or after 20 September 2016.

New paragraphs 29AA(2)(c) and (d) then provide that paragraph 29(1)(c) of Schedule 1, or paragraph (c) of step 1 of the method statement in subclause 29(2) of Schedule 1 does not apply, and never again applies, to the individual from:

a)

if the applicable day is before the commencement of clause 29AA-the start of the day clause 29AA commences; or

b)

if the applicable day is on or after the commencement of clause 29AA-the start of the applicable day.

Item 20 amends subclause 29A(2) of Schedule 1 to include a reference to new clause 29D of Schedule 1.

Item 21 adds a note at the end of subclause 29A(2) of Schedule 1. This note explains that paragraph 29A(2)(c) does not apply to certain individuals as a result of new clause 29D of Schedule 1.

Item 22 adds new clause 29D at the end of Subdivision B of Division 1 of Part 4 of Schedule 1. New subclause 29D(1) provides that paragraph 29A(2)(c) of Schedule 1 does not apply to an individual, meaning energy supplement is not payable, on or after the commencement of clause 29D unless:

a)

the individual was entitled to be paid family tax benefit in respect of 19 September 2016; and

b)

the individual's Part A rate of family tax benefit in respect of 19 September 2016 was not worked out under Part 3A of Schedule 1.

New subclause 29D(2) then applies to determine when a person ceases to be paid the energy supplement in their rate of family tax benefit. This subclause provides that energy supplement won't be added to the person's rate under paragraph 29A(2)(c) of Schedule 1 if:

a)

the individual ceases to be entitled to be paid family tax benefit in respect of a day (the applicable day) on or after 20 September 2016; or

b)

the individual's Part A rate of family tax benefit is worked out under Part 3A of Schedule 1 in respect of a day (the applicable day) on or after 20 September 2016.

New paragraphs 29D(2)(c) and (d) then provide that paragraph 29A(2)(c) of Schedule 1 does not apply, and never again applies, to the individual from:

a)

if the applicable day is before the commencement of clause 29D-the start of the day clause 29D commences; or

b)

if the applicable day is on or after the commencement of clause 29D-the start of the applicable day.

Item 23 adds a note at the end of subclause 31B(1) of Schedule 1 which explains that for certain individuals, energy supplement (Part B) is not to be added in working out the person's Part B rate (see clauses 29AA and 29D in items 18 and 21 respectively).

Item 24 adds a note at the end of subclause 38AA(1) of Schedule 1 which explains that for certain individuals, energy supplement (Part A) is not to be added in working out the person's Part A rate (see clause 6A in item 7).

Item 25 adds a note at the end of subclause 38AF(1) of Schedule 1 which explains that for certain individuals, energy supplement (Part A) is not to be added in working out the person's Part A rate (see clause 25C in item 14).

Part 2 - Energy supplement under the social security law

Amendments to the Social Security Act

Item 36 makes a minor consequential amendment to section 1061U.

Item 37 adds new subsections 1061U(2), (3), (4), (5), (6), (7) and (8).

New subsection 1061U(2) provides that (subject to new subsections 1061U(4), (6) and (8) discussed below), a person can qualify to receive the energy supplement with their seniors health card under subsection 1061U(1) on or after the commencement of subsection 1061U(2) only if on 19 September 2016:

a)

energy supplement with a seniors health card was payable to the person under section 1061UA; or

b)

energy supplement with a seniors health card was payable to the person under section 118PA of the Veterans' Entitlements Act.

New subsection 1061U(3) provides that (subject to new subsection 1061U(8) discussed below), if energy supplement was payable to a seniors health card holder under either section 1061UA or section 118PA of the Veterans' Entitlements Act on 19 September 2016 and then ceases to be payable under either of those sections on or after 20 September 2016 then subsection 1061U(1) does not apply, and never again applies, to the person from:

•

if the cessation occurred before the commencement of subsection 1061U(3) -the start of the day subsection 1061U(3) commences; or

•

if the cessation occurred on or after the commencement of subsection 1061U(3) -the start of the day of that cessation.

New subsection 1061U(4) provides that if:

a)

a person was not qualified for energy supplement with a seniors health card under subsection 1061U(1) on 19 September 2016; and

b)

on 19 September 2016 the person was receiving an income support payment where energy supplement was used to work out the rate of that payment; and

c)

on a day (the cessation day) on or after the commencement of this subsection, the person ceases to be in receipt of any income support payment; and

d)

on the day before the cessation day, the person was receiving an income support payment where energy supplement was used to work out the rate of that payment; and

e)

the person is required to make a claim for a seniors health card in order for such a card to be granted to the person;

a person can become qualified to be paid the energy supplement with their seniors health card under subsection 1061U(1) if the person makes a claim for a seniors health card within the period of 6 weeks beginning on the cessation day.

