House of Representatives

Second Reading Speech

Mr Porter (Minister for Social Services)

While the amendments are minor in nature, they are worth bringing forward to, over time, minimise confusion for payment recipients and stakeholder groups contending with legislative provisions that are sometimes unclear. Such amendments are also an important part of ongoing responsible management of this important core legislative framework and within the established policy to ensure consistency and clarity. In this case, amendments will be made to the social security law and family assistance law. The amendments will correct technical errors and clarify intended policy by removing minor ambiguities and anomalies.

One of the changes in the bill is to clarify that people serving an income maintenance period for a mainstream income support payment such as Newstart allowance cannot also access special benefit during that period. An income maintenance period is a period of time during which payments-for example, redundancy or leave payments-are apportioned and treated as income for certain social security payments. The effect of the income maintenance period is either to reduce the person's payment rate or to preclude them fully from receiving a social security payment for the period represented by the determination or leave payment. During this period the person is expected to draw upon the resources provided by the determination or leave payment.

A single person without children would be fully precluded from receiving Newstart allowance if their termination payment were equivalent to at least $1,014 per fortnight. This amount is of course higher if the person is paying rent. In addition to Newstart allowance the income maintenance period applies to youth allowance, partner allowance, Austudy payment, widow allowance, parenting payment, disability support pension and sickness allowance. A person who is required to serve an income maintenance period may have it reduced or waived if he or she is in severe financial hardship due to unavoidable or reasonable expenditures. Unavoidable and reasonable expenditure includes but is not limited to reasonable costs of living-such as food, rent and utilities bills-as well as school and funeral expenses; essential repairs to the home, whitegoods and car; insurance premiums; medical expenses; and other costs that are considered unavoidable or reasonable taking into account the individual circumstances of the person.

Special benefit is a discretionary income support payment available to people in severe financial hardship who are unable to earn a sufficient livelihood for themselves due to reasons beyond their control. Special benefit is generally paid at the same rate as Newstart allowance but is not subject to an income maintenance period. However, it has been longstanding policy that a person who is unable to have an income maintenance period for another income support payment waived or reduced because the expenditure of their funds is neither unavoidable nor reasonable should not be paid special benefit. As this circumvents the purpose of the income maintenance period, it may encourage people to spend their termination payments too quickly.

This amendment affirms the policy position that people should use their own resources before drawing upon taxpayer funded support. A further measure in this bill will realign the time period for income reconciliation for certain family tax benefit recipients. That is, for families who are not required to lodge a tax return or who have types of income not included in a tax return, the bill will introduce a one-year time frame for individuals to notify their non-lodger status or provide income details. This is consistent with the equivalent time frame currently applying to families who are required to lodge a tax return. One year is thought of as a reasonable period of time for families to notify Centrelink that they are not required to lodge and/or provide details of types of income not included in a tax return in order for reconciliation of their family tax benefit entitlement to occur. The reduction to the time frame to provide income details from two years to one year is also consistent with the intent of the family assistance program, which is to deliver financial assistance to families to help with the cost of raising children when it is needed.

It is also important to note that this amendment will have very little practical effect on families, as the one-year timeframe to provide income details or notify of non-lodger status has been communicated to recipients since the implementation of the broader realignment of time period amendments in 2013. As such, these amendments will not result in any unexpected or unforeseen outcomes for families, as they have been familiar with the rules for some time. However, the amendments will make it clear that all FTB recipients have the same time period in which to meet the reconciliation conditions for receiving supplements and top up payments.

This bill will also make several amendments to the administration of certain student payments. One of these amendments is to clarify that only one course of education is taken into account in assessing the definition of 'undertaking full-time study' or the definition of 'undertaking qualifying study' for student payments at the same institution or across multiple institutions. This amendment aims to prevent students from being supported financially to undertake multiple unrelated courses of education that do not contribute to their employment or career prospects. It is estimated that this will affect only a small number of individuals. It has always been the intention that students are only assessed against one course of education under the full-time study requirements of youth allowance student and the qualifying study requirements of Austudy. The amendment will make the law clearer in this area so that students are not assessed as undertaking full-time study on the basis of more than one course of education during a single study period.

Secondly, the student payment eligibility criteria will be changed to remove the current requirement for new apprentices to have a Commonwealth registration number. This present administrative detail has proved to cause delays in accessing and cancelling payments for apprentices. For example, when an apprentice who is receiving Austudy payments ceases his apprenticeship and leaves his employer the delay in cancelling the Commonwealth registration number means the apprentice continues to be paid Austudy payments. There can be delays of weeks or even months before a Commonwealth registration number is cancelled which can mean that when the Austudy payment is cancelled the apprentice has been overpaid and has incurred a debt.

The amendment alters payment eligibility criteria so that the requirements for the concept of new apprentice can be determined by the minister in a legislative instrument. The amended definition of 'new apprentice' removes any link to the person having a Commonwealth registration number and removes the delay in cancelling payment and avoids social security debts. Removing the requirement is a sensible improvement. The change ensures that payments are not unduly delayed to new apprentices needing financial support and that payments cease promptly when people cease to be apprentices so debts do not occur. This is expected to benefit all new apprentices seeking financial support through youth allowance or Austudy payment. The change is also needed in light of Commonwealth registration numbers being replaced from 1 July 2016 as part of the Department of Education and Training's apprenticeship reforms.

The third amendment relating to student payments is to clarify exemptions from the Austudy assets test for people with a partner receiving a relevant payment. A person is intended to be exempt from the Austudy assets test if their partner is receiving a relevant pension, benefit, allowance or compensation payment. The exemption is not intended to apply if the partner has received the relevant payment at any time in the past unless the payment relates to lump sum compensation received in the past as an armed services widow or widower under the Military Rehabilitation and Compensation Act 2004. This amendment will ensure the appropriate application of the assets test to the partners of individuals receiving financial support through Austudy payment.

The bill will also make a series of other minor amendments clarifying and simplifying matters such as the allowable income limits for the healthcare card, indexation of pharmaceutical allowance and certain delegation provisions. In relation to the healthcare card, the Social Security Act 1991 does not presently specify exactly what components of Newstart allowance are to be included in the calculation of allowable income limits for the healthcare card. The amendment in this bill, therefore, clarifies that the maximum basic rate and energy supplement are included in this calculation but that pension supplement, pharmaceutical allowance and rent assistance are all to be excluded.

In the case of the pharmaceutical allowance, the bill makes some small corrections and additions to cross-referencing in the indexation tables. Pharmaceutical allowance, which is added to the rate of social security payments or may in some circumstances be paid as a separate payment, is indexed or adjusted each year. These amendments are effectively a minor consolidation of those indexation provisions.

The amendment regarding the delegation framework will remove the current requirement in the family assistance law for the Secretary of the Department of Human Services to agree formally before the secretary of the department administering the family assistance law-currently the Department of Social Services and the Department of Education and Training-can delegate powers to an officer of the Department of Human Services. This amendment will reduce the administrative burden and the time taken in the making of instruments of delegation under the family assistance law. It will also bring the relevant delegation provisions in the family assistance law into line with those in the social security law. Officers of the relevant departments will continue to consult closely to ensure delegation instruments meet appropriate requirements.

Finally, there are a small number of technical amendments. These technical amendments to the social security law include correcting cross-referencing, which will make the law easier to understand, and repealing a spent clause that no longer has any application. These measures in this bill are technical in nature. The amendments are an important part of the ongoing management of these relevant legislative frameworks. I commend the bill to the House.