Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017-2018
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
SOCIAL SERVICES LEGISLATION AMENDMENT
(HOUSING AFFORDABILITY) BILL 2017
REVISED EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Families and Social Services, the Hon Paul Fletcher MP)
SOCIAL SERVICES LEGISLATION AMENDMENT
(HOUSING AFFORDABILITY) BILL 2017
Contents
OUTLINE .......................................................................................................................... 3
FINANCIAL IMPACT STATEMENT ............................................................................. 3
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS................................... 4
NOTES ON CLAUSES ............................................................................................................. 4
Schedule 1 - Social Security Amendments ............................................................................... 5
Schedule 2 - Family Assistance Amendments ........................................................................ 14
Schedule 3 - National Rental Affordability Scheme Amendments......................................... 20
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS......................................... 30
SOCIAL SERVICES LEGISLATION AMENDMENT
(HOUSING AFFORDABILITY) BILL 2017
OUTLINE
The Bill introduces the following measures:
Automatic Rent Deduction Scheme
National Rental Affordability Scheme Amendments
Schedules 1 and 2 - Social security amendments and Family assistance
amendments
The social security law and the family assistance law are amended to incorporate a
scheme for the automatic deduction of rent and other household payments. The
amendments provide that lessors of social (public and community) housing may
request the Secretary to deduct payments of rent and household utilities relating to
the occupancy of the premises, from the social security or family tax benefit
payments of tenants and other adult household members who have entered into an
agreement that contemplates deductions being made under this scheme.
Schedule 3 - National Rental Affordability Scheme Amendments
This Schedule clarifies and corrects certain ambiguous provisions in the National
Rental Affordability Scheme Act 2008 (NRAS Act), and provides further flexibility in
the future administration of the National Rental Affordability Scheme so as to further
the objects of the NRAS Act.
The Bill clarifies that the object of the NRAS Act is to be achieved in ways that
include protecting tenants in NRAS, protecting investors, providing rights to investors
and recognising that State and Territories contributions are complementary to NRAS.
The Bill expressly identifies the Constitutional powers being relied upon and giving
the NRAS Act operation within the scope of those Constitutional powers.
The Bill also clarifies other regulation making powers including to support the making
of new regulations to replace the National Rental Affordability Scheme Regulations
2008 (NRAS Regulations), which are due to sunset on 1 April 2019. No new
allocations will be made under NRAS and so the amendments to the Bill will ensure
that the regulations do not need to provide for the approval of new participants under
NRAS.
FINANCIAL IMPACT STATEMENT
MEASURE FINANCIAL IMPACT OVER THE FORWARD
ESTIMATES
Automatic Rent Deduction Not for publication
Scheme - Schedule 1 - Social
Security Amendments and
Schedule 1 - Family Assistance
Amendments
Schedule 3 - National Rental Nil
Affordability Scheme Amendments
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
The statement of compatibility with human rights appears at the end of this
explanatory memorandum.
SOCIAL SERVICES LEGISLATION AMENDMENT
(HOUSING AFFORDABILITY) BILL 2017
NOTES ON CLAUSES
Abbreviations used in this explanatory memorandum
Social Security Act means the Social Security Act 1991.
Social Security Administration Act means the Social Security
(Administration) Act 1999.
Family Assistance Administration Act means the A New Tax System
(Family Assistance) (Administration) Act 1999.
National Rental Affordability Scheme Act means the National Rental
Affordability Scheme Act 2008.
Clause 1 sets out how the new Act is to be cited - that is, as the Social Services
Legislation Amendment (Housing Affordability) Act 2017
Clause 2 provides a table setting out the commencement dates of the various
sections in, and Schedules to, the new Act.
Clause 3 provides that each Act that is specified in a Schedule is amended or
repealed as set out in that Schedule.
Schedule 1 - Social Security Amendments
Schedule 1 - Social Security Amendments
Summary
The social security law is amended to incorporate a scheme for the automatic
deduction of rent and other household payments (the Automatic Rent Deduction
Scheme). The amendments provide that lessors of social (public and community)
housing may request the Secretary to deduct payments of rent and household
utilities from the social security payments of tenants and other adult members of their
households who have entered into an agreement with the lessor (however
described) that authorises deductions being made.
Background
The Automatic Rent Deduction Scheme enables a social housing lessor to request
the Secretary make a deduction from a person's social security payments (subject to
some exceptions), to pay for rent and utilities arising as a result of the occupancy of
the premises. In order to request a deduction, a lessor must be a social housing
lessor (as defined) and the person in receipt of various social security payments
must be a social housing tenant (as defined).
The Automatic Rent Deduction Scheme also provides for the recovery of
overpayments made to social housing lessors, and enables the Secretary to charge
a social housing lessor fees for various services associated with the Automatic Rent
Deduction Scheme. Associated amendments are also made to Division 2 (Internal
review) of Part 4 and Division 1 (Information gathering) of Part 5 of the Social
Security Administration Act.
The amendments made by this Schedule commence on the later of the day after
Royal Assent and 1 January 2019.
Explanation of the changes
Part 1 - Main amendments
Social Security (Administration) Act 1999
Inalienability
Social security payments are absolutely inalienable under section 60 of the Social
Security Administration Act. Item 1 amends paragraph 60(2)(aa) to provide that the
inalienability of social security payments is subject to the new Part 3E of the Social
Security Administration Act inserted by item 8.
Income management regime
Under Part 3B (income management regime), a person who is subject to income
management will have part of their payments deducted in order to pay for the priority
needs of that person, their partner, their children, and any other dependants. A
deduction made under the Automatic Rent Deduction Scheme will be made from the
Schedule 1 - Social Security Amendments
'deductible portion' of a person's instalment or payment prior to the balance of the
deductible portion being credited to the Income Management Record and the
person's income management account.
'Household utilities' is currently defined in paragraph 123TH(1)(h) of the Social
Security Administration Act. Item 4 amends this definition to remove references to
specific household utilities, as this definition is moved to Schedule 1 under item 15.
Items 4A to 4W will amend provisions in Division 5 of Part 3B of the Social Security
Administration Act which provide for a deduction to be made from a welfare
payment, or instalment of a welfare payment, subject to the income management
regime. This deduction is referred to in the Social Security Administration Act as the
'deductible portion'.
Item 4A of the Bill will repeal paragraphs 123XI(2)(b) and (c) of the Social Security
Administration Act and substitute new paragraphs 123XI(2)(b) and (c). Paragraph
123XI(2)(b) applies if Part 3E of the Social Security Administration Act or Part 3A of
the Family Assistance Administration Act (both dealing with automatic deductions of
rent or other household payments) applies in relation to the person and the
instalment of category I welfare payment.
If so, an amount equal to so much of the deductible portion of the instalment as
remains after a deduction is made from that portion of the instalment under section
124QG of the Social Security Administration Act or section 67E of the Family
Assistance Administration Act is credited to the Income Management Record and the
person's income management account.
Paragraph 123XI(2)(c) states that, if paragraph (b) does not apply, an amount equal
to the deductible portion of the instalment is credited to the Income Management
Record and the person's income management account.
This effect is replicated in items 4B to 4W amending equivalent sections 123XJ,
123XJA, 123XJB, 123XJC, 123XJD, 123XK, 123XL, 123XM, 123XN, 123XO,
123XP, 123XPAA, 123XPAB, 123XPA, 123XPB, 123XPC, 123XPD, 123XPG,
123XPJ, and 123XPK of the Social Security Administration Act.
Trial of cashless welfare arrangements
Under Part 3D (Trial of cashless welfare arrangements), section 124PL provides for
the manner of payment of a restrictable payment, where that payment is payable to a
trial participant or voluntary participant. When a deduction is made from, or an
amount is set off against the restrictable payment (for instance, under various
provisions of the social security law or the Family Assistance Administration Act), the
balance of the restricted portion that is to be paid to a restricted bank account is
reduced by the amount deducted. Items 5 and 6 insert references to include
deductions under new section 124QG, and new section 67E of the Family
Assistance Administration Act.
A social housing tenant who is a trial participant or voluntary participant within the
meaning of Part 3D of the Social Security Administration Act will only have a
Schedule 1 - Social Security Amendments
deduction made from the restricted portion of their payments (see item 8 of
Schedule 1, proposed sections 124QG and 124QH, and item 5 of Schedule 2,
proposed sections 67E and 67F).
Item 7 repeals and substitutes a new section 124PM to make clear that use of the
unrestricted portion of the payment is not governed by Part 3E.
Automatic deductions of rent or other household payments
Item 8 inserts new Part 3E - automatic deductions of rent or other household
payments, after existing Part 3D.
Division 1 - Introduction
Sections 124Q and 124QA set out the simplified outline and the objects of this Part.