New subsection 1061U(5) then provides that, subject to subsection 1061U(8) (discussed below), if:

a)

as a result of a claim mentioned in subsection 1061U(4), a seniors health card is issued to a person on a day; and

b)

energy supplement ceases to be payable to the person under section 1061UA on or after that day;

then subsection 1061U(1) of this section does not apply, and never again applies, to the person from the start of the day of that cessation.

New subsection 1061U(6) provides that if:

a)

a person was not qualified to be paid energy supplement with a seniors health card under subsection 1061U(1) on 31 December 2016; and

b)

on that day, the person was receiving a social security pension and an amount of energy supplement was added to the rate of that pension; and

c)

under subsection 1061ZJA(3) or (4), the Secretary must issue a seniors health card to the person;

the person can become qualified to be paid energy supplement under subsection 1061U(1) of this section because of holding that card.

New subsection 1061U(6) applies to a person who is automatically issued a seniors health card under subsections 1061ZJA(3) or (4) as a result of the amendments made by the Social Services Legislation Amendment (Fair and Sustainable Pensions) Act 2015 , which commences on 1 January 2017. A person whose rate of pension becomes nil on 1 January 2017 as a result of the amendments made by that Act will be automatically issued a seniors health card. New subsection 1061(6) ensures that where a person is automatically issued a card and had an amount of energy supplement added to the rate of their pension on 31 December 2016 the person will qualify for the energy supplement with their seniors health card from 1 January 2017.

New subsection 1061U(7) provides that, subject to new subsection 1061U(8) (discussed below), if a person is automatically issued a seniors health card as mentioned in new paragraph 1061U(6)(c) and energy supplement ceases to be payable to the person (under section 1061UA), the person ceases to be qualified to be paid the energy supplement with their seniors health card under subsection 1061U(1) and subsection 1061U(1) does not apply, and never again applies, to the person from:

•

if the cessation occurred before the commencement of subsection 1061U(7)-the start of the day on which subsection 1061U(7) commences; or

•

if the cessation occurred on or after the commencement of subsection 1061U(7)-the start of the day of that cessation.

New subsection 1061U(8) provides that if:

a)

on a day on or after 20 September 2016, the person ceases to hold a seniors health card under the Social Security Administration Act or the Veterans' Entitlements Act; and

b)

on that day, the person receives an income support payment where energy supplement is used to work out the rate of that payment; and

c)

on a day (the cessation day ), on or after the commencement of this subsection the person ceases to be in receipt of any income support payment; and

d)

on the day before the cessation day, the person was receiving an income support payment where energy supplement was used to work out the rate of that payment; and

e)

the person is required to make a claim for a seniors health card in order for such a card to be granted to the person;

the person can become qualified for energy supplement under subsection 1061U(1) only if the person makes a claim for a seniors health card within the period of 6 weeks beginning on the cessation day.

New subsection 1061U(8) allows a person who is paid the energy supplement with their seniors health card on or after 20 September 2016 to move between being the holder of a seniors health card and an income support payment recipient while retaining the energy supplement with the card or payment.

A movement from a seniors health card to an income support payment must occur on the day the person ceases to be the holder the seniors health card. Where the person moves from an income support payment to a seniors health card the person can retain the energy supplement if they claim the seniors health card within the 6 week period beginning on the day the person ceases to be in receipt of any income support payment.

Item 38 is a transitional provision that provides that if:

a)

before 19 September 2016 a person was receiving an income support payment where energy supplement was used to work out the rate of that payment; and

b)

on a day (the cessation day) in the period of 6 weeks ending at the end of 19 September 2016, the person ceased to receive that payment; and

c)

on the day before the cessation day, energy supplement was used to work out the rate of that payment; and

d)

the person makes a claim under the Social Security Administration Act for a seniors health card within the period of 6 weeks beginning on the cessation day; and

e)

the person's claim is granted and the person becomes the holder of a seniors health card; and

f)

the person holds that card immediately before the commencement of this item;

then:

g)

the person can become qualified for energy supplement under subsection 1061U(1) of the Social Security Act (despite subsection 1061U(2) of that Act); and

h)

paragraph 1061U(5)(a) of the Social Security Act applies as if a reference to a claim mentioned in subsection 1061U(4) included a reference to a claim mentioned in this item.

