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
HOUSE OF REPRESENTATIVES
SOCIAL SERVICES LEGISLATION AMENDMENT
(MAINTAINING INCOME THRESHOLDS) BILL 2018
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Hon Dan Tehan MP)
SOCIAL SERVICES LEGISLATION AMENDMENT
(MAINTAINING INCOME THRESHOLDS) BILL 2018
OUTLINE
The Bill implements the Family Tax Benefit and Paid Parental Leave -- maintaining
income thresholds measure announced as part of the Mid-Year Economic and Fiscal
Outlook 2017-18.
Indexation - Family Tax Benefit, Parental Leave Pay and Dad and Partner Pay
amounts
The Bill will extend the indexation pauses on certain higher income limits for one further year
until 30 June 2021.
This will apply to the Family Tax Benefit Part A family higher income free area, the Family
Tax Benefit Part B primary earner income limit, and the Parental Leave Pay and Dad and
Partner Pay income limits. In addition, the annual end-of-year Family Tax Benefit
supplements will remain at current levels for three years from 1 July 2018.
Annual indexation of the thresholds and supplements will resume on 1 July 2021.
Financial impact statement
MEASURE FINANCIAL IMPACT OVER THE FORWARD
ESTIMATES
Indexation - Family Tax Benefit, Saving of $321.9 million over four years.
Parental Leave Pay and Dad and
Partner Pay amounts
STATEMENTS OF COMPATIBILITY WITH HUMAN RIGHTS
The statement of compatibility with human rights appears at the end of this
explanatory memorandum.
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SOCIAL SERVICES LEGISLATION AMENDMENT
(MAINTAINING INCOME THRESHOLDS) BILL 2018
NOTES ON CLAUSES
Abbreviations and Acronyms used in this explanatory memorandum
CPI means Consumer Price Index
DAPP means Dad and Partner Pay
Family Assistance Act means the A New Tax System (Family Assistance)
Act 1999
Family Assistance Administration Act means the A New Tax System
(Family Assistance)(Administration) Act 1999
FTB means Family Tax Benefit
PLP means Parental Leave Pay
Paid Parental Leave Act means the Paid Parental Leave Act 2010.
Clause 1 sets out how the new Act is to be cited - that is, as the Social
Services Legislation Amendment (Maintaining Income Thresholds) Act 2018.
Clause 2 provides a table setting out the commencement date of the new Act - that
is, the day the Act receives the Royal Assent.
Clause 3 provides that each Act that is specified in a Schedule is amended or
repealed as set out in that Schedule, and any other item in a Schedule to the Bill has
effect according to its terms.
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Schedule 1 - Amendments
Schedule 1 - Amendments
Summary
This Schedule implements the Family Tax Benefit and Paid Parental Leave --
maintaining income thresholds measure announced as part of the Mid-Year
Economic and Fiscal Outlook 2017-18. This Schedule will pause indexation of the
FTB Part A and FTB Part B end of year supplements for three years from 1 July
2018. Additionally, this Schedule will extend the current pause on indexation of the
FTB Part A higher income free area and the FTB Part B primary earner income limit
for a further year from 1 July 2020. This Schedule will also extend the current pause
on indexation of the PLP income limit and the DAPP income limit for a further year
from 1 July 2020.
Background
FTB Part A and FTB Part B supplements
Clause 1 of Schedule 1 to the Family Assistance Act sets out the overall rate
calculation process for FTB. Supplements are included in the calculation for
FTB Part A in clauses 3 and 25 of Schedule 1 and for FTB Part B in clause 29 of
Schedule 1.
The amounts of the supplements are indexed annually, on 1 July each year, in line
with movements in the CPI. The supplement amounts are currently $737.30 for
FTB Part A and $357.70 for FTB Part B. The relevant indexation provisions are items
8A and 9A in the table in clause 2 of Schedule 4 to the Family Assistance Act, and
items 8A and 9A in the table in subclause 3(1) of Schedule 4, which provide for CPI
indexation of these amounts.
The indexation arrangements for the amounts that comprise the FTB Part A and
FTB Part B supplements will be amended so that these amounts are not indexed on
1 July 2018, 1 July 2019 and 1 July 2020. As a result, indexation will not
recommence until 1 July 2021.