Section 124QB defines a divertible welfare payment for the purposes of this Part
as a social security payment or a payment under the ABSTUDY scheme that is
payable (except as an advance), that is not an Australian Victim of Terrorism
Overseas Payment, a Disaster Recovery Allowance, a student start-up loan, or an
ABSTUDY student start up loan under the Student Assistance Act 1973. The
Minister may also determine, by legislative instrument, that one or more kinds of
social security payments are not divertible welfare payments.
Section 124QC defines a social housing lessor for the purposes of this Part.
Subsection 124QC(1) provides that an authority of a State or Territory is a social
housing lessor where all preconditions are met. The authority must provide social
housing in the State or Territory, and have a written agreement with the Human
Services Department relating to the authority's ability to request deductions under
Part 3E. A Minister of the authority's State or Territory must have also provided a
letter or document to the Commonwealth Minister setting out the social housing
policies of the State or Territory. This is subject to subsection 124QC(2).
Subsection 124QC(1A) provides that a body is a social housing lessor where all
preconditions are met. The body must provide social housing in a State or Territory
and is either approved to provide social housing by the State or Territory, or is
registered as a community housing provider under a law of a State or Territory, and
this approval or registration has been notified in writing to the Secretary. The body
must have a written agreement with the Human Services Department relating to the
body's ability to request deductions under Part 3E. A Minister of the body's State or
Territory must have also provided a letter or document to the Commonwealth
Minister setting out the social housing policies of the State or Territory. This is
subject to subsection 124QC(2).
New subsection 124QC(1A) will enable a provider registered under the National
Regulatory System for Community Housing to be considered a social housing lessor
under Part 3E, subject to meeting the other preconditions in the subsection.
Schedule 1 - Social Security Amendments
The purpose of the precondition in paragraphs 124QC(1)(c) and 124QC(1A)(d) is to
provide transparency that social housing lessors are regulated by States and
Territories, and operate under State or Territory legislation and policy regimes. In
practice, the letter or document from the relevant Minister of a State or Territory will
include information on how their policies apply limits to the amount that tenants can
be charged, and how tenants are protected from financial hardship. The letter will
also confirm to the Commonwealth Minister that social housing lessors in the
jurisdiction are responsible for informing tenants of their intention to request a
deduction and the reasons for making that request under the Automatic Rent
Deduction Scheme.
Subsection 124QC(2) enables the Minister, by written instrument, to determine that a
specified authority or body may not be a social housing lessor for the purposes of
this Part.
Example
A particular community housing provider in Queensland is a registered body
under paragraph 124QC(1)(c). The Minister for housing in Queensland writes
to the Minister for Families and Social Services requesting that this
community housing provider not be a social housing lessor under Part 3E.
After considering the correspondence from the Queensland Minister, the
Minister for Families and Social Services may determine, by written
instrument, that the community housing provider may not be a social housing
lessor for the purposes of Part 3E.
Subsection 124QC(3) provides that such a written instrument is not a legislative
instrument. This provision is included to assist readers as the instrument is not a
legislative instrument within the meaning of subsection 8(1) of the Legislation Act
2003.
Subsection 124QC(4) states that the Commonwealth Minister may publish a letter or
document provided by a Minister of a State or Territory setting out the social housing
policies of the State or Territory, as referred to in paragraphs 124QC(1)(c) and
124QC(1A)(d), on the Department's website to ensure transparency. The
Department referred to in subsection 124QC(4) is the Department of Social Services.
Subsection 124QC(5) defines Commonwealth Minister for the purposes of section
124QC.
Section 124QD defines a social housing tenant as a person who is 18 or older,
who pays, or is liable to pay rent in relation to premises let by a social housing
lessor, whether or not the person is named in an agreement (however described)
with the lessor for occupancy of the premises. State and Territory social housing
schemes provide for rent to be calculated based upon the income of all members of
a tenant's household, despite the fact not all members of the household may be
party to the lease with the social housing lessor. This definition will allow deductions
to be sought from the welfare payment of any of the adult occupants of the house.
Schedule 1 - Social Security Amendments
A note alerts the reader that 'rent' is defined in section 13 of the Social Security Act.
The definition is broad, and includes all amounts payable as a condition of
occupancy of premises, which would generally include bond payments.
Section 124QE expressly provides that this Part binds the Crown in each of its
capacities.
Division 2 - Deductions from divertible welfare payments
Subsection 124QF(1) provides that a social housing lessor may request the
Secretary to make a deduction from a divertible welfare payment payable to a social
housing tenant if both of the following conditions apply. Firstly, the tenant has an
ongoing or outstanding obligation to pay an amount for rent, household utilities or
both, in relation to the tenant's occupancy of premises let by the lessor. Secondly,
the tenant's agreement with the lessor for occupancy of the premises, or another
agreement with the lessor, authorises the lessor to make requests under Part 3E for
deductions from divertible welfare payments payable to the tenant.
A tenant's other agreement with the lessor referred to in paragraph 124QF(1)(b),
which is not a tenancy agreement but authorises the lessor to make requests for
deductions, is not required to be in written form.
Subsection 124QF(2) provides that a deduction may be requested whether the
obligation arose before, on or after the commencement of this section.
Subsection 124QF(3) provides that the social housing lessor's request must specify
the amount to be deducted, which must not be more than that required to satisfy
rent, household utilities or both payable by the tenant, and any outstanding payment
of rent, household utilities or both payable by the tenant. The lessor's request must
also specify the date from which deductions are to be made.
Subsection 124QF(4) provides that the social housing lessor may amend the request
to specify a different amount to be deducted. An amended request must satisfy the
requirements of subsection (3).
Subsection 124QF(5) provides that the social housing lessor must give the request
and any amendment of the request to the Secretary in a way approved by the
Secretary, for the request or amendment to be effective. The Secretary may
approve a way of giving requests and a way of giving amendments.
Under section 124QG, the Secretary has discretion to deduct an amount from a
social housing tenant's divertible welfare payment if a request has been made by a
social housing lessor under section 124QF. However, the Secretary must not make a
deduction if any circumstances outlined in subsection 124QG(2) exist.
The Secretary must not make a deduction if the social housing lessor's request is
revoked, if the Secretary is notified under section 124QI that the social housing
tenant ceases to be a social housing tenant in relation to the lessor, if the social
housing lessor ceases to be a social housing lessor, or at any time the tenant is
covered by a determination under subsection 124QG(3).
Schedule 1 - Social Security Amendments
The Secretary must also not make a deduction if a social housing tenant is subject to
the income management regime within the meaning of Part 3B of the Social Security
Administration Act and the following two criteria are met. Firstly, all or part of the
tenant's divertible welfare payment is a category E welfare payment, category H
welfare payment, category I welfare payment, category P welfare payment, category
Q welfare payment, category R welfare payment or category S welfare payment
within the meaning of Part 3B of the Social Security Administration Act. Secondly,
the deductible portion under Division 5 of Part 3B of the Social Security
Administration Act is nil.
The Secretary must not make a deduction if a social housing tenant is a trial
participant or voluntary participant in the cashless debit card trial within the meaning
of Part 3D of the Social Security Administration Act and the following two criteria are
met. Firstly, all or part of the divertible welfare payment is a restrictable payment
within Part 3D of the Social Security Administration Act. Secondly, the tenant's
percentage of the payment that is the restricted portion under paragraph 124PJ(1)(a)
or subsection 124PJ(2) is 0%.
Subsection 124QG(3) enables the Minister, by legislative instrument, to determine
that deductions must not be made from divertible welfare payments payable to
specified social housing tenants. A note alerts the reader that subsection 13(3) of
the Legislation Act 2003 provides for specification by class.
If the Secretary does not make a deduction in accordance with a request made,
including where the Secretary deducts less than was requested, the Secretary must
give written notice to the lessor of that fact (subsection 124QG(4)).
If a divertible welfare payment payable to a social housing tenant is suspended
under this Act, but subsequently resumes, the Secretary may deduct any amounts
that would otherwise have been deducted under this Part during the period of
suspension from payments paid to the tenant after the suspension ends
(subsection 124QG(5)). Paragraph 124QG(5)(b) makes clear that the Secretary
must make any deduction from more than one payment paid to the tenant after the
suspension ends. This reduces the likelihood of a tenant experiencing financial
hardship, as it prevents arrears incurred due to a suspension of a payment from
being deducted from a single payment.
Section 124QH provides that the Secretary is to determine the amount of the
deduction. The amount must not exceed the amount specified in a request made
under section 124QF, or the amount of the divertible welfare payment remaining
after all deductions specifically required by a law of the Commonwealth (other than
Part 3E) are made.
