Senate

Supplementary Explanatory Memorandum

Circulated By the Authority of the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon Jenny Macklin MP)

Outline and financial impact

These Government amendments address implementation issues in the new family tax benefit (FTB) Part A participation requirements for 16 to 20 year olds, arising from the delay in introduction of the youth allowance reforms until 1 July 2010. The participation requirements for FTB children aged 16 to 20 were introduced by the Family Assistance Legislation Amendment (Participation Requirement) Act 2009 (the amending Act) late last year.

The amendments do not affect the substantive elements of this Bill - the introduction of weekly payments in the social security and family assistance systems. Rather, they change the application, to different parts of the family assistance law, of some of the amendments made by the amending Act. The amending Act introduced a participation requirement for FTB children aged 16 to 20 years. A new FTB activity test commenced on 1 January 2010 but has progressive application.

These new amendments amend the application and transitional provisions of the new FTB Part A participation requirements so these requirements will not affect, until 1 July 2010, existing FTB instalment customers who claimed their FTB before 1 January 2010. The new rules continue to apply to people who became new customers from 1 January 2010.

This delay is due to the introduction of the youth allowance reforms, particularly the changes to the youth allowance parental income test.

Financial impact statement

The estimated financial impact of changing the start date of the participation requirement to 1 July 2010 for existing customers is $21.3 million in Total Resourcing over four years from 2009-10.