Part 4 - Energy supplement under the Veterans' Entitlements Act

Items 104 and 106 amend section 118P. Section 118P sets out the eligibility criteria for the payment of the energy supplement under Part VIIAD of the Veterans' Entitlements Act.

Subsection 118P(1) provides that an individual is eligible for the energy supplement if:

a)

they are the holder of a seniors health card; and

aa)

aa) either resident in Australia or temporarily absent for a period of less than 6 weeks; and

b)

the person is not receiving any of the following payments:

-

service pension;

-

income support supplement;

-

social security pension or benefit;

-

energy supplement under Part 2.25B of the Social Security Act.

Item 104 inserts new subsections 118P(1A), (1B), (1C), (1D), (1E),(1F) and (1G).

New subsection 118P(1A) provides that subject to new subsections (1C), (1E) and (1G) that subsection 118P(1) will continue to apply to a person on or after the commencement of the amendment if on 19 September 2016:

•

energy supplement was payable to the person under section 118PA; or

•

energy supplement was payable to the person under section 1061UA (the equivalent of section 118PA) of the Social Security Act.

The Note to new subsection 118P(1A) states that the subsection will only continue to apply to a person who satisfies the requirements set out in paragraphs

118P(1)(a) to (b).

The effect of new subsection 118P(1A) is (subject to new subsections 118P(1C), (1E) and (1G) - discussed below) to prevent new seniors health card holders from being paid the energy supplement after 20 March 2017. The amendments also ensure the "grandfathering" of existing seniors health card holders (under both the Veterans' Entitlements Act and the Social Security Act) who are paid the energy supplement on 20 September 2016.

New subsection 118P(1B) provides that (subject to new subsection 118P(1G) - discussed below) if:

•

energy supplement was payable to the person under section 118PA of the Veterans' Entitlements Act or section 1061UA of the Social Security Act on 19 September 2016; and

•

energy supplement ceases to be payable under either of those sections on or after 20 September 2016;

then subsection 118P(1) will not apply, and never again apply to the person from:

a)

if the cessation occurred before the commencement of new subsection 118P(1B) - the day the subsection commences; or

b)

if the cessation occurred on or after the commencement of new subsection 118P(1B) - the day that the cessation occurred.

The effect of subsection 118P(1B) (subject to subsection 118P(1G)) is to determine the date on which a person who has lost eligibility (under section 118PA of the Veterans' Entitlements Act or section 1061UA of the Social Security Act) for the energy supplement on or after 20 September 2016 will cease to be eligible under subsection 118P(1) for the energy supplement.

New subsection 118P(1C) provides that if:

a)

a person was not eligible for energy supplement under subsection 118P(1) on 19 September 2016; and

b)

on 19 September 2016 the person was receiving an income support payment (as defined by the Social Security Act) where energy supplement was used to work out the amount of that payment; and

c)

on a day (the cessation day ) on or after the commencement of subsection 118P(1C), the person ceases to be in receipt of any income support payment (as defined by the Social Security Act); and

d)

on the day before the cessation day, the person was receiving an income support payment (as defined by the Social Security Act) where energy supplement was used to work out the amount of that payment; and

e)

the person is required to make a claim for a seniors health card for it to be issued to the person;

the person can become eligible for energy supplement under subsection 118P(1) only if the claim for the seniors health card was made within a period of 6 weeks that begins on cessation day.

New subsection 118P(1C) allows a person who is paid the energy supplement with their income support payment on or after the commencement of the subsection to move between being the holder of a seniors health card and an income support payment recipient while retaining the energy supplement with the card or payment.

A movement from a seniors health card to an income support payment must occur on the day the person ceases to be the holder of the seniors health card. Where the person moves from an income support payment to a seniors health card the person can retain the energy supplement if they claim within the 6 week period beginning on the day the person ceases to be in receipt of any income support payment.

New subsection 118P(1D) provides, subject to subsection 118P(1G) that if:

a)

a person becomes the holder of a seniors health card because of a claim made under new subsection 118P(1C); and

b)

energy supplement ceases to be payable under section 118PA on or after that day;

then subsection 118P(1) will not apply, and never again apply to the person from the day that the cessation occurred.

The effect of subsection 118P(1D) is to make it clear that a person will lose eligibility for the energy supplement which has been obtained under subsection 118P(1C) on a day on or after 20 September 2016 if the energy supplement is not payable under section 118PA on that day.

