Download (Interest Charge) Act 2016. Clause 2 provides a table setting out the

2013-2014-2015-2016
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
SOCIAL SERVICES LEGISLATION AMENDMENT
(INTEREST CHARGE) BILL 2016
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Minister for Social Services, the Hon Christian Porter MP)
SOCIAL SERVICES LEGISLATION AMENDMENT
(INTEREST CHARGE) BILL 2016
OUTLINE
This Bill introduces the legislative amendments required for the 2015-16 Mid-Year
Economic and Fiscal Outlook measure, Applying a general interest charge to the
debts of ex-recipients of Social Security and Family Assistance Payments.
The Bill will provide for the application of a new annual interest charge to outstanding
debts owed by former recipients of social welfare payments who have failed to enter
into, or have not complied with, an acceptable repayment arrangement.
The interest charge will apply to social security, family assistance (including
child care), paid parental leave and student assistance debts.
The rate of the proposed interest charge (approximately nine per cent) will be based
on the 90-day Bank Accepted Bill rate (approximately two per cent), plus an
additional seven per cent, as is already applied by the Australian Taxation Office
under the Taxation Administration Act 1953.
The measure is intended to be implemented from 1 July 2016.
Financial impact statement
This Bill is expected to provide savings to the fiscal balance of $24.4 million over
four years from 1 July 2016, with underlying cash savings of $416.5 million.
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
(INTEREST CHARGE) BILL 2016
NOTES ON CLAUSES
Abbreviations used in this explanatory memorandum

Family Assistance Administration Act means the A New Tax System
(Family Assistance) (Administration) Act 1999

Paid Parental Leave Act means the Paid Parental Leave Act 2010

Social Security Act means the Social Security Act 1991

Student Assistance Act means the Student Assistance Act 1973

Taxation Administration Act means the Taxation Administration Act 1953

Veterans’ Entitlements Act means the Veterans’ Entitlements Act 1986
Clause 1 sets out how the new Act is to be cited – that is, as the Social
Services Legislation Amendment (Interest Charge) Act 2016.
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.
1
Schedule 1 – Amendments
Summary
This Schedule introduces a new annual interest charge scheme, to former recipients
of social welfare payments who have outstanding debts and have failed to enter into,
or have not complied with, an acceptable repayment arrangement.
The interest charge will apply to social security, family assistance (including child
care), paid parental leave and student assistance debts.
The rate of the proposed interest charge (approximately nine per cent) will be based
on the 90-day Bank Accepted Bill rate (approximately two per cent) plus an
additional seven per cent, as is already applied by the Australian Taxation Office
under the Taxation Administration Act.
Background
The Family Assistance Administration Act, Paid Parental Leave Act and Social
Security Act each currently provides for an interest charge scheme in relation to
debts that arise under those Acts. A person may be liable to pay interest on a debt
at the penalty interest rate if the person does not either pay the debt in full within a
certain period specified in notices, or enter into a repayment arrangement.
The current interest charge scheme in the Family Assistance Administration Act
does not apply to a person who is receiving instalments of family tax benefit.
Similarly, the interest charge scheme in the Social Security Act does not apply to a
person who is receiving a social security payment, a pension or allowance under the
Veterans’ Entitlements Act, or compensation under the Military Rehabilitation and
Compensation Act 2004.
The current interest rate is 20 per cent per year or a lower rate determined by the
Minister in a legislative instrument. The Minister has determined a lower rate of
three per cent per year. The initial rate of 20 per cent was too high and resulted in a
rapidly increasing debt base and financial hardship for debtors. The subsequent rate
of three per cent was too low and did not provide an incentive for debtors to enter
into payment arrangements, and administrative costs outweighed recovery of debts.
The interest charge scheme has not been applied since 2005.
This Schedule inserts a new, consistently applied, interest charge scheme for debts
that arise under the Family Assistance Administration Act, Paid Parental Leave Act,
Social Security Act and Student Assistance Act. An interest charge will be applied to
a debt if, by the 28th day after receiving a relevant notice, the debt has not been paid
in full or the person has not entered into a repayment arrangement. There will be
exemptions for debtors who are currently in receipt of relevant payments, including,
among other payments, social security payments and payments of family tax benefit
by instalment.
2
Schedule 1 – Amendments
The key purpose of the interest charge is to incentivise responsible self-management
of debts and encourage debtors to repay their debts in a timely manner, where they
have the financial capacity to do so.
The rate of the proposed interest charge (approximately nine per cent) will be based
on the 90-day Bank Accepted Bill rate (approximately two per cent) plus an
additional seven per cent, as is already applied by the Australian Taxation Office
under the Taxation Administration Act.
The measure is intended to be implemented from 1 July 2016.
Explanation of the changes
Part 1 – Amendments
Amendments to the Family Assistance Administration Act
Items 1 inserts a new paragraph 77(1)(ea).
Subsection 77(1) currently provides that, if a debt by a person to the Commonwealth
has not been wholly paid, the Secretary must give the person a notice specifying
certain matters. New paragraph 77(1)(ea) provides that the notice must specify the
effect of sections 78 and 78A. New sections 78 and 78A are inserted by this
Schedule and they provide for an interest charge on a debt if:

the person who owes the debt does not have a repayment arrangement in
effect; or

the person fails to comply with a repayment arrangement; or

a repayment arrangement is terminated.
Item 2 repeals subsections 77(3) and (4) and substitutes a new subsection 77(3).
Current subsection 77(3) provides that the Secretary may give a person a further
notice specifying certain matters if, following a notice given under subsection 77(1),
the debt has not been wholly paid and:


the person has failed to enter into an arrangement to pay the debt; or
the person has entered into an arrangement but has failed to make a payment
in accordance with the arrangement.
The matters that the Secretary must specify in a further notice include the effect of
the current interest charge provisions and how the interest is to be calculated.
Current subsection 77(4) provides that an initial notice given under subsection 77(1)
is taken to be a further notice given under subsection 77(3) if it specifies the effect of
the current interest charge provisions and how the interest is to be calculated.
3
Schedule 1 – Amendments
Repealing subsection 77(3) means that a person who owes a debt to the
Commonwealth may be liable to pay an interest charge in respect of a debt if, before
the end of 28 days after a notice is given, the person has not paid the debt in full and
has not entered into a repayment arrangement to pay the debt. That is, a further
notice does not need to be given before the person becomes liable to pay the
interest charge. The notification of the effect of the interest charge provisions must
be included in the first notice under the amendments made by item 1 of this
Schedule, removing the need for a further notice under current subsection 77(3).
New subsection 77(3) makes it clear that the Secretary may give more than one
notice under subsection 77(1) in relation to a person and a debt of the person.
Item 3 repeals sections 78 to 79A and substitutes new provisions.
Current sections 78 to 79A set out provisions in respect of interest charges. These
sections are substituted to provide for a new interest charge scheme.
Section 78 – Interest charge – no repayment arrangement in effect
The purpose of new section 78 is to set out when an interest charge is payable by
people who do not have a repayment arrangement in effect.
New subsection 78(1) provides that, if a person has been given a notice under
subsection 77(1) and has an unpaid amount on a relevant debt and, by the end of
the due day, has not entered into an arrangement for the repayment of the debt
(under section 91), then the person is liable to pay, by way of penalty, an interest
charge on the debt for each day in a period.
New subsection 78(2) provides that the period for which the interest charge will be
applied to the debt starts at the beginning of the day after the due day for the debt.
It further provides that the period will end on the earlier of either the last day on
which the unpaid amount (and any interest charge on the unpaid amount) remains
unpaid, or the day before the first day on which the person makes a payment under
an arrangement for repayment of the debt.
Subsection 78(2) is intended to ensure that a person will be able to end the
application of the interest charge by entering into, and making a payment under,
an arrangement for repayment of the debt. This, in addition to entering into an
arrangement before the due date, will mean that the person can entirely avoid the
interest charge applying to their debt.
New subsection 78(3) provides that the interest charge on any unpaid amount is
worked out by multiplying the interest charge rate for that day by the sum of the
remaining unpaid amount and the interest charge from previous days. This provision
ensures that the interest is compounded on a daily basis. New section 78C
prescribes the calculation of the ‘interest charge rate’ for that day, and is explained
below.
4
Schedule 1 – Amendments
Section 78A – Interest charge – failure to comply with or termination of repayment
arrangement
The purpose of new section 78A is to set out when an interest charge is payable by
people who have failed to comply with a repayment arrangement or where a
repayment arrangement has been terminated.
New subsection 78A(1) provides that, if a person has entered into a repayment
arrangement under section 91 in relation to a debt and the person fails to make a
payment under the arrangement, then the person is liable to pay, by way of penalty,
an interest charge for each day in a period.
New subsection 78A(2) provides that the period for which the interest charge will be
applied to the debt starts at the beginning of the day after the due day. It further
provides that the period will end on the earliest of:

the last day on which the outstanding amount (and any interest charge on any
of the outstanding amount) remains unpaid;

the day before the first day on which the person has paid all the payments that
have so far become due and payable under the arrangement;

the day before the day the arrangement is terminated.
Subsection 78A(2) is intended to ensure that a person may end the application of the
interest charge to their debt at the point where they catch up on any missed
payments under the arrangement. To avoid doubt, while the interest charge will
apply to the debt during the period, a person is only required to pay an amount equal
to the missed payments (rather than an amount equal to the missed payments and
the interest charge) to end the period of application of the interest charge.
The interest charge will otherwise be payable as a debt due to the Commonwealth,
as explained below.
New subsection 78A(3) prescribes the calculation of an interest charge for a day.
The interest charge is calculated in the same way as in new subsection 78(3), which
is explained above.
Repayment arrangement is terminated
New subsection 78A(4) provides that, if the person has entered into a repayment
arrangement under section 91 in relation to a debt, and the arrangement is
terminated, then the outstanding debt, and any interest charge on the outstanding
debt, is due and payable on the 14th day after the termination. If, at the end of the
14th day, any amount remains unpaid, the person is liable to pay, by way of penalty,
an interest charge each day in a period.
5
Schedule 1 – Amendments
New subsection 78A(5) provides that the period for which the interest charge will be
applied to the debt starts at the beginning of the day after the 14 th day. It further
provides that the period will end on the earlier of the last day on which the
outstanding amount (and any interest charge on the outstanding amount) remains
unpaid or the day before the first day after the 14 th day on which the person makes a
payment under another arrangement for the repayment of the debt.
Subsection 78A(5) is intended to ensure that a person may end the application of the
interest charge at the point where they enter into another arrangement for repayment
of the debt.
New subsection 78A(6) prescribes the calculation of an interest charge for a day.
The interest charge is calculated in the same way as in new subsection 78(3), which
is explained above.
Section 78B – Other rules for interest charge
New subsection 78B(1) provides that the interest charge under new section 78
or 78A for a day is due and payable to the Commonwealth at the end of that day.
New subsection 78B(2) provides that an interest charge under new section 78
or 78A for a day is a debt due to the Commonwealth by the person.
New subsection 78B(3) clarifies that new subsection 77(1) does not apply to a debt
which is also an interest charge (as provided for under new sections 78 and 78A).
This means that a notice in respect of the interest charge debt is not required to be
issued under new subsection 77(1). This avoids a situation where an interest charge
is subject to further interest charges.
Section 78C – What is the interest charge rate?
New section 78C provides for the calculation of the interest charge rate.
New subsections 78C(1) and 78C(2) provide that the rate is based upon the 90-day
Bank Accepted Bill rate, plus an additional seven per cent, as is currently applied by
the Australian Taxation Office for tax debts under the Taxation Administration Act.
This is an appropriate method for calculating the rate of the interest charge to apply
to family assistance debts because the rate is high enough to encourage repayment
without being punitive, it provides a return to the Commonwealth (commensurate
with the time value of the monies overpaid), and it will help align tax and income
support debt recovery policy.
New subsection 78C(2) specifies what the base interest rate is, with reference to
the monthly average yield of 90-day Bank Accepted Bills. The rate is currently
published by the Reserve Bank of Australia in the ‘Interest Rates and Yields –
Money Market – Monthly’ table on the Bank’s website. This subsection also provides
a table identifying the appropriate monthly average to be used for each quarter.
6
Schedule 1 – Amendments
Where the Reserve Bank of Australia has not published the specified rate by the
start of a quarter, new subsection 78C(3) substitutes the last published monthly
average.
New subsection 78C(4) provides for the rounding of the base interest rate to the
second decimal place.
This new interest charge rate replaces the interest charge rate that currently applies
under section 79. The current interest charge rate is 20 per cent per year, or a lower
rate if a lower rate has been determined by the Minister in a legislative instrument.
A lower rate of three per cent per year has been determined in the A New Tax
System (Family Assistance) (Administration) (Penalty Interest) Determination 2001
(Penalty Interest Determination).
The initial rate of 20 per cent was too high and resulted in a rapidly increasing debt
base and financial hardship for debtors. The subsequent rate of three per cent was
too low and did not provide an incentive for debtors to enter into payment
arrangements, and administrative costs outweighed recovery of debts. The interest
charge scheme has not been applied since 2005.
Section 78D – Exemption from interest charge – general
New section 78D provides for general exemptions from an interest charge. A person
is not liable to pay an interest charge under new section 78 or 78A if, on the day
before the person would otherwise have been liable to pay that charge, the person is
receiving:

instalments of family tax benefit; or

a social security payment; or

a payment of pension or allowance under the Veterans’ Entitlements Act; or

a payment of compensation
Compensation Act 2004; or

instalments under the ABSTUDY scheme that include an amount identified as
living allowance; or

instalments under the Assistance for Isolated Children Scheme.
under
the
Military
Rehabilitation
and
These exemptions mean that a person who is already subject to deductions from
their payments in order to pay off their debts is not liable to pay an interest charge,
and only people who have the financial capacity to pay an interest charge will be
liable to pay that charge. A person who is receiving any one of a number of
government payments who is paying off their debt through deductions, and who may
have less financial capacity to pay the interest charge, will be exempt from that
interest charge.
A person who is receiving child care assistance and/or payments under the Paid
Parental Leave Act (and no other payment listed above), and who has the financial
capacity to repay their debts, will not be exempt under this provision as they are not
subject to deductions from these payments to pay back existing debts.
7
Schedule 1 – Amendments
A person will also not be liable to pay an interest charge if the circumstances
determined by the Minister in a legislative instrument apply in relation to the person.
Providing for exemptions in circumstances determined by the Minister in a legislative
instrument will provide the Minister with the flexibility to consider other circumstances
which may be identified in the future where it would be appropriate for a person to
have an exemption from the interest charge. Using an instrument will enable this to
occur in a timely manner without having to amend the primary legislation. This
power can only be used beneficially and any instrument made by the Minister would
be subject to Parliamentary scrutiny and disallowance.
Section 78E – Exemption from interest charge – Secretary’s determination
New section 78E provides for when a person has an exemption from the interest
charge on the basis of a determination made by the Secretary. New section 78E is
in similar terms to current section 78A, which applies to the current interest charge
scheme.
New subsection 78E(1) provides for the Secretary to determine that interest charge
is not payable, in respect of a particular period, by a person on the outstanding
amount of a debt. Providing the Secretary with the discretion to determine that an
interest charge is not payable will ensure there is capacity to exempt a particular
person from the charge where exceptional circumstances apply to the person. Such
exceptional circumstances may not have been foreseen before any legislative
instrument is made for the purposes of new section 78D, as described above.
New subsection 78E(2) provides guidance on when the Secretary may make a
determination under new section 78E.
The Secretary may make such a
determination in circumstances that include, but are not limited to, the Secretary
being satisfied that the person had a reasonable excuse for:

failing to enter into a repayment arrangement under section 91 to pay the
outstanding debt; or