For a social housing tenant who is also subject to the income management regime
within the meaning of Part 3B of the Social Security Administration Act, and all or
part of the divertible welfare payment is a payment of a type outlined in paragraph
124QH(3)(b), then the amount of a deduction must not exceed the amount that
would be the deductible portion, under Division 5 of Part 3B of the Social Security
Administration Act, if no deduction was made under section 124QG.
Schedule 1 - Social Security Amendments
For a social housing tenant who is also a trial participant or voluntary participant in
the cashless debit card trial under Part 3D of the Social Security Administration Act,
and all or part of the divertible welfare payment is a restrictable payment under Part
3D, then the amount of a deduction must not exceed the amount equal to the
tenant's percentage under paragraph 124PJ(1)(a) or subsection 124PJ(2).
Section 124QI sets out the requirements for notifications by social housing lessors.
Subsection 124QI(1) provides that a social housing lessor may revoke a request
made under section 124QF by giving notice to the Secretary in a way approved by
the Secretary. If a request has been made under section 124QF in relation to a
person and the person ceases to be a social housing tenant in relation to that social
housing tenant lessor, the lessor must notify the Secretary as soon as practicable
(subsection 124QI(2)). Similarly, if the social housing lessor ceases to be a social
housing lessor (other than because of section 124QC(2)), the authority or body must
notify the Secretary as soon as practicable after ceasing to be a social housing
lessor (subsection 124QI(3)). A notification under subsection 124QI(2) or (3) must
be given in a way approved by the Secretary (subsection 124QI(4)).
Division 3 - Treatment of amounts deducted
Under section 124QJ, Division 3 will apply when the Secretary deducts an amount
under Division 2 from a divertible welfare payment payable to a social housing
tenant.
Section 124QK requires the Secretary to pay the amount deducted to the social
housing lessor.
Section 124QL provides that if the Secretary pays the amount to the social housing
lessor and the amount, or a part of the amount relates to a particular liability, then
the liability is discharged to the extent of the amount, or part of the amount paid to
the social housing lessor. In other words, if a deduction was sought for combined
amounts representing rent and utilities, and a deduction is made, the amount paid to
the lessor extinguishes each of the liabilities for rent and utilities, to the extent that
part of the deduction relates to that liability. The liability is extinguished even if the
liability is not yet due and payable (subsection 124QL(2)). However, this section
does not reduce a liability in respect of an amount paid to the lessor that gives rise to
a debt due to the Commonwealth by the lessor (subsection 124QL(3)).
Section 124QM provides that for the purposes of all laws of the Commonwealth
(except any law specified under subsection 124QM(4)), the social housing tenant is
taken to have been paid the amount deducted, at the time the divertible welfare
payment was paid, or would have been paid but for the deduction, whether or not the
Secretary paid the amount to the social housing lessor (subsections 124QM(1)
to (3)). This provision is subject to new section 124QO and any law of the
Commonwealth specified in an instrument under subsection 124QM(4). Subsection
124QM(4) provides that the Minister may, by legislative instrument, make a
determination specifying a law of the Commonwealth for the purposes of
subsection 124QM(2).
Schedule 1 - Social Security Amendments
Division 4 - Overpayments to social housing lessors
Section 124QN applies where a payment to a lessor purportedly made under
Division 3 is made in connection with a deduction properly made under Division 2. If
the amount paid to the social housing lessor exceeds the deduction, the excess is a
debt due to the Commonwealth by the social housing lessor. A note under
subsection 124QN(2) directs the reader to section 124QP for debt recovery.
Section 124QO applies where a payment of a deduction has been made to a social
housing lessor under Division 3 and the deduction exceeded the amount (which may
be nil) determined by the Secretary under section 124QH (subsection 124QO(1)). In
such cases, the amount a social housing tenant is taken to have been paid under
subsection 124QM(1) is reduced by the excess (subsection 124QO(2)). Subsection
124QO(3) provides that the excess is a debt due to the Commonwealth by the social
housing lessor. A note under subsection 124QN(2) directs the reader to section
124QP for debt recovery.
Subsection 124QO(4) provides that the Secretary must pay the social housing tenant
an amount equal to the excess that was deducted, whether or not the
Commonwealth recovers the debt, and that amount will be taken to be a payment of
the divertible welfare payment. Subsection 124QO(5) provides that the Secretary
must not pay an amount under subsection 124QO(4) to the extent that the sum of
that amount, and the amount that should have been deducted, would exceed the
amount of the divertible welfare payment that would have been payable to the tenant
apart from Part 3E. Subsection 124QO(6) provides that subsection 124QO(4) has
effect for the purposes of all laws of the Commonwealth, except any law specified by
the Minister by legislative instrument under subsection 124QO(7).
Section 124QP allows the Secretary to set off amounts payable to a social housing
lessor under Division 3 against debts due to the Commonwealth by the lessor under
Division 4 (subsection 124QP(1)). Subsection 124QP(2) provides that the
Commonwealth may recover a debt due to it under Division 4 in a court of competent
jurisdiction. A note directs the reader to Part 5.4 of the Social Security Act for other
recovery action in relation to debts.
Section 124QQ provides that there is no time limit for the commencing legal
proceedings or taking any action under Part 3E for the recovery of a debt or
overpayment.
Division 5 - Fees
Section 124QR enables the Secretary to charge social housing lessors fees, on the
Commonwealth's behalf, for deducting amounts under Division 2, paying amounts to
the lessor under Division 3, and for services provided to the lessor in the
administration of Part 3E.
Item 9 is a consequential amendment.
Review of decisions
Schedule 1 - Social Security Amendments
Item 10 inserts new subsection 127(3A), which provides that a decision to make a
determination under subsection 124QC(2) is not reviewable by the Secretary.
Item 11 inserts new paragraph 129(4)(daa) into section 129. It provides that a
person may not apply under subsection 129(1) for review of a decision to make a
determination under subsection 124QC(2).
Information management
Paragraph 192(db) is amended by item 12 to include a reference to Part 3E in the
Secretary's general information-gathering powers.
Item 13 inserts new paragraph 195(1)(cd) to enable the Secretary to require a
person to give information about a class of persons to the Department to facilitate
the administration of Part 3E.
Item 14 inserts new paragraph 195(2)(m) to enable the Secretary to require, about
each person in the class of persons, for the purposes of Part 3E, evidence to support
a request made by the social housing lessor under section 124QF.
Definitions
Item 15 inserts new definitions into subclause 1(1) of Schedule 1, for divertible
welfare payment, household utilities, social housing lessor and social housing
tenant.
Part 2 - Consequential amendments
Social Security Act
Item 16 inserts new paragraph 1235(ca) into the Social Security Act to extend the
definition of debt, for the purposes of Part 5 of that Act, to a debt due by a social
housing lessor under Division 4 of Part 3E of the Social Security Administration Act.
Item 17 adds a reference to Part 3E of the Social Security Administration Act into
subsection 1237AB(1), enabling the Secretary, on behalf of the Commonwealth, to
decide to waive the Commonwealth's right to recover debts arising under Part 3E.
Schedule 2 - Family Assistance Amendments
Schedule 2 - Family Assistance Amendments
Summary
The Family Assistance Administration Act is amended to incorporate a scheme for
the automatic deduction of rent and other household payments (the Automatic Rent
Deduction Scheme). The amendments provide that lessors of social (public and
community) housing may request the Secretary to deduct payments of rent and
household utilities from the family tax benefit payments of tenants and other adult
members of their households who have entered into an agreement with the lessor
(however described) that authorises deductions being made under the Automatic
Rent Deduction Scheme.
Background
The Automatic Rent Deduction Scheme enables a social housing lessor to request
the Secretary make a deduction from a person's family tax benefit payments (other
than family tax benefit advances), to pay for rent or utilities arising as a result of the
occupancy of the premises. In order to request a deduction, a lessor must be a
social housing lessor (as defined in Part 3E of the Social Security Administration Act)
and the person in receipt of family tax benefit payments must be a social housing
tenant (as defined in Part 3E of the Social Security Administration Act).
The Automatic Rent Deduction Scheme also provides for the recovery of
overpayments made to social housing lessors, and enables the Secretary to charge
a social housing lessor fees for various services associated with the Automatic Rent
Deduction Scheme. Associated amendments are also made to Division 1
(Information gathering) of Part 6 of the Family Assistance Administration Act.
The amendments made by this Schedule commence on the later of the day after
Royal Assent and 1 January 2019.
Explanation of the changes
Family Assistance Administration Act
Definitions
Item 1 inserts definitions of household utilities, social housing lessor and social
housing tenant. which are given the same meanings as they have in the Social
Security Administration Act. Any determination made by the Minister for the
purposes of subsection 124QC(2) will also apply for the purposes of the family
assistance law.
