Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016 - 2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SERVICES LEGISLATION AMENDMENT
(SIMPLIFYING STUDENT PAYMENTS) BILL 2016
SUPPLEMENTARY EXPLANATORY MEMORANDUM
Amendments to be Moved on Behalf of the Government
(Circulated by the authority of the
Minister for Social Services, the Hon Christian Porter MP)
SOCIAL SERVICES LEGISLATION AMENDMENT
(SIMPLIFYING STUDENT PAYMENTS) BILL 2016
OUTLINE
These amendments reduce the period, from 18 months to 14 months, in
which students from areas classified as remote or regional may earn at the
rate required in order to be assessed as independent under the workforce
participation provisions for youth allowance and relocation scholarship
purposes.
Financial impact statement
The financial impact of these amendments is:
MEASURE FINANCIAL IMPACT OVER THE FORWARD
ESTIMATES
Independent test for youth $81.1 million cost over the forward estimates
allowance and scholarship
payments for students
STATEMENT[S] 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
(SIMPLIFYING STUDENT PAYMENTS) BILL 2016
Government Amendments
These amendments were included as part of the 2016-2017 MYEFO and give
effect to a Government election commitment to support regional students'
access to education. They amend the Social Services Legislation
Amendment (Simplifying Student Payments) Bill 2016 (the Bill), which will in
turn amend the Social Security Act 1991 (the Act).
These amendments add a new Schedule 4 to the Bill. The new Schedule
amends the rules governing when a person will be regarded as independent
for the purpose of youth allowance and relocation scholarship payments for
students.
A person's rate of youth allowance may be affected by whether or not they are
'independent', with a dependent recipient's rate affected by parental income.
There are a variety of bases upon which a person may be independent (under
section 1067A of the Act), for example where both of the young person's
parents are dead, or it is unreasonable for the young person to live at home. A
young person will also be regarded as independent where they have
supported themselves through paid work for a period or periods of
employment over an 18 month period since leaving secondary school, earning
at least the equivalent of 75% of the maximum rate of pay applicable to them
($24,042 for the 2016-17 financial year). To access this criterion, the young
person must also be from a regional or remote area of Australia; their parental
income must be below $150,000; they must be undertaking full-time study;
and required to live away from home to study.
The amendments will result in a young person being regarded as independent
if they have supported themselves for a reduced period of 14 months.
Students who qualify under this provision will be eligible for youth allowance
as independent after 14 months, rather than the current 18 month period,
provided they have earned at least the equivalent of 75% of the maximum
rate of pay under Wage Level A of the transitional Australian Pay and
Classification Scale or modern award generally applicable to trainees or any
rate substituted by the Fair Work Commission over that period.
This reduced timeframe will potentially allow young people to take a gap year
at the end of secondary school and receive youth allowance the following year
(subject to satisfying the other qualification requirements for youth allowance),
rather than having to wait for a longer period and delay commencing their
tertiary studies. For example, students who finished secondary school in
November 2016, take a gap year in 2017 and commence tertiary studies in
February 2018, could qualify for youth allowance as independents if they have
earned at least $24,042 during the 14 months from November 2016 to
February 2018
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These amendments will also apply to Part 2.11B, including the definition of
independence for relocation scholarship qualification purposes.
NOTES ON AMENDMENTS
Amendment 1 adds a new clause at the end of the table in clause 2, page 2.
These provisions are intended to come into effect on 1 January 2018.
However, if the Act receives the Royal Assent on or after that date, these
provisions come into effect on the first 1 January or 1 July after the Act
receives Royal assent.
Amendment 2 adds a new Schedule 4 to the Bill.
Item 1 of new Schedule 4 amends paragraph 1067A(10)(c), by inserting "for
the purposes of Parts 3.4A, 3.4B and 3.7, except section 1070G." This
amendment has the effect of limiting the application of current paragraph
1067A(10)(c), setting out the earnings over 18 months rule, so that it will only
apply to:
the pension rate calculator "D", which sets out the rate of disability
support pension for people under the age of 21 who are not blind (Part
3.4A);
the pension rate calculator "E", which sets out the rate of disability
support pension for people under the age of 21 who are blind (Part
3.4B); and
rent assistance, with the exception of section 1070G, which sets out
the specific requirements for youth allowance (Part 3.7).