New subsection 118P(1E) provides that if:

a)

a person was not eligible for energy supplement under subsection 118P(1) on 31 December 2016; and

b)

on that day the person was receiving a service pension where energy supplement was used to work out the amount of that payment; and

c)

under subsection 118XA(3) the Commission must make a determination that under section 118ZG the person is entitled to a seniors health card (section 118XA of the Veterans' Entitlement Act modifies the eligibility criteria for the seniors health card to create automatic eligibility for pensioners affected by changes to the assets test on 1 January 2017);

the person may become eligible under subsection 118P(1) for energy supplement because they hold a seniors health card.

New subsection 118P(1E) applies to a person who is automatically issued a seniors health card under section 118XA as a result of the amendments made by the Social Services Legislation Amendment (Fair and Sustainable Pensions) Act 2015 , which commences on 1 January 2017.

A person whose rate of service pension becomes nil on 1 January 2017 as a result of the amendments made by the above Act will be automatically issued a seniors health card. Subsection 118P(1E) ensures that where the person is automatically issued a card and had an amount of energy supplement added to the rate of their pension on 31 December 2016 the person will qualify for the energy supplement with their seniors health card from 1 January 2017.

New subsection 118P(1F) is applicable to persons who are issued with a seniors health card under new subsection 118P(1E) and provides, subject to subsection 118P(1G) that if:

a)

as described in new paragraph 118P(1E)(c), a person becomes the holder of a seniors health card, on a day; and

b)

energy supplement ceases to be payable under section 118PA on or after that day;

then subsection 118P(1) will not apply, and never again apply to the person from:

a)

if the cessation occurred before the commencement of subsection 118P(1F) - the day the subsection commences; or

b)

if the cessation occurred on or after the commencement of subsection 118P(1F) - the day that the cessation occurred.

The effect of subsection 118P(1F) (subject to subsection 118P(1G)) is to determine the date on which a person who has lost eligibility under section 118PA for the energy supplement on or after 20 September 2016 will cease to be eligible under subsection 118P(1) for the energy supplement.

New subsection 118P(1G) provides that if:

a)

on a day after on or after 20 September 2016, a person ceased to be the holder of a seniors health card under the Veterans' Entitlements Act or the Social Security Act; and

b)

on that day the person was receiving an income support payment (as defined by the Social Security Act) where energy supplement was used to work out the amount of that payment; and

c)

on a day (the cessation day ) on or after the commencement of subsection 118P(1G), the person ceases to be in receipt of any income support payment (as defined by the Social Security Act); and

d)

on the day before the cessation day, the person was receiving an income support payment (as defined by the Social Security Act) where energy supplement was used to work out the amount of that payment; and

e)

the person is required to make a claim for a seniors health card in order for it to be issued to the person;

the person can become eligible for energy supplement under subsection 118P(1) only if the claim for the seniors health card was made within a period of 6 weeks that begins on cessation day (set out in paragraph 118(1G)(c)).

New subsection 118P(1G) allows a person who is paid the energy supplement with their seniors health card on or after the commencement of the subsection to move between being the holder of a seniors health card and an income support payment recipient while retaining the energy supplement with the card or payment.

A movement from a seniors health card to an income support payment must occur on the day the person ceases to be the holder the seniors health card. Where the person moves from an income support payment to a seniors health card the person can retain the energy supplement if they claim within the 6 week period beginning on the day the person ceases to be in receipt of any income support payment.

Item 106 inserts new subsections 118P(4) and (5).

New subsection 118P(4) ensures that certain persons will retain eligibility for energy supplement under section 118P despite an absence from Australia of greater than 6 weeks but not exceeding 19 weeks.

If the person returns to Australia after an absence of greater than 6 weeks but less than 19 weeks and they hold a seniors health card or a gold card on the day before the person returns to Australia, then the person will be eligible for energy supplement for the period beginning at the end of the 6 week period of absence if they meet the all of the requirements in subsection 118P(4).

For subsection 118P(4) to apply energy supplement must be payable to the person under section 118PA on 19 September 2016.

Further to this, subsection 118P(4) will only apply if either:

a)

the person is absent from Australia on 19 September 2016 and has been so for a continuous period not exceeding 6 weeks; or

b)

the person leaves Australia on a day on or after 20 September 2016 and, on the day before so leaving, the person was receiving energy supplement under section 118PA.