having entered into such an arrangement, failing to make a payment in
accordance with the arrangement.
New subsection 78E(3) clarifies that a determination made by the Secretary may
relate to a period before, or to a period that includes a period before, the making of
the determination.
New subsection 78E(4) provides that a determination may be expressed to be
subject to the person complying with one or more specified conditions. If the
determination is expressed in this way and the person contravenes a condition or
conditions without reasonable excuse, then new subsection 78E(6) provides that the
determination ceases to have effect from the day on which the contravention occurs.
As such, the person may be liable to pay an interest charge from that day.
8
Schedule 1 – Amendments
New subsection 78E(5) provides that the Secretary must give the person written
notice of the determination if the determination to exempt them from the application
of an interest charge is expressed to be subject to the person complying with one or
more specified conditions. New section 78E is a beneficial provision. As such, there
is no statutory requirement to provide a person with written notice of a determination
that is not subject to such conditions. A determination will be made under new
section 78E only after the Department of Human Services has had discussions with
the person about the person’s debt, including giving advice that an interest charge
will not be payable on the person’s debt.
New subsection 78E(7) provides that the Secretary may cancel or vary the
determination by written notice given to the person. Providing the Secretary with the
flexibility to cancel a determination will ensure there is the capacity to end a person’s
exemption to the interest charge where their circumstances no longer warrant the
exemption being applied.
Section 78F – Guidelines on interest charge provisions
New section 78F provides that the Minister may determine guidelines in a legislative
instrument relating to the operation of the provisions dealing with the interest charge.
Current section 79A requires the Secretary to determine guidelines, by legislative
instrument, for the operation of the current provisions dealing with penalty interest.
The Penalty Interest Determination has been made for the purposes of current
section 79A.
As explained above in relation to new section 78C, one of the matters determined in
the Penalty Interest Determination is the penalty interest rate. Given that new
section 78C outlines what the interest rate is under the new scheme (90-day Bank
Accepted Bill rate plus seven per cent) and there is no capacity for the Minister to
change it by legislative instrument, guidelines to be determined by a legislative
instrument may not be needed. Therefore new section 78F provides the Minister
with the discretion to determine guidelines but does not require the Minister to
determine guidelines. The operation of the penalty interest charge scheme will be
monitored and consideration will be given to whether guidelines are necessary.
The Minister may choose to determine guidelines on, for example, the circumstances
in which the Secretary may make a determination under new section 78E that a
person is not liable to pay an interest charge.
Item 4 amends the definition of debt in paragraph 82(3)(a) to include the interest
charge. Section 82 provides for methods of recovery in relation to a debt, and this
amendment will ensure that those methods of recovery are available to debts that
are interest charges.
Item 5 is to clarify that, if a person has entered into an arrangement for the payment
of a debt, it is a statutory requirement for the person to make a payment under the
arrangement before the end of the day that the arrangement requires such a
payment.
9
Schedule 1 – Amendments
Amendments to the Paid Parental Leave Act
Items 6, 8 and 9 repeal definitions in section 6, which are no longer necessary
following the amendments made by this Schedule.
Item 7 inserts a definition of interest charge rate into section 6, referring to the
interest charge rate as set out in new section 177, which is inserted by this item.
Item 10 amends section 164, which provides a guide to Part 4-3 (Debt Recovery).
The amendment removes the reference to an administrative charge of $50 being
payable if interest is charged, because the new interest charge scheme inserted by
this Schedule will not have an administrative charge.
Item 11 amends a note after section 165 to refer to the correct provision that deals
with interest. Following the amendments made by this Schedule, interest will be
dealt with in new section 176, not section 177.
Items 12 to 16 and item 18 remove references to an ‘initial debt notice’ and a
‘further debt notice’ in section 173. These amendments are consequential to the
amendments made by this Schedule to create a new interest charge scheme, which,
among other things, have the effect that there will no longer be a requirement for the
Secretary to give a further notice in relation to a debt before an interest charge
applies, because the first debt notice will specify the effect of the interest charge
provisions, as discussed below.
Item 17 inserts a new paragraph 173(1)(fa).
Subsection 173(1) currently provides that, if a debt by a person to the
Commonwealth has not been wholly paid, the Secretary must give the person a
notice specifying certain matters. New paragraph 173(1)(fa) provides that the notice
must specify the effect of sections 174 and 175. New sections 174 and 175,
as amended by this Schedule, provide for an interest charge on a debt if:

the person who owes the debt does not have a repayment arrangement in
effect; or

the person fails to comply with a repayment arrangement; or

a repayment arrangement is terminated.
Item 19 repeals subsection 173(3) and substitutes a new subsection.
Current subsection 173(3) provides that, if a notice given under section 173 states
the effect of paragraphs 174(2)(e) and (f), then the notice is taken to be a further
debt notice under section 174. Currently, a person is liable to pay an interest charge
only if the person is given a further debt notice under section 174.
10
Schedule 1 – Amendments
Following the amendments made by this Schedule, a person who owes a debt to the
Commonwealth may be liable to pay an interest charge in respect of a debt if, before
the end of 28 days after the initial notice is given, the person has not paid the debt in
full and has not entered into a repayment arrangement to pay the debt. That is,
a further notice does not need to be given before the person becomes liable to pay
the interest charge. A person will be notified of the effect of the interest charge
provisions following the amendments made by item 17 of this Schedule, removing
the need for a further notice referred to in current section 174. It follows that
subsection 173(3) does not need to refer to the circumstances in which an initial debt
notice can be a further debt notice.
New subsection 173(3) makes it clear that the Secretary may give more than one
notice under subsection 173(1) in relation to a person and a debt of the person.
Item 20 repeals sections 174 to 180 and substitutes new sections. The new
provisions introduce a new interest charge scheme and they mirror, with
modifications to make the scheme relevant to the Paid Parental Leave Act,
the operation of the interest charge scheme inserted into the Family Assistance
Administration Act by item 3 of this Schedule and described above.
Items 21, 23 and 24 amend notes in section 181, subsection 191(1) and
subsection 194(1). The notes provide that debts recoverable by the Commonwealth
under the Paid Parental Leave Act are provided for by particular provisions, including
provisions dealing with interest charges. The notes are amended to refer to the new
interest charge provisions, as inserted by this Schedule.
Item 22 is to clarify that, if a person has entered into an arrangement for the
payment of a debt, it is a statutory requirement for the person to make a payment
under an arrangement before the end of the day that the arrangement requires such
a payment.
Amendments to the Social Security Act
Item 25 amends item 16 of the table in subsection 1222(2). This table provides for
the methods of recovery of debts. Current table item 16 provides for the methods of
recovery for an interest charge, and this amendment refers to the new provision
(section 1229C) under which the interest charge is calculated.
Item 26 repeals item 17 of the table in subsection 1222(2). Table item 17 refers to
the methods of recovery for an administrative charge that applies when a person first
becomes liable to pay an interest charge. Following the amendments made by this
Schedule, a person will not be liable to pay an administrative charge when the
person becomes liable to pay the interest charge.
Items 27 to 30 repeal a number of notes, which are no longer necessary as a result
of the new interest charge scheme as inserted by this Schedule.
11
Schedule 1 – Amendments
Item 31 inserts new subsection 1228B(2A) to clarify that a 10 per cent penalty added
to a debt for the understatement of income is part of the debt. For the purposes of
imposing an interest charge, this will mean that a reference to ‘debt’ will include the
amount of the payment that a person has obtained to which they were not entitled,
as well as any 10 per cent penalty added to the debt under section 1228B.
Item 32 amends subsection 1228B(5) so that an additional 10 per cent penalty
imposed for the understatement of income does not apply to a debt due to the
Commonwealth under new section 1229C (as inserted by item 35 of this Schedule).
The purpose of this amendment is to clarify that an additional 10 per cent penalty
cannot apply to an interest charge under new section 1229C. This is because
section 1228B only imposes an additional 10 per cent penalty where a person has
refused or failed to provide information in relation to the person’s income or has
knowingly or recklessly provided false or misleading information in relation to the
person’s income. The interest charge debt due to the Commonwealth under new
section 1229C is not dependent on an individual providing information on their
income, so an additional 10 per cent penalty cannot apply to an interest charge debt
under new section 1229C.
Item 33 inserts a new paragraph 1229(1)(ea).
Subsection 1229(1) currently provides that, if a debt by a person to the
Commonwealth has not been wholly paid, the Secretary must give the person a
notice specifying certain matters. New paragraph 1229(1)(ea) provides that the
notice must specify the effect of new sections 1229A and 1229B.
New sections 1229A and 1229B are inserted by this Schedule, and they provide for
an interest charge on a debt if:

the person who owes the debt does not have a repayment arrangement in
effect; or

the person fails to comply with a repayment arrangement; or

a repayment arrangement is terminated.
Item 34 repeals subsections 1229(3) and (4) and inserts a new subsection 1229(3).
Current subsection 1229(3) provides that the Secretary may give a person a further
notice specifying certain matters if, following a notice given under
subsection 1229(1), the debt has not been wholly paid and:

the person has failed to enter into an arrangement to pay the debt; or

the person has entered into an arrangement but has failed to make a payment
in accordance with the arrangement.
The matters the Secretary must specify in a further notice include the effect of the
current interest charge provisions and how the interest is to be calculated. Current
subsection 1229(4) provides that an initial notice given under subsection 1229(1)
is taken to be a further notice given under subsection 1229(3) if it specifies the effect
of the current interest charge provisions and how the interest is to be calculated.
12
Schedule 1 – Amendments
Repealing subsection 1229(3) means that a person who owes a debt to the
Commonwealth may be liable to pay an interest charge if, before the end of 28 days
after the initial notice is given, the person has not paid the debt in full and has not
entered into a repayment arrangement to pay the debt. That is, a further notice does
not need to be given before the person becomes liable to pay the interest charge.
A person will be notified of the effect of the interest charge provisions following the
amendments made by item 33 of this Schedule, removing the need for a further
notice under current subsection 1229(3).
New subsection 1229(3) makes it clear that the Secretary may give more than one
notice under subsection 1229(1) in relation to a person and a debt of the person.
Item 35 repeals sections 1229A to 1229C and substitutes new sections. The new
provisions introduce a new interest charge scheme and they mirror, with
modifications to make the scheme relevant to the Social Security Act, the operation
of the interest charge scheme inserted into the Family Assistance Administration Act
by item 3 of this Schedule and described above.
Items 36 and 37 repeal notes, which are no longer necessary as a result of the new
interest charge scheme inserted by this Schedule.
Item 38 is to clarify that, if a person has entered into an arrangement for the
payment of a debt, it is a statutory requirement for the person to make a payment
under an arrangement before the end of the day that the arrangement requires such
a payment.
Amendments to the Student Assistance Act
Item 39 repeals the definition of late payment charge in subsection 3(1).
The amendments made by item 43 mean that this term will no longer be used in the
Student Assistance Act.
Item 40 is consequential to the amendments made by item 42.
Item 41 amends paragraph (c) of the definition of debt in section 38 to ensure that
an interest charge, imposed under new section 41B (inserted by this Schedule), is an
amount payable to the Commonwealth and is therefore a debt.
Item 42 inserts a new definition of relevant debt into section 38. Section 38
provides definitions for the purposes of Part 6 of the Student Assistance Act. Part 6
provides for overpayments arising under the Student Assistance Act and certain
administrative schemes.
The new definition of relevant debt is relevant to the new interest charge scheme
inserted by item 43 of this Schedule. A person may be liable to pay an interest
charge in relation to relevant debts. A relevant debt means:

an amount paid under the ABSTUDY Scheme (also known as the Aboriginal
Study Assistance Scheme) that should not have been paid; or
13
Schedule 1 – Amendments

an amount paid under the Assistance for Isolated Children Scheme that
should not have been paid; or

