House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Social Services, the Hon Dan Tehan MP)

Chapter 6 - Financial matters

Part 6-1 - Liability for funding

Division 1 - Simplified outline of this Part

Clause 148 provides a simplified outline of Part 6-1.

Division 2 - Liability of participating institutions for funding contribution

The Scheme is intended to operate on a responsible entity pays basis as recommended by the Royal Commission. Division 2 sets out how funding contribution under the Scheme will be determined and collected by the Operator in order to achieve that objective. As the Commonwealth will be expending money that will be recovered from participating institutions in arrears, Division 2 also sets out late payment penalties and recovery mechanisms. It will be possible for the Operator to waive a funding contribution and late payment penalty in exceptional circumstances, which might arise where, for example, recovery would cause a participating institution that is a charitable organisation to cease operating. Where a participating institution applies for the waiver of funding contribution and late payment penalty and the Operator does not waive the amount owing, the affected institution may apply to have that decision reviewed internally.

Clause 149 sets out liability for funding contribution under the Scheme.

Subclause 149(1) provides that if in a quarter a person becomes entitled to redress for abuse that person suffered, each participating institution that is determined by the Operator under paragraph 29(2)(b) to be responsible for the abuse is liable to pay funding contribution for that quarter.

Note 1 clarifies that if the responsible institution is a defunct institution, its representative will be liable pay the funding contribution (see clause 123).

Note 2 clarifies that if the responsible institution is a defunct institution, its representative instead will be jointly and severally liable with the institution to pay the funding contribution (see clause 131).

Note 3 clarifies that if the responsible institution is a member of a participating group, the representative for the group will be jointly and severally liable with the institution to pay the funding contribution (see clause 141).

Subclause 149(2) defines a quarter as a period of 3 months beginning on 1 July, 1 October, 1 January or 1 April in any year.

Subclause 149(3) provides that subclause 149(1) does not apply to a Commonwealth institution.

Subclause 149(4) states that the rules may provide for the application of Part 6-1 to a Commonwealth institution. This will enable the rules to set out arrangements for the Commonwealth to allocate funding contributions if that becomes necessary.

Clause 150 defines funding contribution for a participating institution for a quarter. The funding contribution consists of the redress element for the institution for a quarter and the Scheme administration element for the institution for a quarter.

The note to this clause directs the reader to paragraph 29(2)(i) which provides that if the Operator determines that a participating government institution is the funder of last resort for defunct institution in relation to abuse of a person, the government institution will be liable for the defunct institution's (hypothetical) share of the costs of providing redress to the person. The note to this clause directs the reader to clause 165. Clause 165 outlines how the redress payment, counselling and psychological component, and Scheme administration costs are to be calculated when the Operator has determined under paragraph 29(2)(i) that a participating government institution is the funder of last resort for a defunct institution.

Clause 151 defines the redress element of funding contribution for a participating institution for a quarter. Clause 151 specifies that the redress element is the amount equal to the sum of the amount of the institution's share of the costs of the redress payment and the amount of the institution's share of the costs of the counselling and psychological component of redress for the quarter, for each person who is entitled to redress.

The note to this clause directs the reader to paragraphs 29(2)(c) and 29(2)(d). Paragraph 29(2)(c) provides for the Operator to determine the amount of the redress payment and the amount of each responsible institution's share of the cost of a redress payment. Paragraph 29(2)(d) provides for the Operator to determine the amount of the counselling and psychological component of redress and the amount of each responsible institution's share of the costs of that component.

Internal review is not available for this decision. By agreeing to participate in the Scheme a participating institution accepts that the Operator will make determinations in relation to the redress payment and the counselling and psychological component they are required to pay. Each participating institution is aware from when they agree to participate in the Scheme that the maximum redress payment is capped at $150,000 and the counselling and psychological component of redress may consist of either access to counselling and psychological services or a payment, depending on the participating State where the applicant lives at the time of their application.

