House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Families and Social Services, Senator the Hon Anne Ruston)

Schedule 5 - Stillborn baby payment and infant death payment

Summary

This measure addresses inconsistencies in payments available to families affected by stillbirth and infant death in respect of payments for newborn children, by increasing the maximum amount that eligible families are able to access after a stillbirth or a child's death shortly after birth, up to the child's first birthday. This measure also removes discrepancies within the payments system in respect of multiple instances of stillbirth or infant death within the same family.

Currently, when a person has a stillborn child, they may receive parental leave pay for up to 18 weeks or, if not eligible, they may receive stillborn baby payment as a lump sum, subject to meeting an income test. Under existing arrangements stillborn baby payment is paid at a high rate for the first stillbirth and a low rate for a second or subsequent stillbirth. A person who has a stillborn child is ineligible for a Family Tax Benefit (FTB) Part A bereavement payment.

From 1 January 2021, for families not eligible for parental leave pay, this measure will increase and align family assistance payable to families who lose their child through stillbirth or because their child dies before their first birthday by:

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having one rate of stillborn baby payment equal to the current high rate plus an amount equivalent to the maximum FTB Part A bereavement payment for a child aged under 13; and

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paying a top up amount (equivalent to the difference between the high and low rate of newborn supplement) to families for children who received the low rate of newborn supplement and who die before their first birthday.

The income testing arrangements for stillborn baby payment and FTB, including Newborn Supplement, will not change.

Under the measure, subject to income testing arrangements, parents will receive the payment of up to $3,606.81, irrespective of whether the child is stillborn or dies within its first year, and irrespective of whether this is their first or subsequent claim.

Schedule 5 commences the later of 1 January 2021 and the day after Royal Assent.

Explanation of the changes

Family Assistance Act

Items 1 and 2 give effect to paying a top up amount (equivalent to the difference between the high and low rate of newborn supplement) to families for children who received the low rate of Newborn Supplement and who die before their first birthday.

Clause 35A of Schedule 1 provides for eligibility for newborn supplement. Clause 35B provides for the rate of newborn supplement. The rate of newborn supplement for subsequent children is lower than that for the first child of the mother. In circumstances where the child in respect of whom a lower newborn supplement amount was paid dies before their first birthday, a single amount of FTB paid upon the death of the child, may be claimed under section 32. If so claimed, the single amount of FTB is worked out under subsection 65(1). Subsection 65(1) sets out a method statement, with various additional factors provided for in the subsequent subsections of section 65.

Item 1 repeals and replaces step 3 of the method statement at subsection 65(1) to insert adding in the additional amount to be provided for by new subsection 65(4).

Item 2 inserts new subsection 65(4). The subsection provides for the addition of an additional amount to the sum where the child who died was an FTB child (that is, a child for whom the person provides full-time or nearly full-time care), that child died before turning one, and an amount of newborn supplement at the lower rate for the child forms part of the individual's Part A rate of FTB for one or more days. The lower rate of newborn supplement is provided for at paragraph 35B(1)(d) of Schedule 1.

New subsection 65(4) then sets out a method statement for calculation of the additional amount.

Step 1 provides that for days where newborn supplement at the lower rate forms part of the individual's Part A rate of FTB, work out the total amount of that newborn supplement for those days.

Step 2 provides, in relation to those days, to work out what would have been the total amount of newborn supplement for that child for those days if that newborn supplement had been worked out at the higher newborn supplement rate. (The higher rate is set out at paragraph 35B(1)(a) of Schedule 1.)

Step 3 then provides that the additional amount is the step 2 amount less the step 1 amount.

Item 3 gives effect to having a single higher rate of stillborn baby payment which includes an additional amount of bereavement payment.

Eligibility for stillborn baby payment is provided for by Division 2 of Part 3 of the Act. The payment is a component of an individual's family assistance payment, but is claimed separately (section 36). The amount of stillborn baby payment is provided for at section 66. Currently, the Act draws a distinction between the first stillborn child of a woman, and any later stillborn child not born of the same multiple birth, paying a higher amount for the first such child or children of a multiple birth. The higher amount consists of the higher newborn supplement amount, added to the newborn upfront amount. Higher newborn supplement amount refers to the dollar amount mentioned in the formula under paragraph 35B(1)(a) of Schedule 1. Newborn upfront amount means the amount (the dollar amount) mentioned in subsection 58AA(1). Paragraph 66(1)(b) currently provides for a lower rate of payment for a stillborn child who is not the first stillborn child of a woman (or not a stillborn child in a multiple birth).

Item 3 repeals and replaces section 66. New section 66 provides that the amount of stillborn baby payment for an individual in respect of a child is the amount worked out using a formula. The formula requires adding the higher newborn supplement amount to the newborn upfront amount , and adding in an additional amount .

All the elements of the formula are defined. The new element, the additional amount , is the FTB child rate for an FTB child under 13 years of age for FTB Part A calculation, meaning the dollar amount mentioned in item 1 of the table in subclause 7(1) of Schedule 1 applicable on the day of the child's delivery, including that amount as indexed.

This additional amount figure is an annual dollar figure. Because the bereavement payment equivalent calculated under section 65 is calculated over a period of 14 weeks, only 14 weeks' worth of this annual figure is to be added. Accordingly, the formula in new section 66 divides the additional amount by 365 to generate a daily rate, and multiples this by 98 days, representing 14 weeks.

Item 4 is an application provision. Subitem 4(1) provides that the amendments of section 65 of the Family Assistance Act apply in relation to deaths occurring on or after the commencement of this item.

Subitem 4(2) provides that the repeal and substitution of section 66 applies in relation to working out the amount of stillborn baby payment on or after the commencement of this item for the delivery of a child that occurs on or after that commencement.