an ABSTUDY student start-up loan overpayment.
Item 43 repeals sections 39A, 40 and 41 and substitutes new sections to introduce
an interest charge scheme.
The Student Assistance Act does not currently have an interest charge scheme that
is analogous to the schemes currently in effect in the Family Assistance
Administration Act, Paid Parental Leave Act and Social Security Act. Rather, current
section 39A provides that the Secretary may allow a person to pay an amount of
debt by one or more instalments. Current section 40 applies if a person has been
paid an amount that is a special assistance scheme overpayment or a student
assistance overpayment. If this amount is due to the Commonwealth, the Secretary
may give the person a notice specifying that, among other things, if the amount is
still due to the Commonwealth at the end of three months after the notice is given,
the person is liable to pay interest at the rate ascertained by the regulations.
The Student Assistance Regulations 2003 do not currently ascertain an interest rate.
Current section 41 allows the Secretary to determine that interest that is otherwise
payable under section 40 is not payable.
The current provisions are replaced with new provisions to introduce an interest
charge scheme. The new provisions mirror, with modifications to make the scheme
relevant to the Student Assistance Act, the operation of the interest charge scheme
inserted into the Family Assistance Administration Act by item 3 of this Schedule and
described above.
Item 44 amends paragraph 51(1)(b) to ensure that a certificate by the Secretary
(stating that, on a specified day, a notice, to a specified effect, in respect of a
relevant debt, was given to a specified person by the Secretary) is clear evidence of
the matters stated in the certificate.
Amendments to the Veterans’ Entitlements Act
Item 45 repeals section 205AAE and substitutes a new section.
Section 205AAE currently provides the penalty interest rate for the purposes of the
debt recovery provisions contained in the Veterans’ Entitlements Act. The rate
applicable is that which applies under section 1229B of the Social Security Act.
Section 1229B provides that the rate is either the maximum rate of 20 per cent or the
lower rate in force from time to time as determined by a legislative instrument under
that section. The Social Security (Penalty Interest) Determination 2001 that was
made under section 1229B provides that the penalty interest rate is three per cent
per year.
14
Schedule 1 – Amendments
The amendments made by item 35 of this Schedule mean that new section 1229B of
the Social Security Act will no longer contain the penalty interest rate for the
purposes of the interest charge scheme. Rather, the interest rate will be contained
in new section 1229D of the Social Security Act. The new penalty interest rate in
section 1229D will be based on the 90-day Bank Accepted Bill rate plus an additional
seven per cent.
The new interest charge scheme inserted into the Social Security Act by this Bill is
not intended to apply to the Veterans’ Entitlements Act. As such, section 205AAE of
the Veterans’ Entitlements Act is amended so that the current penalty interest rate of
three per cent per year for the purposes of the debt recovery provisions in that Act
will be retained.
New section 205AAE states that the interest rate is three per cent per year or the
rate that the Minister may, by legislative instrument, determine as the penalty interest
rate. As penalty interest is infrequently applied under the debt recovery provisions of
the Veterans’ Entitlements Act, a maximum rate of penalty interest that may be
determined in a legislative instrument has not been specified.
Part 2 – Application, saving and transitional provisions
Item 46 provides application and transitional provisions for the amendments to the
Family Assistance Administration Act.
Subitem 46(1) provides that paragraph 78(1)(a) of the Family Assistance
Administration Act, as amended by this Bill, applies in relation to a notice given on or
after the commencement of item 46, whether the debt arose before, on or after that
commencement. This means that the new interest charge scheme can apply to
debts that arose before the commencement of the scheme, provided that a relevant
notice is given on or after commencement.
Subitem 46(2) provides that, if, before the commencement of item 46, the Secretary
gave a person a notice under subsection 77(1) of the Family Assistance
Administration Act, the Secretary must give the person another notice under
section 77(1) of that Act, as amended by this Bill. This means that the person will be
informed in the new notice of the effect of the application of the interest charge.
Subitem 46(3) provides that paragraph 78A(1)(b) of the Family Assistance
Administration Act, as amended by this Bill, applies only in relation to a failure that
occurs on or after the commencement of item 46, regardless of whether the
arrangement was entered into before, on or after that commencement. This means
that a person is not liable to pay an interest charge under section 78A if a failure to
make a payment under a repayment arrangement occurs before the commencement
of item 46. It also means that an arrangement that was entered into prior to the
commencement of the Bill will continue in effect after commencement.
15
Schedule 1 – Amendments
Subitem 46(4) provides that paragraph 78A(4)(b) of the Family Assistance
Administration Act, as amended by this Bill, applies only to a termination that occurs
on or after the commencement of item 46, regardless of whether the arrangement
was entered into before, on or after that commencement. This means that a person
is not liable to pay an interest charge under section 78A if a repayment arrangement
is terminated before the commencement of item 46. It also means that an
arrangement that was entered into prior to the commencement of the Bill will
continue in effect after commencement.
Subitem 46(5) clarifies that new subsection 91(1B) of the Family Assistance
Administration Act (about making a payment before the end of a particular day under
a repayment arrangement) applies in relation to existing arrangements, as at the
commencement date.
Items 47 and 48 provide application and transitional provisions for the amendments
to the Paid Parental Leave Act and the amendments to the Social Security Act.
These provisions mirror the application and transitional provisions for the
amendments to the Family Assistance Administration Act in item 46, described
above.
Item 49 provides the application, saving and transitional provisions for the
amendments to the Student Assistance Act.
Subitem 49(1) provides that the new interest charge scheme in sections 40 to 41G
of the Student Assistance Act apply to a relevant debt that arises on or after the
commencement of item 49, and to debts that arose before the commencement of
that item, to the extent that the debt is outstanding immediately before that
commencement.
Subitem 49(2) makes it clear that the repeal of section 39A of the Student
Assistance Act by this Schedule does not affect the validity of the decisions made
under that section before the commencement of item 49.
Subitem 49(3) makes it clear that the new interest charge scheme inserted into the
Student Assistance Act by this Schedule can apply to a person and a debt even if a
decision was made by the Secretary before the commencement of item 49 to allow a
person to pay an amount of debt by one or more instalments.
16
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
SOCIAL SERVICES LEGISLATION AMENDMENT
(INTEREST CHARGE) BILL 2016
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 amends the penalty interest provisions in the Social Security Act 1991,
A New Tax System (Family Assistance) (Administration) Act 1999 and
Paid Parental Leave Act 2010 and inserts new penalty interest provisions in the
Student Assistance Act 1973. The new annual interest charge scheme is applied
from 1 July 2016 to former recipients of social welfare payments who have
outstanding debts and have failed to enter into, or have not complied with, an
acceptable repayment arrangement.
The interest charge will apply to social security, family assistance (including child
care), paid parental leave and student assistance debts.
The rate of the proposed interest charge (approximately nine per cent) will be based
on the 90-day Bank Accepted Bill rate (approximately two per cent) plus an
additional seven per cent, as is already applied by the Australian Taxation Office
(ATO) under the Taxation Administration Act 1953.