Schedule 2 - Family Assistance Amendments
Payment of family tax benefit
Item 2 adds references to new Part 3A into subsections 23(6), 24(4) and 24A(2),
which relate to the payment of family tax benefit.
Inalienability
Family tax benefit payments are absolutely inalienable under section 66 of the
Family Assistance Administration Act. Item 3 adds new paragraph 66(2)(ac) to
provide that the inalienability of family tax benefit payments is subject to the new Part
3A of the Family Assistance Administration Act inserted by item 5. Item 4 provides
similarly in relation to Part 3E of the Social Security Administration Act.
Automatic deductions of rent or other household payments
Item 5 inserts new Part 3A into the Family Assistance Administration Act.
Division 1 - Introduction
Sections 67A and 67B set out the simplified outline and the objects of this Part.
Section 67C expressly provides that this Part binds the Crown in each of its
capacities.
Division 2 - Deductions from family tax benefit payments
Subsection 67D(1) provides that a social housing lessor may request the Secretary
to make a deduction from family tax benefit (other than family tax benefit advance),
whether an instalment or other payment, payable to a social housing tenant if both of
the following conditions apply. Firstly, the tenant has an ongoing or outstanding
obligation to pay an amount for rent, household utilities or both, in relation to the
tenant's occupancy of premises let by the lessor. Secondly, the tenant's agreement
with the lessor for occupancy of the premises, or another agreement with the lessor,
authorises the lessor to make requests under Part 3E for deductions from family tax
benefit payable to the tenant.
A tenant's other agreement with the lessor, referred to in paragraph 67D(1)(b), which
is not a tenancy agreement, but authorises the lessor to make requests for
deductions, is not required to be in written form.
Subsection 67D(2) provides that a deduction may be requested whether the
obligation arose before, on or after the commencement of this section.
Subsection 67D(3) provides that the social housing lessor's request must specify the
amount to be deducted, which must not be more than that required to satisfy rent,
household utilities or both payable by the tenant, and any outstanding payment or
rent, household utilities or both payable by the tenant. The lessor's request must
also specify the date from which deductions are to be made.
Schedule 2 - Family Assistance Amendments
Subsection 67D(4) provides that the social housing lessor may amend the request to
specify a different amount to be deducted. An amended request must satisfy the
requirements of subsection (3).
Subsection 67D(5) provides that the social housing lessor must give the request and
any amendment of the request to the Secretary in a way approved by the Secretary,
for the request or amendment to be effective. The Secretary may approve a way of
giving requests and a way of giving amendments.
Under section 67E, the Secretary has discretion to deduct an amount from a social
housing tenant's family tax benefit payment, if a request has been made by a social
housing lessor under section 67D. However, the Secretary must not make a
deduction if any circumstances outlined in subsection 67E(2) exist.
The Secretary must not make a deduction if the social housing lessor's request is
revoked, if the Secretary is notified under section 67G that the social housing tenant
ceases to be a social housing tenant in relation to the lessor, if the social housing
lessor ceases to be a social housing lessor, or at any time the tenant is covered by a
determination under subsection 67E(3).
The Secretary must also not make a deduction if a social housing tenant is subject to
the income management regime within the meaning of Part 3B of the Social Security
Administration Act and the deductible portion under Division 5 of Part 3B of the
Social Security Administration Act is nil.
The Secretary must not make a deduction if a social housing tenant is a trial
participant or voluntary participant in the cashless debit card trial within the meaning
of Part 3D of the Social Security Administration Act and the tenant's percentage of
the restricted portion under paragraph 124PJ(1)(a) or subsection 124PJ(2) of that
Act is 0%.
Subsection 67E(3) enables the Minister, by legislative instrument, to determine that
deductions must not be made from family tax benefit payments payable to specified
social housing tenants. A note alerts the reader that subsection 13(3) of the
Legislation Act 2003 provides for specification by class.
If the Secretary does not make a deduction in accordance with a request made,
including where the Secretary deducts less than was requested, the Secretary must
give written notice to the lessor of that fact (subsection 67E(4)).
Section 67F provides that the Secretary is to determine the amount of the deduction.
The amount must not exceed the amount specified in a request made under
section 67D, or the amount of family tax benefit remaining after all deductions
specifically required by a law of the Commonwealth (other than Part 3A) are made.
For a social housing tenant who is also subject to the income management regime
within the meaning of Part 3B of the Social Security Administration Act, then the
amount of a deduction must not exceed the amount that would be the deductible
portion, under Division 5 of Part 3B of the Social Security Administration Act, of the
family tax benefit if no deduction was made under section 67E of this Act.
Schedule 2 - Family Assistance Amendments
For a social housing tenant who is also a trial participant or voluntary participant in
the cashless debit card trial within the meaning of Part 3D of the Social Security
Administration Act, then the amount of a deduction must not exceed the amount
equal to the tenant's percentage under paragraph 124PJ(1)(a) or subsection
124PJ(2) of that Act.
Section 67G sets out the requirements for notifications by social housing lessors.
Subsection 67G(1) provides that a social housing lessor may revoke a request made
under section 67D by giving notice to the Secretary in a way approved by the
Secretary. If a request has been made under section 67D in relation to a person and
the person ceases to be a social housing tenant in relation to that social housing
tenant lessor, the lessor must notify the Secretary as soon as practicable
(subsection 67G(2)). Similarly, if the social housing lessor ceases to be a social
housing lessor (other than because of subsection 124QC(2) of the Social Security
Administration Act), the authority or body must notify the Secretary as soon as
practicable after ceasing to be a social housing lessor (subsection 67G(3)). A
notification under subsection 67G(2) or (3) must be given in a way approved by the
Secretary (subsection 67G(4)).
Division 3 - Treatment of amounts deducted
Under section 67H, Division 3 will apply when the Secretary deducts an amount
under Division 2 from family tax benefit payable to a social housing tenant.
Section 67J requires the Secretary to pay the amount deducted to the social housing
lessor.
Section 67K provides that if the Secretary pays the amount to the social housing
lessor and the amount, or a part of the amount relates to a particular liability, then
the liability is discharged to the extent of the amount paid to the social housing
lessor, even if the liability is not yet due and payable. In other words, if a deduction
was requested for combined amounts representing rent and utilities, and a deduction
is made, the amount paid to the lessor extinguishes each of the liabilities for rent and
utilities to the extent that part of the deduction relates to that liability. However, this
section does not reduce a social housing tenant's liability in respect of an amount
paid to the lessor that gives rise to a debt due to the Commonwealth by the lessor
(subsection 67K(3)).
Section 67L provides that for the purposes of all laws of the Commonwealth (except
any law specified under subsection 67L(4)), the social housing tenant is taken to
have been paid the amount deducted, at the time the family tax benefit payment was
paid, or would have been paid but for the deduction, whether or not the Secretary
paid the amount to the social housing lessor (subsections 67L(1) to (3)). This
provision is subject to new section 67N and any law of the Commonwealth specified
in an instrument under subsection 67L(4). Subsection 67L(4) provides that the
Minister may, by legislative instrument, make a determination specifying a law of the
Commonwealth for the purposes of subsection 67L(2).
Division 4 - Overpayments to social housing lessors
Schedule 2 - Family Assistance Amendments
Section 67M applies where a payment to a lessor purportedly made under Division 3
is made in connection with a deduction properly made under Division 2. If the
amount paid to the lessor exceeds the deduction, the excess is a debt due to the
Commonwealth by the social housing lessor. A note under subsection 67M(2) directs
the reader to section 67P for debt recovery.
Section 67N applies where a payment of a deduction has been made to a social
housing lessor under Division 3 and the deduction exceeded the amount (which may
be nil) determined by the Secretary under section 67F (subsection 67N(1)). In such
cases, the amount a social housing tenant is taken to have been paid under
subsection 67L(1) is reduced by the excess (subsection 67N(2)). Subsection 67N(3)
provides that the excess is a debt due to the Commonwealth by the social housing
lessor. A note under subsection 67N(2) directs the reader to section 67P for debt
recovery.
Subsection 67N(4) provides that the Secretary must pay the social housing tenant an
amount equal to the excess that was deducted, whether or not the Commonwealth
recovers the debt, and that amount will be taken to be a payment of family tax
benefit. Subsection 67N(5) provides that the Secretary must not pay an amount
under subsection 67N(4) to the extent that the sum of that amount, and the amount
that should have been deducted, would exceed the amount of family tax benefit that
would have been payable to the tenant apart from Part 3A. Subsection 67N(6)
provides that subsection 67N(4) has effect for the purposes of all laws of the
Commonwealth, except any law specified by the Minister by legislative instrument
under subsection 67N(7).