Clause 152 defines the scheme administration element of funding contribution for a participating institution for a quarter.

Subclause 152(1) specifies that the Scheme administration element is the amount equal to the participating institution's share of the administration of the Scheme for the quarter.

Subclause 152(2) provides that for subclause 152(1), the Operator must determine an institution's contribution to the costs of the administration of the Scheme for a quarter, in accordance with any requirements prescribed by rules.

Internal review is not available for this decision. By agreeing to participate in the Scheme a participating institution accepts that the Operator will make determinations in relation to the administration costs they are required to contribute. The Scheme administration cost of providing redress for the abuse of each person for which an institution is responsible will be determined as a proportionate share of the total amount of redress paid to each person.

Clause 153 sets out when funding contribution is due for payment. Funding contribution payable by a participating institution is due and payable on a business day specified in a notice that the Operator gives to the participating institution. The business day specified in the notice must be 30 or more days after the date of the notice.

Clause 154 outlines when a late payment penalty will be due in respect of any funding contribution payable by a participating institution.

Subclause 154(1) provides that where funding contribution payable by a participating institution remains unpaid at the start of a calendar month after it became due for payment, the institution is liable to pay the Commonwealth a penalty for that calendar month. The penalty is worked out by multiplying the amount of the unpaid funding contribution (as at the start of the calendar month) by 0.1 divided by 12.

Subclause 154(2) provides that a late payment penalty for a calendar month is due and payable at the end of the calendar month.

Subclause 154(3) allows the Operator to defer the payment of a late payment penalty. In order to defer the payment of a late payment penalty the Operator must give a written notice to the participating institution that specifies a later day for the late payment penalty to be paid. Such a notice may be issued before, on or after the day on which the late payment penalty was originally due and payable and is taken to have effect, and have always had effect, according to its terms.

Example:

A participating non-government institution of a Territory was required to pay funding contribution in May, and the amount remained unpaid in June. As a result, a late payment penalty would apply. If the amount due to be paid was $50,000, that amount would be multiplied by 0.1, and divided by 12. Therefore, the late payment penalty would be $416.66, and would be due by the end of June, unless the Operator of the Scheme specified a later day that the penalty could be paid.

Clause 155 provides that funding contributions and late payment penalties are payable to the Operator on behalf of the Commonwealth.

Clause 156 enables funding contributions and late payment penalties to be waived in exceptional circumstances.

Subclause 156(1) provides that the Operator may waive the payment of the whole or part of funding contribution or a late payment penalty that is owed by a participating institution. The Operator must be satisfied that there are exceptional circumstances justifying the waiver.

Subclause 156(2) makes it clear that the Operator may grant a waiver on his or her own initiative or following a written application by a person (made on behalf of the participating institution). The application must be in the approved form.

Clause 157 provides for the review of decisions under clause 156 relating to the waiver of funding contribution (in whole or part) or late payment penalties.

Subclause 157(1) allows a participating institution that is affected by, and dissatisfied with a decision of the Operator under clause 156 (about a request to waive the payment of funding contribution (in whole or a part) or late payment penalty), to request the Operator reconsider the decision.

An internal review is a quick and inexpensive means of re-examining decisions. Clause 156 only provides for the waiver of the payment of funding contribution or late payment penalty in exceptional circumstances. The internal review permitted under clause 156 relates only to redress components and scheme administration components participating institutions were aware they would be liable for before agreeing to participate in the Scheme.

A waiver of funding contribution would result in the Commonwealth paying the redress component for the participating institution. This would undermine the policy that the responsible institution should pay the cost of providing redress to a person. The requirement for exceptional circumstances demonstrates that in most circumstances funding contributions and late payment penalties must be paid.

Subclause 157(2) provides that a request for reconsideration must be made by notice to the Operator in the approved form. The request must be made within 21 days after the day of the notice of the decision or within a further period as allowed by the Operator. The request must set out the reasons for making the request.