New subsection 118P(5) provides that new subsection 118P(4) will not limit section 118PB which sets out the rates of energy supplement. The Note to subsection 118P(5) states that subsection 118PB(2) provides that there is no daily rate of energy supplement for a person whose period of absence exceeds 6 weeks.

Item 107 inserts a transitional provision providing that if:

a)

before 19 September 2016 a person was in receipt of an income support payment (within the meaning of the Social Security Act) where energy supplement was included in the payment; and

b)

a person ceased to receive that payment on a day (the cessation day ) in the period of 6 weeks ending at the end of 19 September 2016; and

c)

on the day before cessation day, energy supplement was used to work out the amount of that income support payment; and

d)

the person make a claim for a seniors health card under the Veterans Entitlements Act within a period of 6 weeks beginning on the cessation day ; and

e)

the claim is granted and the person becomes the holder of a seniors health card; and

f)

the card is held by that person immediately before the commencement of this transitional provision;

then:

g)

the person can become eligible for energy supplement under subsection 118P(1) if the person satisfies paragraphs 118P(1)(a) to (b) (despite new subsection 118P(1A)); and

h)

new paragraph 118P(1D)(a) is applicable on the basis that the reference to a claim mentioned in subsection 118P(1C) included the reference to claim subject to this application provision.

Part 6 - Telephone allowance

Amendments to the Social Security Act

Item 125 amends subparagraph 17(1)(l)(ii) to omit the words 'other than a telephone allowance payable to the holder of a seniors health card' from the definition of compensation affected payment in section 17. This amendment reflects the repeal of subsection 1061Q(4A).

Item 126 repeals subsection 1061Q(4A), so that holding a seniors health card will not resulting in qualification for telephone allowance. This maintains existing arrangements despite the repeal of energy supplement because paragraph 1061R(d) currently prevents telephone allowance being payable to a person where the person receives the energy supplement.

Item 127 amends subsection 1061SA(1) by repealing the cell in item 10, column 2 of that subsection and substituting a new cell as a consequence of the repeal of subsection 1061Q(4A) in item 126..

Items 128 repeals paragraphs 1061SB(2)(a) and (b). This amendment is made as a consequence of the repeal of subsection 1061Q(4A) in item 126.

Amendments to the Social Security Administration Act

Item 129 repeals the definition of telephone allowance payday in subsection 48(4) and substitutes a new definition that omits those parts of subsection 48(4) that referred to subsection 1061Q(4A) of the Social Security Act consequential upon item 126.

Item 130 repeals the definition of working day in subsection 48(4). This change is a consequence of the amendments made by item 129.

Item 131 contains an application provision for the amendments made by this Part.

Sub-item 131(1) provides that the repeal of subsection 1061Q(4A) of the Social Security Act made by this Part applies in relation to working out if a person is qualified for a telephone allowance on a telephone allowance payday occurring on or after the commencement of this item.

Sub-item 131(2) provides that the amendments to sections 1061SA and 1061SB of the Social Security Act made by this Part apply in relation to working out the rate of telephone allowance for a telephone allowance payday occurring on or after the commencement of this item.

Part 7-Single income family supplement

Amendments to the Family Assistance Act

Item 132 adds a note at the end of subsection 57G(1) regarding new section 57GDA.

Item 133 adds new section 57GDA at the end of Subdivision A of Division 6 of Part 3.

New subsection 57GDA(1) provides that section 57G does not apply to an individual on or after the commencement of section 57GDA unless the individual was eligible for single income family supplement in respect of the day before that commencement.

Section 57G sets out the circumstances in which a person is eligible for single income family supplement.

New subsection 57GDA(2) provides that section 57G does not apply, and never again applies, to the individual from the start of the first day on or after the commencement of section 57GDA on which the individual ceases to be eligible for single income family supplement. The effect of new subsection 57GDA(2) is that even if a person is eligible for single income family supplement on the day before the commencement of section 57GDA, any subsequent loss of eligibility will mean the person can never again be eligible for single income family supplement.

New subsection 57GDA(3) provides for ongoing eligibility for single income family supplement for a person who is required to make a past period claim.

This subsection requires the person to be continuously eligible for single income family supplement but also requires that they continue to claim the supplement for the income year ending on the day before commencement and every subsequent income year in accordance with the timeframe in section 65KD of the Family Assistance Administration Act in order to remain eligible.