Section 67P allows the Secretary to set off amounts payable to a social housing
lessor under Division 3 against debts due to the Commonwealth by the lessor under
Division 4 (subsection 67P(1)). Subsection 67P(2) provides that the Commonwealth
may recover a debt due to it under Division 4 in a court of competent jurisdiction.
Subsection 67P(3) provides that Part 4 of the Family Assistance Administration Act
does not apply to a debt due by a social housing lessor to the Commonwealth under
Division 4.
Section 67Q provides that there is no time limit for the commencing legal
proceedings or taking any action under Part 3E for the recovery of a debt or
overpayment.
Division 5 - Fees
Section 67R enables the Secretary to charge social housing lessors fees, on the
Commonwealth's behalf, for deducting amounts under Division 2, paying amounts to
the lessor under Division 3, and for services provided to the lessor in the
administration of Part 3A.
Information gathering
Item 6 and 7 inserts new paragraph 154(1)(c) to enable the Secretary to require a
person to give information or produce a document to a specified agency if the
Schedule 2 - Family Assistance Amendments
Secretary considers that the information or document may be relevant to the
operation of Part 3A.
Item 8 and 9 inserts new paragraph 157(1)(c) to enable the Secretary to require a
person to give information about a class of persons to a specified agency to facilitate
the administration of Part 3A.
Item 10 inserts new paragraph 157(2)(m) enabling the Secretary to require, about
each person in the class of persons, for the purposes of Part 3A, evidence to support
a request made by the social housing lessor under section 67D.
Schedule 3 - National Rental Affordability Scheme Amendments
Schedule 3 - National Rental Affordability Scheme Amendments
Summary
The purpose of this Schedule is to clarify and correct certain ambiguous provisions in
the National Rental Affordability Scheme Act 2008 (NRAS Act), and to provide
further flexibility in the future administration of the National Rental Affordability
Scheme (NRAS) so as to further the objects of the NRAS Act.
The Bill clarifies that the objects of the NRAS Act are to be achieved in ways that
include protecting tenants in NRAS, protecting investors, providing rights to investors
and recognising that State and Territory contributions are complementary to NRAS.
The amendments will also allow for the Secretary to accept a voluntary written
undertaking from an approved participant in relation to NRAS.
The Bill expressly identifies the Constitutional powers being relied upon and giving
the NRAS Act operation within the scope of those Constitutional powers.
The Bill also clarifies other regulation making powers including to support the making
of new regulations to replace the National Rental Affordability Scheme Regulations
2008 (NRAS Regulations), which are due to sunset on 1 April 2019. No new
allocations will be made under NRAS and so the Bill will ensure that the new
regulations do not need to provide for the approval of new participants under NRAS.
Background
The National Rental Affordability Scheme (NRAS) is established by the National
Rental Affordability Scheme Regulations 2008 (NRAS Regulations), made under the
National Rental Affordability Scheme Act 2008 (the NRAS Act). The object of the
NRAS is to increase the supply of affordable rental housing for low to middle income
earners, by enabling eligible individuals and families to rent NRAS dwellings at a rate
that is at least 20 per cent below market value rent. NRAS also provides incentives
to persons to build and rent NRAS dwellings. Under NRAS, an 'approved participant'
may apply for an 'allocation' in relation to a rental dwelling, subject to certain
conditions. If the conditions are satisfied, the approved participant is eligible to
receive an 'incentive', either in the form of a monetary payment or a tax offset for a
period of ten years. The 'incentive' is comprised of a Commonwealth component
which is paid in accordance with the NRAS Regulations. There is also a State and
Territory contribution which is paid in accordance with an agreement between the
relevant State/Territory Government and an approved participant.
Often, an approved participant is not the owner of the rental dwelling; rather the
owners are third party 'investors'. The approved participant usually acts as a service
provider to the investor by managing the compliance with the requirements under the
NRAS Regulations in exchange for a fee (generally a portion of the incentive). Under
NRAS, an approved participant has an obligation to pass on an incentive to an
investor if there is a contractual arrangement in place to this effect (regulations 30A
and 30B).
Schedule 3 - National Rental Affordability Scheme Amendments
There have been issues surrounding approved participants failing to pass on
incentive payments to investors and other issues around the conduct of approved
participants.
Schedule 3 will commence on the day after Royal Assent, except the provisions
which require changes to the National Rental Affordability Scheme Regulations
2008, which are to commence on a single day fixed by Proclamation.
Explanation of the changes
Item 1 repeals and substitutes subparagraph 7(2)(b)(ii) of the NRAS Act. The new
subparagraph inserted by this item clarifies that the NRAS Regulations must provide
that a condition of allocation is that each and every time rent is charged for a
dwelling (whether that be on a weekly, fortnightly, monthly or other basis), that rent
must be at least 20 per cent below the market value rent.
This amendment is made for the sake of clarity to remove any ambiguity about the
operation of subparagraph 7(2)(b)(ii), and to protect eligible tenants from being
subject to higher rent at any time during the year.
Item 1A amends section 3 to insert subsections in order to clarify the object of the
NRAS Act.
Item 1B inserts a new subsection 3(2) which clarifies that the object of the NRAS Act
is to be achieved in ways that include the matters mentioned in new paragraphs
3(2)(a) to (d).
Paragraph 3(2)(a) provides for protecting tenants of rental dwellings that are rented
during an NRAS year. Section 5 of the NRAS Act provides that the regulations that
prescribes NRAS must provide for certain matters that further the objects of the
NRAS Act. Together with the amendments made by item 1K, this item will ensure
that regulations can be made in respect of protecting tenants in NRAS.
Paragraph 3(2)(b) provides that protecting investors of an NRAS rental dwelling is
also a way in which the object of the NRAS Act is to be achieved.
Since NRAS began in 2008, there have been instances where approved participants
have failed to pass on incentives to investors. Approved participants and investors
usually enter into a contract to facilitate this, outside of the Department's scope, as
investors are not defined under the Act. Investors provide a significant proportion of
properties in NRAS, and if they are not supported, investors are likely to withdraw
their properties from NRAS, which would reduce the number of rental properties in
NRAS and likely to impact low to moderate income households. Therefore, the
inclusion of investors in this amendment will clarify that the purpose of NRAS is also
to protect investors.
Schedule 3 - National Rental Affordability Scheme Amendments
Paragraph 3(2)(c) provides that the object of the Act is to be achieved by providing
rights to investors in NRAS. If investors' rights are not protected, they may be out of
pocket and may seek to remove their properties out of NRAS, which would lead to a
decline of available affordable housing for low and moderate income households.
Paragraph 3(2)(d) makes clear that there are separate contributions, in cash or in
kind, made by States and Territories, to approved participants in NRAS.
Item 1C inserts a new section 3A.
Section 3A provides that NRAS is supported by a variety of Constitutional powers.
The effect of this section is that if a court finds that the Commonwealth's legislative
power does not support the Act, a particular provision or multiple provisions of the
Act or the Income Tax Assessment Act 1997, the Act shall nevertheless be valid to
the extent to which it is supported by other legislative powers.
Subsections 3A(1) and (2) are provisions relating to the severable operation of the
Act. Subsections 3A(3) to (6) set out additional and severable heads of legislative
power under the Constitution which support the Act.
Subsection 3A(3) provides that the Act has the effect it would have if its operation
were expressly confined to give effect to Australia's rights and obligations under
paragraph 1 of Article 2 and Article 11 of the International Covenant on Economic,
Social and Cultural Rights (ICESCR) to which paragraph 51(xxix) of the Constitution
applies. NRAS and its goal to provide for more affordable housing is a suitable
method for Australia to comply with its international obligations under the ICESCR.
Subsection 3A(4) provides that the Act has the effect it would have if its operation
were expressly confined to:
(a) the regulation of activities, functions, relationships or business of an investor
or approved participant that is a constitutional corporation;
(b) the creation of rights or privileges belonging to an investor or approved
participant that is a constitutional corporation;
(c) the imposition of obligations on an investor or approved participant that is a
constitutional corporation;
(i) in respect of the matters mentioned in paragraphs (a) to (c), the
regulation of the employees or shareholders of the constitutional
corporation;
(d) the regulation of persons or entities whose conduct affects or is capable of
affecting the activities, functions, relationships or business of an investor or an
approved participant that is a constitutional corporation.
Subsection 3A(5) provides that the Act has the effect it would have if its operation
were expressly confined to determining the tax liability of a person.
Subsection 3A(6) provides that the Act has the effect it would have if its operation
were expressly confined to apply in relation to the following:
(a) an approved rental dwelling located in a Territory;
(b) an approved participant or investor who is a resident in a Territory; or
(c) an approved participant or investor that is:
(i) a body corporate that is incorporated in a Territory; or
Schedule 3 - National Rental Affordability Scheme Amendments
(ii) a body corporate that is taken to be registered in a Territory under
section 119A of the Corporations Act 2001; or
(iii) a trust, if the proper law of the trust and the law of the trust's
administration are the law of a Territory; or
(iv) an entity, the core or routine activities of which are carried out in or in
connection with a Territory.