This is considered an
appropriate method for calculating the rate of the interest charge to apply to social
welfare debt because the rate is high enough to encourage repayment without being
punitive, and it provides a return to the Commonwealth, commensurate with the time
value of the monies overpaid.
The purpose of the interest charge is to incentivise responsible self-management of
debts and encourage debtors to repay their debts in a timely manner, where they
have the financial capacity to do so.
It is important to note that a debt only arises where a person receives a payment to
which they were not entitled. In most circumstances, current recipients of social
welfare payments with outstanding debts have their payments reduced until their
debts are repaid. By comparison, former recipients who are no longer dependent on
the social security system, have no incentive to repay their debts and may actively
avoid repayment.
Debtors who are no longer eligible to receive financial support through social welfare
payments are more likely to have the financial capacity to make repayments than
those in receipt of social welfare payments.
1
Statement of compatibility with human rights
To ensure all debtors are treated consistently and fairly, the interest charge will also
apply to those in receipt of only child care assistance and/or payments under the
Paid Parental Leave Act 2010 (and no other social welfare payment) with
outstanding debts. These debtors are not subject to deductions from their payment,
and should be required to enter into an acceptable repayment arrangement to repay
the debt as with other debtors.
The interest charge can only be applied to the debt where the person has not
entered into a repayment arrangement, has failed to comply with a repayment
arrangement, or where a repayment arrangement has been terminated (without
entering into an alternative repayment arrangement with DHS).
The debtor will be issued a notice in respect of a debt, which will outline the reason
why the debt was incurred, the outstanding amount of the debt, and the effect of the
interest charge applying if they do not enter into an acceptable payment
arrangement within 28 days.
In the event that a repayment arrangement is terminated, the debtor will be provided
with sufficient time (14 days) to pay the debt in full or enter into a new repayment
arrangement and avoid the application of the interest charge.
In cases of severe financial hardship, a debtor can apply to Centrelink for a review of
their capacity to pay and the debt may be waived or temporarily written off until the
debtor’s financial circumstances improve. No interest charge would be applied for
that period of time. A reduced rate of recovery may also be applied under the
repayment arrangement.
Human rights implications
The Bill engages the following human rights:
Rights of parents and children
The Bill engages the right of parents and children contained in article 3 of the
Convention of the Rights of the Child (CRC) and article 24(1) of the International
Covenant on Civil and Political Rights (ICCPR).
Under the CRC, countries are required to apply the principle of best interests of the
child. The principle applies to all actions concerning children and requires active
measures to protect their rights and promote their survival, growth, and wellbeing,
as well as measures to support and assist parents and others who have day-to-day
responsibility for ensuring recognition of children's rights.
Countries are also required under the CRC to ensure recognition of the principle that
both parents have common responsibilities for the upbringing and development of
the child and to provide appropriate assistance to parents and legal guardians in the
performance of their child-rearing responsibilities, in particular to ensure that children
of working parents have the right to benefit from child-care services and facilities for
which they are eligible. Countries should ensure that parents and legal guardians
are aware of their rights to access information on payments and services to which
they are entitled to for the benefit of children.
2
Statement of compatibility with human rights
The Bill does not limit the rights of parents and children. The interest charge will
apply to former recipients of social welfare with outstanding debts, who are unwilling
to enter into acceptable repayment arrangements. To ensure all debtors are treated
consistently and fairly, the interest charge will also apply to those in receipt of only
child care assistance and/or payment under the Paid Parental Leave Act 2010 (and
no other social welfare payment) with outstanding debts. These debtors are not
subject to deductions from their payment and should be required to enter into an
acceptable repayment arrangement to repay the debt as with other debtors.
A debt only arises where a person receives a payment to which they were not
entitled. Given the interest charge is intended as an incentive for debtors to repay
debts in a timely fashion and is only applied where the debtor has not entered into a
repayment arrangement where they have the financial capacity to do so, the interest
charge will not limit the rights of parents and children.
Right to maternity leave
The Bill engages the right to maternity leave contained in contained in article 10(2)
of the International Covenant on Economic, Social and Cultural Rights (ICESCR)
and article 11(2)(b) of the Convention on the Elimination of All Forms of
Discrimination Against Women (CEDAW).
The right to maternity leave includes an entitlement for working mothers to paid
leave or social security benefits during a reasonable period before and after
childbirth. It also requires countries, as a measure of prevention of discrimination
against women, to provide maternity leave with pay or with comparable social
benefits without loss of former employment or seniority.
The Bill does not limit the right to maternity leave. The interest charge will apply to
former recipients of social welfare with outstanding debts, who are unwilling to enter
into acceptable repayment arrangements. To ensure all debtors are treated
consistently and fairly, the interest charge will also apply to those in receipt of only
child care assistance and/or payments under the Paid Parental Leave Act 2010 (and
no other social welfare payment) with outstanding debts. These debtors are not
subject to deductions from their payment and should be required to enter into an
acceptable repayment arrangement to repay the debt as with other debtors.
A debt only arises where a person receives a payment to which they were not
entitled. Given the interest charge is intended as an incentive for debtors to repay
debts in a timely fashion and is only applied where the debtor has not entered into a
repayment arrangement where they have the financial capacity to do so, the interest
charge will not limit the right to maternity leave.
Rights of people with disability
The Bill engages the rights of people with disability contained in the Convention on
the Rights of Persons with Disabilities.
3
Statement of compatibility with human rights
In particular, to ensure that people with disability have the same right as others to
live, take part and be included in the community, article 19 states that countries take
appropriate steps to ensure that people with disability have the opportunity to choose
where they live and who they live with, have access to in-home, residential and other
community support services to help them be included in the community and prevent
them from being isolated, and to ensure that they have equal access to community
services and facilities that are available to the public.
Article 26 (1) states that parties shall take effective and appropriate measures,
including through peer support, to enable persons with disabilities to attain and
maintain maximum independence, full physical, mental, social and vocational ability,
and full inclusion and participation in all aspects of life.
The Bill does not limit the rights of people with disability. The interest charge will
apply to former recipients of social welfare with outstanding debts, who are unwilling
to enter into acceptable repayment arrangements (this includes carer payments and
the Disability Support Pension). A debt only arises where a person receives a
payment to which they were not entitled. Given the interest charge is intended as an
incentive for debtors to repay debts in a timely fashion and is only applied where the
debtor has not entered into a repayment arrangement where they have the financial