Item 2 adds a new paragraph (d) at the end of subsection 1067A(10).
Instead of having to have a period or periods of employment over an 18
month period since they left secondary school, a person who is eligible under
this provision will be regarded as independent if they have a period or periods
of employment over a 14 month period, provided they earn the rate of pay set
out in subparagraphs 1067A(10)(d)(i) or (ii).
Under subsection 1067A(10A) a person will be eligible under paragraph
1067A(10)(d) if, at the time of their application, they meet the criteria set out
under subsection 1067A(10E):
their family home is located in a regional or remote location; and
they are required to live away from home; and
they are undertaking full-time study; and
their combined parental income (as defined in point 1067G-F10 of the
Youth Allowance Rate Calculator in section 1067G) for the appropriate
tax year (Submodule 3 of Module F of that calculator) is less than
$150,000.
In addition to applying to Part 2.11 (Youth Allowance), Part 3.5 (Youth
Allowance Rate Calculator) and section 1070G (Specific Requirement (Youth
Allowance)), paragraph 1067A(10)(d) also applies to scholarship payments for
students, set out in Part 2.11B.
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Extending the application of paragraph 1067A(10)(d) to Part 2.11B is intended
to align the definition of independence for youth allowance purposes and the
definition of independence for the purposes of qualifying for the relocation
scholarship, as set out in section 592J of the Act.
As a result, if a person is regarded as independent for the purposes of
qualification for youth allowance under the workforce independence criteria,
they will also be regarded as independent for relocation scholarship purposes
and thus not eligible for the relocation scholarship.
However, if someone is not eligible for youth allowance under paragraph
1067A(10)(d) and thus are considered dependent for youth allowance
purposes, they may still meet the criteria for a relocation scholarship if they
have to live away from home (see section 1067D).
Item 3 applies to subsection 1067A(10A). It omits paragraphs (10)(b) and (c)
and substitutes paragraphs 10(b) and (d). The result of this amendment is
that a person will have to meet the criteria set out in subsection 1067A(10E),
before they can be regarded as independent under paragraphs 1067A(10)(b)
and (d) for youth allowance purposes.
Item 4 applies to subsection 1067A(10A) and inserts "or 2.11B". This
amendment has the effect of extending the application of paragraphs
1067A(10)(b) and (d) to scholarship payments for students under Part 2.11B,
including relocation scholarships provided for by section 592J of the Act. This
corrects an unintended omission of these additional criteria when determining
whether a person is independent for the purposes of relocation scholarship,
and applies other criteria such as the remoteness criteria to this
determination.
Item 5 applies to subsection 1067A(10A) and omits (10B) and (10C), as
these provisions will be repealed as a result of these amendments.
Item 6 repeals subsections 1067A(10B) to (10D). These provisions are no
longer required, as they were grandfathering provisions which ensured that
people in specified situations retained access to the workforce independence
criteria for youth allowance purposes. This included people who were
receiving youth allowance before 1 July 2010 or who completed secondary
school in 2008, took a gap year in 2009, commenced tertiary studies in 2010
and demonstrated their independence under these criteria before 1 January
2011. Students who would have otherwise qualified for youth allowance
under these provisions, will be able to qualify as independent due to their age.
Item 7 applies the amendments made by this schedule to claims for youth
allowance made on or after the commencement of this item.
The amendments made by this schedule in relation to working out if a person
is qualified for a relocation scholarship payment will apply at a time on or after
the commencement of this item.
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Schedule 4 - Independent test for youth allowance and scholarship
payments for students
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
This Schedule will support regional and remote students' access to tertiary
education by reducing, from 18 months to 14 months, the period young
people from regional and remote areas of Australia have to earn the amount
required to satisfy the workforce independence provisions for youth
allowance, from 1 January 2018.