Item 1D amends the definition of 'allocation' to substitute 'an approved rental' with 'a
rental'. This amendment is required as 'approved rental dwelling' is a defined term in
the NRAS Regulations and is not defined in the NRAS Act.
Item 1E inserts new definitions.
A new definition of 'constitutional corporation' is inserted to mean a corporation to
which paragraph 51(xx) of the Constitution applies.
New section 3A will include references to an investor or approved participant that is
a constitutional corporation. It is therefore necessary to define 'constitutional
corporation'.
A new definition of 'investor', similar to the definition in the NRAS Regulations, is
also inserted to mean a person who is the legal or beneficial owner of a rental
dwelling covered by an allocation and who is not an approved participant in relation
to the rental dwelling.
A number of other amendments to Schedule 3 to the Bill will result in provisions of
the NRAS Act including references to investors. It is therefore necessary to define
'investor'.
Investors are the owners of rental dwellings covered by an allocation in NRAS who
are not approved participants themselves. This amendment will ensure that investors
are acknowledged as being part of NRAS.
'Tax law provisions' is defined to mean item 23 of the table in section 67-23 and
provisions of Division 380 of the Income Tax Assessment Act 1997.
New section 3A will include references to tax law provisions. It is therefore necessary
to define 'tax law provisions'.
Item 1F repeals paragraph 5(a) and substitutes a new paragraph.
Current paragraph 5(a) states that the regulations must prescribe a Scheme about
the approval of participants by the Secretary. However, allocations are no longer
being made under NRAS and as such, the Secretary is no longer approving new
approved participants. Given this, it should be possible for future regulations not to
include provisions relating to the approval of participants.
Therefore, this item amends the NRAS Act to state that the NRAS Regulations must
prescribe a Scheme about the obligations of existing approved participants.
Schedule 3 - National Rental Affordability Scheme Amendments
Item 1G inserts new paragraph 6(ca).
Section 6 sets out matters for which NRAS, contained in regulations, may provide.
New paragraph 6(ca) allows for regulations to be made in relation to the adjustment,
in certain circumstances of the amount of an incentive that:
(i) is to be provided to an approved participant; or
(ii) has previously been provided to an approved participant;
Approved participants are entitled to an incentive if they satisfy the conditions of
allocations, set out in the NRAS Regulations, for an NRAS year. The adjustment of
an incentive paid and payable may be required in circumstances where an approved
participant has failed to pass on the incentive to the investor. Adjustments will only
be made where there has been a transfer under regulation 21A.
Item 1H inserts 'covered by an allocation' after 'dwelling'.
Section 6 sets out matters for which NRAS, contained in regulations, may provide.
Currently, paragraph 6(d) states that NRAS may provide for how the market value
rent of a rental dwelling for an NRAS year is to be determined. This current wording
appears to be broad and these amendments are a technical amendment because
'rental dwelling' is defined in a general way not connected to NRAS.
Item 1J inserts new paragraph 6(cb).
Section 6 sets out matters for which NRAS, contained in regulations, may provide.
New paragraph 6(cb) provides that regulations may be made in relation to the
passing on of State and Territory contributions, or their monetary equivalent, by
approved participants in certain circumstances.
Under NRAS, an approved participant that satisfies the conditions of allocation is
entitled to a Commonwealth incentive payment. The relevant State and Territory
Government also pays an additional contribution, either through a cash payment or
through an in-kind payment. There have been instances where approved
participants have failed to pass on this State/Territory contribution to investors.
However, it is not clear that the NRAS Act currently permits regulations to be made
relating to the circumstances in which the State/Territory contribution must be
passed on to investors. New paragraph 6(cb) will clearly allow for such regulations
to be made.
Item 1K inserts new paragraphs 6(e), (f) and (g).
Section 6 sets out matters for which NRAS, contained in regulations, may provide.
New paragraphs 6(e), (f) and (g) provide that regulations may be made in relation to
the protection of tenants of rental dwellings in NRAS that are rented during an NRAS
year, the protection of investors and the rights of investors.
Item 1L inserts a heading 'Conditions imposed by Secretary under the Scheme' to
clarify that the provisions following it relate to conditions imposed by Secretary under
NRAS.
Schedule 3 - National Rental Affordability Scheme Amendments
Item 2 repeals and substitutes paragraph 7(2)(c) of the NRAS Act. Vacancy periods
will continue to be prescribed by the NRAS Regulations, but the substituted provision
provides greater flexibility in how maximum vacancy periods are prescribed,
including how the vacancy periods may be calculated, or what form they may take.
This is necessary to ensure that approved participants are not subject to excessive
penalties as a result of vacancy periods, while ensuring that NRAS continues to
meet its objective of increasing the stock of affordable rental dwellings.
Item 3 inserts new subsections 7(4) to (6)
Current section 7 sets out matters for which NRAS, contained in the NRAS
Regulations, must provide.
New subsection 7(4) clarifies that the NRAS Regulations made for the purposes of
subparagraph 2(b)(i) may provide for the Secretary to make a legislative instrument
prescribing matters relating to the income of eligible tenants under NRAS.
Item 1 of Schedule 3 to the Bill will repeal subparagraph 7(2)(b)(ii) of the Act, and
substitute a new subparagraph which has the effect that the NRAS Regulations must
provide for the Secretary to make an allocation on the condition that each charge of
rent for the rental dwelling is at least 20% less than the market value rent for the
dwelling.
Evidence given to the Senate Community Affairs Legislation Committee's inquiry on
the Bill suggested that it is possible for a tenant to be overcharged rent inadvertently
in a number of circumstances. While the Government's policy is for each charge of
rent to be at least 20 per cent below the market rent, it is appropriate for the NRAS
Regulations to be able to set out circumstances in which this rule should not apply.
New subsection 7(5) empowers the NRAS Regulations to provide that in certain
circumstances, the Secretary may decide that the condition mentioned in
subparagraph 7(2)(b)(ii) does not apply if it will not result in an increase in rental
costs for low and moderate income households. The NRAS Regulations will confine
the Secretary's power to disapply the condition to very limited circumstances. The
Secretary will only be able to use the discretion in relation to a specific charge for
rent, for a specific allocation, where the overcharging of rent was inadvertent and the
tenant had been compensated.
The ability to implement new and varied conditions of allocations is important to
further the objects of NRAS, and to protect eligible tenants and ensure the safety
and viability of dwellings. For example, new conditions of allocation may be imposed
to deal with certain emerging safety issues, such as a requirement to use certain
non-flammable materials, or replace existing dangerous materials.
New subsection 7(6) provides express legislative authority for NRAS to impose a
new condition or vary conditions of an existing allocation. If the NRAS Regulations
provide, the new or varied condition could automatically apply to all existing
allocations by force of law, without any further action required by the Department to
individually vary those allocations. However, this subsection does not apply to a
Schedule 3 - National Rental Affordability Scheme Amendments
condition that is varied or imposed by the Secretary (such as special conditions
made by the Secretary).
New subsection 7(7) provides that subsection 7(6) has effect despite anything in the
Act or the NRAS Regulations.
Item 4 inserts new paragraphs 8(ba) and 8(bb)
The current paragraph 8(b) states that NRAS may provide for the transfer of an
allocation to another approved participant in certain circumstances, however it is
unclear whether it allows for regulations to be made to allow for the transfer of all of
an approved participant's allocations. In some circumstances, approved participants
engage in undesirable conduct in relation to a large number of allocations.
Therefore, this item inserts a new paragraph 8(ba) to allow for NRAS to provide for
the transfer of all allocations made to an approved participant, in certain
circumstances.
If the NRAS Regulations provide, the Secretary would have the power to make a
'bulk' transfer of all of the participant's allocations to another approved participant, in
certain circumstances. This power would only be exercised on the Secretary's own
initiative, and does not automatically trigger upon every request by an investor.
New paragraph 8(bb) confirms that NRAS may provide for the circumstances in
which an allocation can be transferred from one rental dwelling to another rental
dwelling. This ability is necessary in instances where a dwelling is sold and the new
owner does not wish to participate in NRAS.
Without this discretion, numerous allocations would fall out of NRAS where the
owners of the dwellings no longer wish to participate. This would lead to a significant
reduction in the stock of affordable housing provided for under NRAS.
Item 4A inserts new sections 10A and 10B
The conduct of some approved participants towards investors has at times, been
unacceptable. Approved participants have sent incorrect or misleading
communications to investors, failed to perform their contractual obligations to
investors and taken action to require investors to use particular property
management services.