Subclause 157(3) requires the Operator to review the decision after receiving the request. The Operator can also cause the decision to be reviewed by another person that has been delegated power under subclause 157(3). That person must not have been involved in making the original decision.

Subclause 157(4) defines the review period as a period of 30 business days after receiving the request, or such longer period as is determined by the Operator in writing. Within the review period the Operator, or other person reviewing the decision, must reconsider the decision and either confirm, revoke or vary the decision.

Subclause 157(5) outlines what occurs in circumstances where the Operator or person reviewing the decision does not confirm, revoke or vary the decision within the review period. In such circumstances, the original decision will be taken to be confirmed immediately after the review period ends.

Subclause 157(6) provides that the person reviewing the decision must give written notice of the outcome of the review decision to the participating institution that made the request under subclause 157(1). The written notice must set out the results of the reconsideration and the reasons for the decision.

It was considered appropriate to make decisions on waiving funding contributions and late payment fees reviewable because these are decisions that directly affect a participating institution and their ability to effectively participate in the Scheme.

Example:

Institution A is given a notice from the Operator on 10 October 2018, which states that the institution's funding contribution for the quarter that commenced on 1 July 2018 comprises:

•

a redress component of $200,000; and

•

a Scheme administration component of $20,000.

The notice states that funding contribution is due and payable on 12 November 2018. Institution A pays $20,000 on 12 November 2018 and $200,000 remains unpaid on 1 December 2018. Institution A is liable to pay a penalty of $1666.66 for December 2018, which is due and payable on 31 December 2018.

Institution A made an application for a waiver of the late payment penalty in the approved form. Institution A stated that they were late to pay their redress component for the quarter because the staff member assigned with the duty of paying the contribution was on holiday. The Operator was not satisfied that this was exceptional circumstances and notified Institution A that their application was unsuccessful.

Institution A subsequently made a request for reconsideration to the Operator. A delegate of the Operator reviewed the decision13 days after receiving the request (within the 30 business day period under subclause 157(4)) and provided a notice in writing to Institution A that the decision was confirmed, along with reasons for that decision.

Clause 158 provides for the liability of corporate State or Territory institutions for funding contribution. If a State institution or a Territory institution is a body corporate that is taken to have agreed to participate in the Scheme (see subclause 115(5)) and the imposition of liability on the institution to pay funding contribution would impermissibly impose taxation on the institution or acquire property of the institution otherwise than on just terms then the liability is taken to be imposed on the relevant State or Territory.

Division 3 - Liability of the Commonwealth for counselling and psychological services contribution

Clause 159 provides that the Commonwealth is liable to pay counselling and psychological services contribution to a participating jurisdiction, for a quarter, where the jurisdiction is a declared provider of counselling and psychological services under the Scheme and it is required under paragraph 51(2)(b) to provide counselling and psychological services to a person.

Clause 160 defines counselling and psychological services contribution. The counselling and psychological services contribution, for a participating jurisdiction for a quarter, is the amount equal to the sum of the amounts of the counselling and psychological components of redress for each person that the jurisdiction becomes required to provide counselling and psychological services to under paragraph 51(2)(b) in the quarter.

Division 4 - Appropriation

Clause 161 provides that the Consolidated Revenue Fund is appropriated to the extent necessary for the purposes of the payment or discharge of the costs incurred by the Commonwealth in making the following payments, that is, redress payments, counselling and psychological services payments and counselling and psychological services contribution.

Part 6-2 - Funders of last resort

Division 1 - Simplified outline of this Part

Clause 162 provides a simplified outline of Part 6-2.

Division 2 - Funders of last resort

Division 2 sets out how funders of last resort will operate under the Scheme. In some circumstances there may be no responsible participating institution for a particular instance of abuse because the relevant institution no longer exists. Where there is an appropriate level of shared responsibility, it will be open to a participating government institution to step in to meet the cost of providing redress for survivors of that abuse. Division 2 provides the mechanism for the Operator to determine that a government institution is the funder of last resort for a defunct institution in relation to abuse of a person. The determination will be made under paragraph 29(2)(i).