FTB Part A higher income free area and FTB Part B primary earner income
limit
Schedule 17 to the Budget Savings (Omnibus) Act 2016 amended subclause 3(7) of
Schedule 4 to the Family Assistance Act to extend the pause on indexation of the
FTB Part A higher income free area and the FTB Part B income limit in clause 28B of
Schedule 1 (often referred to as the 'primary earner income limit') for an additional
three years. The amendments in that Act provided that, in addition to 1 July 2016,
there was to be no indexation of these income threshold amounts on 1 July 2017,
1 July 2018 and 1 July 2019.
This Schedule will extend the pause on indexation for these income threshold
amounts for an additional year by pausing the indexation that would otherwise occur
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Schedule 1 - Amendments
on 1 July 2020. The indexation of these income thresholds would next occur on
1 July 2021.
PLP income limit and DAPP income limit
To be eligible for PLP and DAPP, a person must satisfy, among other things, an
income test. The Paid Parental Leave Act covers both PLP and DAPP, with the
same income test applying to both payments. To satisfy this income test, a person's
income for a particular income year must not exceed the PPL income limit in section
41 of the Paid Parental Leave Act. Currently, the PPL income limit is $150,000 until
30 June 2020 and is then to be indexed.
The amendments made by this Schedule will maintain the current PPL income limit
until 30 June 2021, with indexation of the income limit to occur on 1 July 2021.
Explanation of the changes
Amendments to the Family Assistance Act
Item 1 repeals subclauses 3(7) and (8) of Schedule 4 and substitutes two new
subclauses.
New subclause 3(7) provides that the FTB Part A higher income free area and the
FTB Part B income limit in clause 28B of Schedule 1 (often referred to as the
'primary earner income limit') will not be indexed on 1 July 2018, 1 July 2019 and 1
July 2020. The practical effect of this change is to extend the current pause on
indexation for these income threshold amounts by a further year as the law already
provides for no indexation on 1 July 2018 and 1 July 2019. The next indexation of
these income thresholds will occur on 1 July 2021.
New subclause 3(8) provides that FTB Part A and FTB Part B gross supplement
amounts will not be indexed on 1 July 2018, 1 July 2019 and 1 July 2020. The next
indexation of these supplement amounts will occur on 1 July 2021.
Amendments to the Paid Parental Leave Act
Item 2 amends the guide to Part 2-3 in section 30 to reflect the extension of the
pause on the indexation of the PPL income limit from 30 June 2020 to 30 June 2021.
Items 3 and 4 amend the references to 1 July 2020 in sections 41 and 42 to
1 July 2021. The effect is that the PPL income limit will not be subject to indexation
until 1 July 2021.
Item 5 amends the guide to Part 3A-3 in section 115CA to reflect the extension of
the pause on the indexation of the PPL income limit from 30 June 2020 to 30 June
2021.
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Statement 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
SOCIAL SERVICES LEGISLATION AMENDMENT
(MAINTAINING INCOME THRESHOLDS) BILL 2018
This Bill 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 Bill
The Bill will pause indexation of certain higher income limits until 30 June 2021.
The indexation pauses will apply to the Family Tax Benefit Part A higher income free
area, the Family Tax Benefit Part B primary earner income limit, the Parental Leave
Pay and Dad and Partner Pay individual income limits.
The Bill also includes amendments to pause indexation of the Family Tax Benefit
end-of-year supplements until 30 June 2021.
Maintaining the higher income limits and supplement rates at their current levels until
30 June 2021 will ensure that Government assistance is targeted to low and
middle-income families. This measure will result in savings and ensure that family
and parental payments are sustainable into the future.
Human rights implications
These amendments are likely to engage the following human right:
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'. That right requires a
social security system to be established, and states that a country must, within its
maximum available resources, ensure access to a social security scheme that
provides 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. Article 26 of
the Convention on the Rights of the Child (CRC) ensures that right to 'every child'
and requires that 'the 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'.
These amendments maintain the current income test that applies to the higher
income limits for family and parental payments. These amendments will not affect
the fortnightly assistance currently provided to low and middle-income families.
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Statement of compatibility with human rights
There may be families on higher incomes who do experience a reduction in
assistance due to their private income increasing. As private income increases, FTB
Part A is withdrawn by 30 cents for each dollar over $94,316 until it reaches nil.
Families cease to be eligible for FTB Part B once the primary earner's income
exceeds $100,000 per year, and parents cease to be eligible for Parental Leave Pay
or Dad and Partner Pay once their income reaches $150,000 per year.
Families at these income levels are considered to have reasonable levels of private
income which would enable them to maintain their current living standards.
Maintaining supplements at their current rates until 30 June 2021 ($737.30 for each
Family Tax Benefit Part A child, and $357.70 for each Family Tax Benefit Part B
family) supports the sustainability of the family assistance program, without reducing
fortnightly assistance provided to low and middle-income families.
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Statement of compatibility with human rights
Conclusion
These amendments are compatible with human rights because they advance the
protection of human rights and, to the extent that these changes limit access to
family and parental payments, these limitations are reasonable and proportionate.
[Circulated by the authority of the
Minister for Social Services, the Hon Dan Tehan MP]
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