This item inserts new sections that allows an approved participant to voluntarily
provide a written undertaking to the Secretary in relation to any conduct relating to
NRAS. In appropriate cases, the acceptance of an enforceable undertaking by an
approved participant to remedy prior undesirable conduct, or to not engage in the
undesirable conduct in the future, may avoid the need for the Secretary to respond to
the conduct in another way, for example, by transferring an allocation.
Whilst this Bill has not adopted the enforceable undertakings provisions as provided
for under Part 6 of the Regulatory Powers (Standard Provisions) Act 2014, the
provisions are similar. These provisions are broader that the Regulatory Powers
Schedule 3 - National Rental Affordability Scheme Amendments
(Standard Provisions) Act 2014 as it allows the Secretary to enforce broader
conduct, not in an Act or a legislative instrument, in relation to NRAS. Through these
provisions, the Secretary may accept a voluntary undertaking from an approved
participant relating to any conduct connected with NRAS (including the approved
participant's dealings with investors) and then enforce that undertaking, if necessary
in the Federal Court.
Subsection 10A(1) enables the Secretary to accept a written undertaking given by an
approved participant, committing them to particular action (or inaction) in order to
prevent or respond to an undesirable conduct committed by an approved participant
in relation to NRAS.
Undertakings provide a remedy other than financial sanctions to past or prospective
conduct committed by an approved participant in relation to NRAS.
Subsection 10A(2) states that the undertaking must be expressed to be an
undertaking under this section.
Subsection 10A(3) states that the approved participant may withdraw or vary the
undertaking at any time, but only if the Secretary provides written consent to the
withdrawal or variation.
Subsection 10A(4) states that the consent of the Secretary is not a legislative
instrument. This is to assist readers to understand the status of consent given under
this clause; it does not meet the meaning of legislative instrument under subsection
8(1) of the Legislation Act 2003, and is not intended as an exemption from that Act.
Subsection 10A(5) provides that the Secretary may cancel the undertaking by
providing a written notice to the approved participant.
Subsection 10B(1) states that the Secretary may apply to the Federal Court of
Australia for an order of enforceable undertaking if an approved participant has been
given an undertaking under section 10A, the undertaking has not been withdrawn or
cancelled, and the Secretary considers that the approved participant has breached
the undertaking.
Subsection 10B(2) provides the list of orders the Federal Court of Australia may
impose to remedy a breach of an undertaking. This includes the ability to make
orders to comply with the undertaking, to pay a pecuniary penalty to the
Commonwealth, to compensate other people, or to make any other orders the court
sees fit, if it is satisfied that the approved participant has breached the undertaking.
Item 4B repeals subsection 11(1) and substitutes a new subsection.
Current subsection 11(1) states that the Secretary may, by written instrument,
delegate their power to approve a participant, to approve a rental dwelling and to
decide whether to make an allocation under NRAS, to an SES employee in the
Department. However, allocations are no longer being made under NRAS and as
such, the Secretary is no longer approving new approved participants or deciding
whether to make an allocation. Given this, new delegation instruments are no longer
Schedule 3 - National Rental Affordability Scheme Amendments
required for the purposes of approving a participant or making an allocation under
NRAS.
This item substitutes a new subsection to state that the Secretary may still, by written
instrument, delegate the Secretary's power to approve a rental dwelling for the
purposes of NRAS, to an SES employee in the Department.
Item 5 sets out six application provisions.
Subitem 5(1) provides that paragraph 5(a) of the Act 'obligations of approved
participants' applies to an obligation that arose before, or arises on or after, the day
this item commences as the NRAS Regulations already includes matters relating to
the obligations of approved participants.
Subitem 5(2) provides that paragraph 6(ca) applies to an incentive provided before,
on or after the day this item commences. This would allow the NRAS Regulations to
provide for the adjustment of an incentive paid and payable in relation to an
allocation in a past period. This would assist investors to recover incentives which
had not been passed on to them from past periods.
Subitem 5(3) provides that paragraph 6(cb) applies to a contribution made by a State
or Territory before, on or after the day this item commences.
Subitem 5(4) provides that paragraphs 6(f) and (g) applies in relation to an investor,
whether the person becomes an investor in NRAS, before, on or after the day this
item commences. In other words, the NRAS Regulations may be made to provide for
the protection of investors, including existing ones.
Subitem 5(5) provides that subsections 7(5), (6) and (7) apply in relation to an
allocation that exists on the day this item commences. This is because no new
allocations can be made and all allocations would have already been made on the
day this item commences.
Subitem 5(6) provides that paragraphs 8(ba) and (bb) apply in relation to an
allocation that exists on the day this item commences. This is because no new
allocations can be made and all allocations would have already been made on the
day this item commences.
Item 6 is an application provision providing that subsection 7(4) as inserted by item 3
applies to all allocations, including those made before, on or after the day the
Schedule commences. New subsection 7(4) provides that subject to some
exceptions, the NRAS Regulations can vary conditions of allocation from time to
time. The purpose of this application provision is to ensure that any future variation
of conditions of allocation will apply to conditions that were in effect before, on or
after the commencement of this Schedule, which will mean that different allocations
cannot be subject to different conditions.
Item 7: Transitional - variation of condition relating to charges of rent
Schedule 3 - National Rental Affordability Scheme Amendments
This item provides an exception to paragraph 7(6)(a) of the Act so that the NRAS
Regulations may vary the condition of an allocation mentioned in subparagraph
7(2)(b)(ii) of the Act for the purposes of the amendment made by item 1 of this
Schedule.
This would allow the NRAS Regulations to vary existing allocations with the condition
that 'the rent that is charged is at all times during the year at least 20% less than the
market value rent for the dwelling' to the condition that 'each charge of rent for the
rental dwelling during the year is at least 20% less than the market value rent for the
dwelling'.
Item 8: Transitional - delegation
Subsection 11(1) allows the Secretary to delegate their powers to an SES employee
in the Department, through a written instrument. This item clarifies that any existing
delegation instrument made under subsection 11(1) of the Act that has been in force
before the amendment of subsection 11(1) continues to be in force.
This clarifies that despite the repeal of the current subsection 11(1), all existing
delegation instruments still continue to be in force.
Statements of compatibility with human rights
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
SCHEDULE 1 - SOCIAL SECURITY AMENDMENTS
SCHEDULE 2 - FAMILY ASSISTANCE AMENDMENTS
These Schedules are compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011.
Overview of Schedules 1 and 2
Schedules 1 and 2 of the Bill establish the Automatic Rent Deduction Scheme
(ARDS). ARDS will enable rent and other social housing tenancy costs to be
deducted from social housing tenants' social security payments, (other than a
student start-up loan or an advance), a payment under the ABSTUDY scheme (other
than an ABSTUDY student start up loan or an advance) and family tax benefit.
Deductions will then be able to be changed or ceased only by agreement with the
tenant's social housing provider.
ARDS recognises that social welfare payments should be used towards a person's
and their family's basic needs and is intended to support security of tenure in
housing. It also recognises that a person's home is an important precondition to
their ability to exercise their human rights and their economic, social and cultural
rights in particular.
ARDS aims to:
1. reduce the risk that social housing tenants will accumulate rental arrears and
other housing debt risking their tenancies,
2. reduce the cost of managing social housing arrears and debt, and
3. better secure the income stream associated with housing assets.
It is a condition of lease in most jurisdictions that public housing tenants use the
Department of Human Services provided (voluntary) Rent Deduction Scheme
(RDS) to pay their public housing tenancy costs. In addition, tenancy tribunals
often order defaulting tenants to use RDS to pay for rent, rental arrears and
property damage. Similarly, community housing and Indigenous community
housing tenants are expected to use the Department of Human Services (DHS)
provided Centrepay service to pay their tenancy costs.
Under social security and family assistance law, social security payments and Family
Tax Benefit are 'absolutely inalienable'. This enables tenants to bypass their social
housing provider and cancel their authorised or tenancy tribunal ordered voluntary
rent deductions directly with DHS.
This Bill will amend the Social Security (Administration) Act 1999, Social Security
Act 1999 and A New Tax System (Family Assistance) (Administration) Act 1999 to
Statements of compatibility with human rights
provide that social housing tenants will need to negotiate changes to deduction
amounts with their social housing provider, which will advise DHS of any
changes.
To the extent that the Bill may limit human rights, those limitations are reasonable,
necessary and proportionate to achieving the legitimate objective of preventing
evictions due to arrears and debt which may force a person, and their children,
into homelessness.
Human rights implications
The Bill engages the following Human Rights.
The right to social security
Article 9 of the International Covenant on Economic, Social and Cultural Rights
(ICESCR) recognises 'the right of everyone to social security, including social
insurance'. The ICESCR requires a country to, within its maximum available
resources, provide a minimum essential level of benefits to all individuals and
families that will enable them to acquire at least essential health care, basic shelter
and housing, water and sanitation, foodstuffs, and the most basic forms of education.
