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2010-2011
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SECURITY AMENDMENT (PARENTING PAYMENT
TRANSITIONAL ARRANGEMENT) BILL 2011
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Tertiary Education, Skills, Jobs and
Workplace Relations)
SOCIAL SECURITY AMENDMENT (PARENTING
PAYMENT TRANSITIONAL ARRANGEMENT) BILL
2011
GENERAL OUTLINE
This Bill will amend the Social Security Act 1991 to limit the application of the
Parenting Payment transitional (grandfathered) arrangement such that recipients are
only covered by the transitional arrangement in respect of children who were in their
care before 1 July 2011.
The Bill forms part of broader reforms in the Building Australia's Future Workforce
2011-12 Budget Package which aims to provide greater incentives for parents to
participate in the workforce and better align the rules for parents in similar
circumstances.
FINANCIAL IMPACT STATEMENT
This Bill will have nil financial impact over the forward estimates to 2014-15.
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SOCIAL SECURITY AMENDMENT (PARENTING
PAYMENT TRANSITIONAL ARRANGEMENT) BILL
2011
NOTES ON CLAUSES
Clause 1 - Short title
This clause provides for the Bill, when it is enacted, to be cited as the Social Security
Amendment (Parenting Payment Transitional Arrangement) Act 2001.
Clause 2 - Commencement
Clause 2 of the Bill provides that the Bill (once enacted) will commence on 1 July
2011.
Clause 3 - Schedule(s)
Provides that each Act that is specified in a Schedule is amended or repealed as set
out in the applicable items in the Schedule and that any other item in a Schedule has
effect according to its terms.
For ease of description, this Explanatory Memorandum uses the following
abbreviation:
`Act' means the Social Security Act 1991
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Schedule 1
Parenting payment transitional arrangement
Summary
This Bill amends subsection 500D(3) of the Act to provide that a child cannot be a PP
child of a person under that subsection unless the person was the principal carer of the
child on or before 30 June 2011.
Background
In July 2006, the Act was amended to reduce the age of a person's dependent child
above which the person ceased to qualify for parenting payment. Prior to that time, a
person could qualify for parenting payment until their youngest dependent child
turned 16. From 1 July 2006, a person can only qualify for parenting payment until
their youngest child turned 8 (if they were single) or 6 (if they were a member of a
couple).
However, people who were in receipt of parenting payment immediately before 1 July
2006 can continue to qualify for parenting payment until their youngest child turned
16, so long as they did not cease to receive parenting payment for more than 12
weeks, or did not change their relationship status (i.e. from single to a member of a
couple, or vice-versa).
This "grandfathering" of the eligibility of existing parenting payment recipients is
called the "parenting payment transitional arrangement", and is given effect to in
Subdivision AA of Division 1, Part 2.10 of the Act, via the definition of PP child in
subsection 500D(3).
Under subsection 500D(3) of the Act, a PP child is a child of a person if... "(b) the
child has not turned 16; and... (d) the person is covered by the parenting payment
transitional arrangement in relation to that child or any other child". Under
subsections 500F(1) and (2), a person is covered by the parenting payment transitional
arrangement in relation to a child if... (b) immediately before 1 July 2006, that child
(or any other child) was a PP child of the person in respect of whom..." the person
was granted PP.
The result is that, while a person is covered by the parenting payment transitional
arrangement in respect of any of his or her children, any of the person's dependent
children under 16 is a PP child. So, for example, if a person is covered by the
parenting payment transitional arrangement on 1 March 2011 when they give birth to
a new child, that new child can be their PP child until he or she turns 16 on
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1 March 2027, and they can be covered by the parenting payment transitional
arrangement for that whole time.
In essence, the parenting payment transitional arrangement can continue indefinitely
while a person who was in receipt of parenting payment on 30 June 2006 continues to
"acquire" dependent children.
As part of broader changes to parenting payment put forward in the context of the
2011-12 Budget, the Government has taken a step to reduce the inequity which exists
between different parenting payment recipients based upon when they first applied for
parenting payment.
The Government has decided that a child cannot become a PP child of a person for
the purposes of the parenting payment transitional arrangement after 30 June 2011
(naturally, they will still be a PP child until they turn 6 or 8, as the case may be, under
subsections 500D(2) or (3)).
Consequently, this will serve to limit the ability of parenting payment recipients to
extend their grandfathered status by acquiring new parenting payment children and
will mean that all parenting payment recipients will be treated equally in a shorter
timeframe than would otherwise have been the case.
Detailed explanation
Social Security Act 1991
Item 1 - After paragraph 500D(3)(c)
Section 500D of the Act prescribes when a child is a PP child for the purposes of the
parenting payment.
Under subsection 500D(1), a child will be a PP child if he or she is the child of
someone who is their principal carer and is a member of a couple and the child in
question is under 6 years old.
Under subsection 500D(2), a child will be a PP child if he or she is the child of
someone who is their principal carer and is not a member of a couple and the child in
question is under 8 years old.
The effect of subsection 500D(3) is that people who were in receipt of parenting
payment immediately before 1 July 2006 could continue to qualify for parenting
payment until their youngest child turned 16, so long as they did not cease to receive
parenting payment for more than 12 weeks, or did not change their relationship status
(i.e. from single to a member of a couple, or vice-versa). Item 1 inserts a new
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paragraph 500D(3)(ca) into subsection 500D(3) which introduces a new criteria that
the person must have been the principal carer of the child before 1 July 2011.
Example: Lisa has two daughters, Jennifer and Lara, aged 9 and 12. She has been
receiving parenting payment (single) since 28 March 2005. As Lisa was receiving
parenting payment on 30 June 2006, she is covered by the parenting payment
transitional arrangement in respect of both her daughters. Jennifer and Lara will
each be a PP child of Lisa until they turn 16 which will occur in 2018 and 2015
respectively. On 15 August 2011, Lisa gives birth to a son, Robert. As Robert is born
after 30 June 2011, Lisa is not covered by the parenting payment transitional
arrangement in respect of him. Robert will be Lisa's PP child until he turns 8 years
old which will occur in 2019. Subject to meeting ongoing eligibility requirements,
Lisa will be qualified for parenting payment (single) until 15 August 2019. By this
point, all of Lisa's PP children will have reached the relevant age cut-off and Lisa
will cease to be eligible for parenting payment. Lisa may transfer to another income
support payment, such as newstart allowance, provided she meets the relevant
eligibility requirements.
Item 2 - Application
Item 2 is an application provision, the effect of which is that the amendment to be
made by Item 1 would only apply on or after 1 July 2011.
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