Currently, students whose family home is in a regional or remote location can
access youth allowance on the basis of being independent under
concessional workforce participation arrangements. One way in which
students can demonstrate they have supported themselves is through a
period or periods of employment over 18 months since leaving secondary
school, with earnings totalling at least 75 per cent of Wage Level A of the
National Training Wage schedule in a modern award. This is $24,042 for
2016-17.
In addition, to access these arrangements students' parental income must be
below $150,000, they must be undertaking full-time study and they must be
required to live away from home to study.
Human rights implications
The Schedule engages the following human rights:
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.
The right to social security requires that a system be established under
domestic law, and that public authorities must take responsibility for the
effective administration of the system. The social security system must
provide a minimum essential level of benefits to all individuals and families
that will enable them to cover essential living costs.
The United Nations Committee on Economic, Cultural and Social Rights (the
Committee) has stated that a social security scheme should be sustainable
and that the conditions for benefits must be reasonable, proportionate and
transparent (see General Comment No.19).
Article 4 of ICESCR provides that countries may limit the rights such as to
social security in a way determined by law only in so far as this may be
compatible with the nature of the rights contained within the ICESCR and
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solely for the purpose of promoting the general welfare in a democratic
society. Such a limitation must be proportionate to the objective to be
achieved.
To the extent that there is an impact on a person's right to social security by
virtue of Schedule 4, the impact is limited.
The reduced period of 18 months to 14 months will allow students to qualify
for youth allowance four months sooner than under current arrangements.
Students will be able to take a gap year at the end of secondary school, and
subject to them satisfying the other qualification requirements for youth
allowance, receive payment as independents the following year.
This Schedule also recognises that young people who have been genuinely
self-supporting through paid employment should be considered financially
independent of their parents. Students who are considered independent for
youth allowance purposes, do not have their rate of payment affected by
parental income, as is the case for dependent recipients.
It is estimated that approximately 3,700 regional and remote students will
qualify for youth allowance as independent under this measure -
approximately 2,500 would become eligible for payment as independent four
months earlier than under current provisions and approximately 1,200 would
become eligible for payment as independent who otherwise would not have
met the independence criteria.
There is a risk that this Schedule could disadvantage students who have
difficulty gaining sufficient employment and earning the minimum amount in
the reduced period of 14 months. These students may not qualify for youth
allowance under the new arrangements. However, anecdotal evidence
indicates that many young people meet the required earnings in a period of
much less than 18 months - usually within a year - but must wait 18 months
before they can qualify for youth allowance (student).
Right to education
Article 13 of the ICESCR recognises the right of everyone to education.
This Schedule may have a limited impact on a person's right to education
where a person has difficulty gaining sufficient employment and earning the
minimum amount in the reduced period of 14 months. As this may result in
students not qualifying for youth allowance under the new arrangements, it
may impact their ability to commence or continue tertiary study for financial
reasons.
However, this impact is expected to be limited as students who may no longer
qualify for youth allowance under these arrangements, will still be able to
apply for youth allowance as either a dependent or under one of the other
independence criteria.
6
As stated above, many young people meet the required earnings within a year
- however they must wait 18 months before they can qualify for youth
allowance. This has resulted in students having to commence study prior to
qualifying for student payments or take two gap years before commencing
study and qualifying for payment. The longer students are disengaged from
study after completing secondary school, such as for more than a year, the
less likely they will be to commence or complete tertiary study. This Schedule
supports students to commence study within a suitable period of time after
completing secondary school.
In addition to student payments, the Australian Government provides other
programs to assist tertiary students with the cost of education, including
through the Higher Education Loan Program and VET Student Loans which
assist students pay part or all of their tuition fees.
Conclusion
The Schedule is compatible with human rights. To the extent that it may have
a limited adverse impact on a person's access to social security or education,
the limitation is reasonable and proportionate to supporting access to
education for regional and remote students.
[Circulated by the authority of the Minister for Social Services,
the Hon Christian Porter MP]
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