People subject to ARDS will benefit by way of a reduction of their liability to a social
housing lessor. As such, ARDS will be compatible with the right to social security as
expressed in the ICESCR.
Although a person's ability to choose how to spend social welfare payments may be
limited, ARDS applies for rent and utility costs that the person is already obligated to
pay. ARDS is designed to ensure persons continue to enjoy an adequate standard of
living by reducing the risk of arrears build-up which may lead to eviction and possible
homelessness. ARDS also ensures that a deduction can only be made in relation to
actual amounts owing, and safeguards are built into ARDS to prevent a deduction
that exceeds the amount specified.
Article 26 of the Convention on the Rights of the Child (CRC) also recognises 'for
every child the right to benefit from social security' and that 'benefits should, where
appropriate, be granted, taking into account the resources and the circumstances of
the child and persons having responsibility for the maintenance of the child'.
Article 3 of the CRC provides that in all actions concerning children, the best
interests of the child must be a primary consideration. ARDS will work to support this
by ensuring that rent is paid on time and in full for households living in social
housing, including families with children, to prevent rental arrears and potential
eviction.
The Bill recognises that recipients of a range of social security payments and family
tax benefit have children and that the best interests of children are served when
parents responsibly ensure that their welfare benefits are directed towards housing
as a primary and basic need. The Bill also aims to reduce pressure on child
protection services by maintaining continuity of accommodation through ARDS.
The right to an adequate standard of living including housing
Statements of compatibility with human rights
Article 11.1 of the ICESCR states that everyone has the right to 'an adequate
standard of living for himself and his family, including adequate food, clothing and
housing, and to the continuous improvement of living conditions' and that
'appropriate steps' be taken to 'ensure the realization of this right'.
Under ARDS, amounts will be deducted from their social security payments,
ABSTUDY or instalments of family tax benefit and directed to their social housing
provider to pay costs for rent and utilities payable under the rental agreement. This
will protect people's social housing tenancies by preventing arrears build-up and
reducing the risk of eviction due to arrears or debt. As such, ARDS is designed to
operate to reduce the likelihood of a person becoming homeless and is compatible
with and enhancing the right to an adequate standard of living including housing.
Article 10 of the ICESCR recognises the rights of the family and child to protection
and assistance. The introduction of an ARDS seeks to support this objective through
ensuring rental payments are made seamlessly and regularly. This will prevent rental
arrears, possible eviction, and will assist with a person's capacity to meet the basic
needs of his or her family.
Article 27 of the CRC also recognises 'the right of every child to a standard of living
adequate for the child's physical, mental, spiritual, moral and social development'.
The Article also states that 'States Parties, in accordance with national conditions
and within their means, shall take appropriate measures to assist parents and others
responsible for the child to implement this right and shall in case of need provide
material assistance and support programmes, particularly with regard to nutrition,
clothing and housing'.
By ensuring social housing rent is paid, the Bill is compatible with children's rights to
an adequate standard of living by ensuring children of social welfare payment
recipients affected by ARDS are at lower risk of being without a home.
Article 18.2 of the CDC places an obligation on States to render appropriate
assistance to parents and legal guardians in the performance of their child-rearing
responsibilities. ARDS will work alongside other available support services, to ensure
that tenants continue to be housed safely and affordably while they get the help they
need to sustain their tenancies.
The right to protection of the family
Article 10 of the ICESCR recognises the rights of the family and child to the widest
possible protection and assistance. The amendments to the Bill protects individuals
and families from financial hardship, and ensures that they are able to meet the
basic needs of their family, including the need for housing.
The rights of children
Article 27 of the Convention on the Rights of the Child (CRC) recognises 'the right of
every child to a standard of living adequate for the child's physical, mental, spiritual,
moral and social development'. The Article also states that 'States Parties, in
accordance with national conditions and within their means, shall take appropriate
measures to assist parents and others responsible for the child to implement this
Statements of compatibility with human rights
right and shall in case of need provide material assistance and support programmes,
particularly with regard to nutrition, clothing and housing'. Article 3 of the CRC
provides that in all actions concerning children, the best interests of the child must be
a primary consideration.
The amendments to the Bill will support this by ensuring that households in social
housing, including families with children, are sustaining their tenancies and are
protected from financial hardship.
The right to self-determination
Article 1 of the ICESCR states that 'all peoples have the right of self-determination.
By virtue of that right they freely determine their political status and freely pursue
their economic, social and cultural development'. ARDS will be compatible with a
person's right to freely pursue their economic, social or cultural development
because ARDS is intended to protect the tenancies of persons affected in
recognition of the important role housing plays in a person's ability to economically,
socially and culturally develop.
The right to privacy
Article 17 of the ICCPR provides that no one shall be subjected to arbitrary or
unlawful interference with their privacy. Privacy guarantees a right to secrecy from
the public of personal information. For interference with privacy not to be arbitrary,
it must be in accordance with the provisions, aims and objectives of the ICCPR and
should be reasonable in the particular circumstances. Reasonableness in this
context incorporates notions of proportionality to the end sought and necessity in the
circumstances.
To operate, ARDS will only require limited information to be provided about a person.
The Secretary will be able to act on a request to make a deduction without requiring
sensitive information about a person's tenancy and circumstances being disclosed.
Conclusion
Schedules 1 and 2 are compatible with human rights. ARDS will limit people's
capacity to withdraw from arrangements to pay rent and utility costs relating to
their social housing to meet their obligations under their leases.
To the extent that this may limit human rights those limitations are reasonable,
necessary and proportionate to achieving the legitimate objective of preventing
evictions due to arrears and debt which may force a person, and their children,
into homelessness.
Statements of compatibility with human rights
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
SCHEDULE 3 - NATIONAL RENTAL AFFORDABILITY SCHEME AMENDMENTS
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Schedule
The Bill expands and clarifies the objects of the National Rental Affordability Scheme
Act 2008 (NRAS Act) and the Constitutional powers that support the NRAS Act. The
Bill also expands and clarifies the power to make regulations under the NRAS Act.
The National Rental Affordability Scheme (NRAS) is prescribed in the National
Rental Affordability Scheme Regulations 2008. These amendments made by the Bill
are technical in nature and do not impact the rights or freedoms of any person.
The Bill includes provisions enabling the Secretary of the Department to accept an
enforceable undertaking from an "approved participant" in NRAS. There are 130
approved participants who have allocations in NRAS associated with rental
dwellings, who are entitled to receive an annual incentive for 10 years if the
conditions of allocation are satisfied. Some approved participants contract with
investors, who own rental dwellings, to make the dwellings available to rent as part
of NRAS. The behaviour of some approved participants to investors is undesirable.
For example, some approved participants delay or fail to pass on incentives to
investors or make misleading statements to investors. Under NRAS, investors may
request the Secretary to transfer the allocation associated with their rental dwelling in
certain circumstances. Enforceable undertakings are voluntary and will only be
given by an approved participant if the approved participant wishes to do so. An
approved participant cannot be required to give an enforceable undertaking.
However, where an enforceable undertaking is given, the Secretary will be able to
enforce the undertaking if the Secretary considers that the undertaking has been
breached.
Enforceable undertakings will provide a further flexible mechanism to enable the
Secretary of the Department to act to protect the interests of investors. The use of
enforceable undertakings may reduce the need to transfer allocations in some
circumstances. For example, if the Secretary accepts an enforceable undertaking
from an approved participant not to send particular communications to investors that
are misleading, the Secretary may decide not to transfer an allocation to another
approved participant, even if previous misleading conduct by the approved
participant means that a ground for transfer exists.
Human rights implications
This Schedule is compatible with the human rights and freedoms recognised or
declared in the international instruments listed in the definition of human rights in
section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Statements of compatibility with human rights
Of the human rights and freedoms recognised or declared in the international
instruments listed in the definition of human rights at section 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011, this Schedule engages the right to an adequate
standard of living, including housing, as referred to in Article 11.1 of the International
Covenant on Economic, Social and Cultural Rights (done at New York on 16
December 1966 ([1976] ATS 5)).
This Schedule supports the right to adequate housing, as it is addresses areas of the
NRAS Act that lack clarity. This is a beneficial measure as it will enable
improvements to be made to the Scheme that can only be realised through changes
to the NRAS Act, thereby providing a clear legislative framework for approved
participants in the Scheme to continue to deliver more affordable rental
accommodation to tenants.
Conclusion
This Schedule is compatible with human rights because it supports the protection of
the right to adequate housing.
[Circulated by the authority of the Minister for Families and Social Services,
the Hon Paul Fletcher MP]
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