A defunct institution for the purposes of this Division is not a participating defunct institution (which is set out in clause 117). While a participating defunct institution has a representative and is 'participating' in the Scheme, a defunct institution in this Division can only have a determination made in relation to it if it is listed for a participating jurisdiction (that is, a jurisdiction agrees to being the funder of last resort for the defunct institution's share of redress, where applicable).

Example:

A now-defunct orphanage does not have a representative and is not declared a participating institution. However, it is listed for a participating jurisdiction. This means that funder of last resort obligations will arise in relation to that jurisdiction, where a government institution from that jurisdiction is equally responsible with the orphanage for abuse within the scope of the Scheme.

Clause 163 provides that a participating government institution will be the funder of last resort for a defunct institution in relation to the abuse of a person if a determination of the Operator to that effect is in force under paragraph 29(2)(i).

The note to this clause provides that the Operator can only make that determination if the participating government institution and defunct institution are equally responsible for the abuse and the defunct institution is listed for the jurisdiction which the government institution belongs to.

Example:

A participating government institution may be a funder of last resort in a case where: Person A was abused at a sporting club by a club employee, when they were taken to that facility as part of an Australian Defence Force cadets program. In this case, the participating government institution and the sporting club may be equally responsible entities, but the sporting club is defunct and unable to pay redress. Therefore, the Operator may make a determination that the participating government institution is a funder of last resort, making the participating government institution liable for what would have been the defunct institution's share of the costs of providing redress to the person in relation to the abuse. The determination may only be made if the participating government institution and defunct institution are equally responsible and the participating government institution has agreed to be the funder of last resort for the defunct intuition.

Clause 164 sets out how a defunct institution is listed.

Subclause 164(1) provides that a defunct institution is listed for a participating jurisdiction if the defunct institution is a non-government institution that is not a participating institution and a declaration that the defunct institution is listed for the jurisdiction is in force under subclause 164(2).

Subclause 164(2) provides for the declaration that a defunct institution is listed for one or more participating jurisdictions by the Minister, in the form of a notifiable instrument.

The note to this subclause provides that a defunct institution may be identified by name, by inclusion in a particular class, or in any other way.

The declaration to provide that a defunct institution is listed for one or more participating jurisdictions will ensure that each participating jurisdiction to the Scheme will have a list of defunct institutions that operated in the relevant jurisdiction. The Operator will be better able to identify if the person (the applicant to the Scheme) was placed in a defunct institution in more than one participating jurisdiction. This will make it easier for the Operator to identify instances where equal responsibility of a participating jurisdiction with a defunct institution has occurred. This will facilitate each participating jurisdiction to determine whether it should be the funder of last resort for the defunct institution (paragraph 29(2)(i)) or should be taken to be the funder of last resort (clause 163).

Subclause 164(3) provides that the Minister must not make a declaration under subclause 164(2) unless the Minister is satisfied that the relevant jurisdiction (the Commonwealth or a participating Territory) has agreed to the defunct institution being listed for the jurisdiction, in the way (if any) prescribed by the rules.

Subclause 164(4) provides that the Minister must not make a declaration under subclause 164(2) unless the Minister is satisfied that a participating State has agreed to the defunct institution being listed for the State, in the way provided for in the State's referral Act or adoption Act.

Subclause 164(5) allows the Minister to vary or revoke a declaration made under subclause 164(2) by notifiable instrument.

Subclause 164(6) specifies that if a declaration is made under subclause 164(2) that a defunct institution is listed for the Commonwealth or a participating Territory and the jurisdiction withdraws its agreement, in the way (if any) prescribed by the rules, to the defunct institution being listed for the jurisdiction, then as soon as practicable, the Minster must vary or revoke the declaration by notifiable instrument so that the defunct institution is no longer listed for the jurisdiction.