Section 65KD of the Family Assistance Administration Act requires a person to claim single income family supplement by the end of the year following the income year to which the claim relates. If a person fails to claim the supplement within this timeframe and has not been granted an extension of time due to special circumstances under subparagraph 65KD(2)(b)(ii) of the Family Assistance Administration Act then the person will never again be able to claim single income family supplement.

For example, a claim for the single income family supplement for the 2016-17 income year must be made by the end of the 2017-18 income year. If a person is eligible to be paid the supplement for the entire 2016-17 income year but fails to claim by the end of the 2017-18 income year (and a special circumstances extension has not been granted) the person can never be eligible for the supplement again under section 57G.

If the person claims in time for the 2016-17 income year but then fails to claim in time for the 2017-18 income year because they fail to make a claim by the end of the 2018-19 income year, the person can never be eligible for the supplement again under section 57G and cannot claim the supplement for the 2018-19 income year.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Closing carbon tax compensation to new welfare recipients

This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview

This Schedule closes payment of the Energy Supplement (ES) to new family tax benefit recipients and concession card holders from 20 March 2017. People who receive the ES on 19 September 2016 retain access to it for so long as they have continuous entitlement to their ES-attracting payment or card on and after that date. People who start, or who do not have continuous entitlement, to receive their Energy Supplement-attracting family tax benefit payment or card between 20 September 2016 and 19 March 2017 will have their payment increased by the amount of the ES but only for those days that both fall within that period and for which they are entitled to it.

This Schedule also amends the A New Tax System (Family Assistance) Act 1999 to cease the Single Income Family Supplement (SIFS) to new entrants from 1 July 2017, while introducing grandfathering arrangements for all families eligible for SIFS as at 30 June 2017 who then continuously remain eligible and entitled to the payment.

The SIFS is a non-indexed payment of up to $300 per year, paid to individuals with a qualifying dependent child, where primary earner income is between $68,000 and $150,000, and secondary income (if any) is less than $18,000. SIFS is paid after an entitlement year after an individual's family income is reconciled.

The ES (which was originally called the Clean Energy Supplement) and SIFS were introduced on 20 March 2013 to compensate people for the introduction of the carbon tax. As the carbon tax was repealed from 1 July 2014, there is no longer a need to provide this compensation.

Human rights implications

The Schedule engages the following human rights:

•

The right of everyone to social security in Article 9, and the right of everyone to an adequate standard of living for an individual and their family, including adequate food, clothing and housing, and the continuous improvement of living conditions in Article 11of the International Covenant on Economic, Social and Cultural Rights; and

•

The rights of the child in Article 26 of the Convention on the Rights of the Child.

The right of everyone to social security and an adequate standard of living

The legitimate objective of removing the ES and SIFS from eligible payments to new recipients is to contribute to the ongoing sustainability of social security, and in doing so, contribute funding the National Disability Insurance Scheme (NDIS). Funding the NDIS is essential to support a better life for hundreds of thousands of Australians with a significant and permanent disability and their families and carers. The pursuit of this objective promotes human rights by supporting the Convention on the Rights of Persons with Disabilities.

The engagement of this Schedule with the right of everyone to social security is reasonable because the Household Assistance Package, which includes the ES and SIFS, was brought in to provide compensation for the carbon tax which no longer exists.

Closing the ES does not affect the range of payments that previously attracted it in any other way, maintaining the general integrity of social security.

Further, the grandfathering provisions in the schedule mean that no one on a payment or entitlement that attracts the ES continuously from 19 September 2016 will be in a worse position financially as they will retain the ES as part of their payment. Grandfathering arrangements will also be introduced for all families who, on 30 June 2017, are eligible and entitled to receive SIFS and then continuously remain eligible and entitled to receive the payment.

This option to include these grandfathering provisions was the least restrictive alternative out of those originally proposed.

SIFS is a small end of year payment paid to families with a main income earner who earns between $68,000 and $150,000. Consequently, the personal means of these families should ensure their standard of living will not be negatively impacted by ceasing to be entitled to apply for the payment.

The rights of the child

To the extent that ceasing the ES and SIFS limits the rights of the child to social security, this is reasonable and proportionate. This Schedule does not impact how the Australian Government supports low and middle income families with dependent children and young people through the payment of family tax benefit and youth support payments.

Family tax benefit Part A and youth support payments are per-child payments that have the primary objective to ensure all children and young people have access to a basic acceptable standard of living. Family tax benefit Part B will continue to provide additional assistance to single parent families, non-parent carers and some couple families with one main income earner.

Conclusion

This Schedule is compatible with human rights because to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate and people are otherwise provided for.