Subclause 164(7) specifies that if a declaration is made under subclause 164(2) that a defunct institution is listed for a participating State and the State withdraws its agreement, in a way provided for in the State's referral Act or adoption Act, to the defunct institution being listed for the State, then as soon as practicable, the Minster must vary or revoke the declaration by notifiable instrument so that the defunct institution is no longer listed for the State.

Division 3 - Special rules for funder of last resort cases

Clause 165 sets out the special rules for funder of last resort cases.

Subclause 165(1) provides that if a determination made by the Operator under paragraph 29(2)(i) that a participating government institution is equally responsible with a defunct institution for abuse and the government institution is the funder of last resort for the defunct institution in relation to the abuse, then the government institution is liable (in accordance with clause 165) for what the defunct institution would have been liable to pay in relation to providing redress to the person had the defunct institution been a participating institution.

Subclause 165(2) sets out what the Operator must do when determining the amount of the redress payment for the person and the amount of the government institution's share of the costs of that payment under paragraph 29(2)(c).

Paragraph 165(2)(a) requires the Operator to apply subclause 30(2) as if the defunct institution were also a liable institution in relation to the abuse.

Paragraph 165(2)(b) requires the Operator to add the amount worked out under subclause 30(2) (as applying because of paragraph 30(2)(a)) as the amount of the defunct institution's share of the costs of the redress payment to the amount that, apart from this section, would have otherwise been the government institution's share of the costs of the redress payment.

Subclause 165(3) sets out what the Operator must do when determining, under paragraph 29(2)(d), the amount of the government institution's share of the costs of providing the counselling and psychological component of redress for the person.

Paragraph 165(3)(a) requires the Operator to determine, in accordance with clause 31, the proportion of the defunct institution's share of the cost, as if the defunct institution were also a responsible institution.

Paragraph 165(3)(b) requires the Operator to add the proportion from paragraph 165(3)(a) to the proportion that, apart from this section, would have otherwise been the proportion of the government institution's share of that cost.

Subclause 165(4) sets out what the Operator must do when determining the government institution's contribution to the costs of the administration of the Scheme for a quarter, under subclause 152(2).

Paragraph 165(4)(a) requires the Operator to determine the amount of the defunct institution's contribution to those costs, as if the defunct institution were a participating institution.

Paragraph 165(4)(b) requires the Operator to add that amount to what, apart from this clause, would have otherwise been the government institution's contribution to those costs.

Part 6-3 - Debt recovery

Division 1 - Simplified outline of this Part

Clause 166 provides a simplified outline of Part 6-3.

Division 2 - Debt recovery

Clause 167 sets out the recovery of amounts, other than funding contribution and late payment penalty. Subclause 167(1) provides that, if an amount has been paid to a person or an institution (the recipient) under this Bill, the amount is a debt due to the Commonwealth only to the extent that clause 167 expressly provides that it is.

Subclause 167(2) provides that if an amount paid to the recipient, should not have been paid in the circumstances set out in this subclause, then the amount paid, or the amount of the excess, is a debt due to the Commonwealth by the recipient. The circumstances are:

(a)

the amount was paid to the wrong person; or

(b)

the amount exceeds the amount payable to the recipient.

Example:

Person A accidently provides incorrect bank details in their application form, and Person B (who has not applied for redress) is accidently paid the redress payment intended to be paid to Person A. The Commonwealth can raise a debt from Person B, equal to the sum of the redress payment that was intended to be paid to Person A.

Subclause 167(3) provides that if an amount paid to the recipient was paid wholly or partly because of a false or misleading statement, or a misrepresentation, by the recipient or another person, then an amount equal to so much of the amount paid that is attributable to the false or misleading statement, or the misrepresentation, is a debt due to the Commonwealth by the recipient.

Example:

Person A applies for redress and is made an offer of redress, which is accepted and paid. However, one month later, information is made available to the Scheme that contradicts the information made in Person A's application, and that information confirms that the person is not in fact eligible for redress. The Commonwealth can raise a debt from Person A, equal to the sum of the redress payment that was paid to them.

Subclause 167(4) provides that a debt due to the Commonwealth will arise where the recipient was required to notify the Operator about a matter under clause 181, the recipient failed to comply and the amount that was paid to the recipient would not have been payable had the Operator been notified as required. The debt due to the Commonwealth will be an amount equal to so much of the amount paid as is attributable to the failure to comply with clause 181.

Subclause 167(5) provides that the debt due by the recipient arises at the time the amount was paid to the recipient.

Clause 168 provides that funding contribution or late payment penalty that is due and payable by the institution or a person may be recovered by the Commonwealth as debts due to the Commonwealth.

The note to this clause directs the reader to clauses 123, 131 and 141 for cases where a person may be liable to pay funding contribution.

Clause 169 provides that a debt due to the Commonwealth under this Part is recoverable by the Commonwealth in a court of competent jurisdiction. This will enable legal proceedings to be commenced in the most appropriate jurisdiction and allow the matter to be heard at the lowest level necessary.

Clause 170 provides for the Operator to enter into an arrangement for the payment of a debt.

Subclause 170(1) enables the Operator to enter into an arrangement with a person or institution under which the person or institution is to pay a debt owed to the Commonwealth under this Part, or the outstanding amount of such a debt in a way set out in the arrangement, for example by means of instalments.

Subclause 170(2) provides that the arrangement entered into under subclause 170(1) has effect, or is taken to have effect, on and after the day specified in the arrangement as the day the arrangement commences (whether that day is the day the arrangement is entered into or earlier or later day). If the arrangement does not specify a day (as mentioned in subclause 170(2)), it has effect on and after the day the arrangement is entered into (subclause 170(3)).

Subclause 170(4) provides that the Operator may terminate or alter an arrangement made under subclause 170(1) at the request of the person or institution, after giving 28 days' notice to the person or institution of the proposed termination or alteration, or without notice where the Operator is satisfied that the person or institution has failed to disclose material information about the person's or institution's true capacity to repay the debt.

Clause 171 provides for the recovery of amounts directly from financial institutions where a payment was made in error. Subclause 171(1) applies if an amount is paid under this Bill to a financial institution for the credit of an account kept with that institution and the Operator is satisfied that the amount has been paid to the account of a person who was not intended to obtain the payment.

Subclause 171(2) provides that the Operator may, by written notice, setting out the relevant matters referred to in paragraphs 171(1)(a) and (b) require the financial institution to pay the amount of the payment to the Commonwealth, within a reasonable period the lesser of the amount of the payment stated in the notice or the amount standing to the credit of the account when the notice is given to the financial institution.

Subclause 171(3) makes it an offence if a financial institution fails to comply with the notice. The penalty is 300 penalty units. The penalty is considered to be appropriate for a financial institution so as to deter the institution from failing to comply with a notice.

Subclause 171(4) provides a defence to prosecution if the financial institution proves that it was incapable of complying with the notice given under subclause 171(2). The note to subclause 171(4) provides that the burden of proving whether a person has a reasonable excuse is on the defendant and directs the reader to section 13.4 of the Criminal Code. This provision in the Criminal Code provides that a defendant who wishes to rely on any exception, exemption, excuse, qualification or justification provided by the law creating an offence bears an evidential burden in relation to that matter.

Subclause 171(5) provides that any amount that has been paid by a financial institution to the Commonwealth pursuant to this clause reduces the amount of any debt referred to in subclause 167(1) (as it relates to paragraph 167(2)(a)).

Clause 172 provides that if the Commonwealth recovers an amount under this Part (other than paragraph 167(2)(a)) and all or part of the amount relates to either a redress payment or a counselling and psychological services payment, or both; and a participating institution has paid funding contribution in relation to the payment, the Commonwealth must repay the institution so much of that funding contribution as the Operator considers relates to the amount recovered.

The note to this clause directs the reader to section 77 of the Public Governance, Performance and Accountability Act in relation to appropriation for the refund.