capacity to do so, the interest charge will not limit the rights of people with disability.
Right to work and rights in work
The Bill engages the right to work and rights in work contained in articles 6(1),
7 and 8(1)(a) of the ICESCR.
In particular, article 6(1) recognises the right to work, which includes the right of
everyone to the opportunity to gain his living by work which he freely chooses or
accepts and states that countries must have specialised services to assist and
support individuals in order to enable them to identify and access available
employment.
The Bill does not limit the right to work and rights in work. The interest charge will
apply to former recipients of social welfare with outstanding debts, who are unwilling
to enter into acceptable repayment arrangements (this includes working age
payments). A debt only arises where a person receives a payment to which they
were not entitled. Given the interest charge is intended as an incentive for debtors to
repay debts in a timely fashion and is only applied where the debtor has not entered
into a repayment arrangement where they have the financial capacity to do so,
the interest charge will not limit the debtor’s right to work and rights in work.
Right to education
The Bill engages the right to education contained in Article 13 of the ICESCR.
In particular, article 13(2)(b) states that secondary education, in all its different forms,
including technical and vocational secondary education, shall be made generally
available and accessible to all by every appropriate means and, in particular, by the
progressive introduction of free education.
4
Statement of compatibility with human rights
The Bill does not limit the right to education. The interest charge will apply to former
recipients of social welfare with outstanding debts, who are unwilling to enter into
acceptable repayment arrangements (this includes student payments). A debt only
arises where a person receives a payment to which they were not entitled. Given
the interest charge is intended as an incentive for debtors to repay debts in a timely
fashion and is only applied where the debtor has not entered into a repayment
arrangement where they have the financial capacity to do so, the interest charge will
not limit the debtor’s ability to access education.
Right to social security
The Bill engages the right to social security contained in article 9 of the ICESCR.
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 scheme 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 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.
The interest charge does not limit the right of a person to receive social security.
It will apply to former recipients of social security and family assistance payments
with outstanding debts, who are unwilling to enter into an acceptable payment
arrangement. A debt only arises where a person receives a payment to which they
were not entitled.
Former recipients who are no longer eligible to receive financial support through
social welfare payments are more likely to have the financial capacity to make
repayments on any outstanding debt than those in receipt of social welfare.
To ensure all debtors are treated consistently and fairly, the interest charge will also
apply to those in receipt of only child care assistance and/or payments under the
Paid Parental Leave Act 2010 (and no other social welfare payment) with
outstanding debts. These debtors are not subject to deductions from their payment
and should be required to enter into an acceptable repayment arrangement to repay
the debt as with other debtors.
5
Statement of compatibility with human rights
A debtor’s financial capacity will be taken into account before a repayment
arrangement is agreed to. Given this, the impact of the interest charge will be limited
and will have a very marginal effect on the ability of a person to cover essential living
costs, thereby engaging a person’s right to social security. The provisions in the Bill
are therefore unlikely to limit this right, given the appropriate safeguards put in place
to protect it.
It is intended that the provisions in the Bill will allow the efficient recovery of social
security payments, supporting effective and efficient administration of the social
security system. This measure is proportionate in achieving this policy objective as
all persons can avoid the interest charge by entering into a repayment arrangement,
and these rights are safeguarded by the requirements of notice and periods of time
in which a person will be able to pay back the debt or enter into an arrangement.
Furthermore, the Secretary will have the discretion in appropriate circumstances, for
example in cases of severe financial hardship, to waive a debt including any interest
charge on the debt.
By allowing the efficient recovery of social security payments, the Bill ensures the
financial sustainability of the social security system. The interest charge, as it
applies to persons who received payments to which they were not entitled, is a
reasonable condition on the benefits of the system as it encourages former
recipients to repay those amounts and ensures that the Commonwealth is able to
recover the real value of these amounts. The interest charge, as a condition, is also
transparent as it is provided for in legislation, will be accurately communicated
through the Department of Human Services’ website, and can only be applied after
sufficient written notice is given.
Therefore the Bill will be compatible with the right to social security as any potential
limitation on this right is proportionate to the policy objective and intended to improve
the administration of social security system.
Right to an adequate standard of living, including food, water and housing
The Bill engages the right to an adequate standard of living, including food, water
and housing, contained in article 11 of the ICESCR. The right to an adequate
standard of living, including food, water and housing provides that everyone is
entitled to adequate food, clothing and housing and to the continuous improvement
of living conditions.
To the extent that there is an impact on a person’s right to an adequate standard of
living, including food, water and housing, by virtue of the Bill, the impact is limited.
It is intended that the provisions will allow the efficient recovery of social security
payments, which will ultimately improve the efficacy of the social security system.
This measure is proportionate in achieving this policy objective as the interest charge
will only apply to former recipients who are no longer eligible to receive financial
support through social security or family assistance payments and debtors can avoid
the interest charge by entering into a repayment arrangement.
6
Statement of compatibility with human rights
To ensure all debtors are treated consistently and fairly, the interest charge will also
apply to those in receipt of only child care assistance and/or payments under the
Paid Parental Leave Act 2010 (and no other social welfare payment) with
outstanding debts. These debtors are not subject to deductions from their payment
and should be required to enter into an acceptable repayment arrangement to repay
the debt as with other debtors.
A debtor’s rights are safeguarded by the requirements of notice and periods of time
in which a person will be able to repay the debt or enter into an arrangement.
In addition a debtor’s financial capacity will be taken into account before a repayment
arrangement is agreed to. The Secretary will also have the discretion to waive a
debt in appropriate circumstances, including any interest charged on the debt.
Furthermore, by allowing the efficient recovery of social security payments, the Bill
ensures the financial sustainability of the social security system. The interest
charge, as it applies to people who receive payments to which they are not entitled,
is a reasonable condition on the benefits of the system as it encourages former
recipients to repay those payments and ensures that the Commonwealth is able to
recover the real value of these amounts. The interest charge is also transparent as it
is provided for in legislation, will be accurately communicated through the
Department’s website, and can only be applied after the recipient is given sufficient
written notice.
Therefore, the Bill will be compatible with the right an adequate standard of living as
the potential limitations on this right are proportionate to the policy objective and are
intended to improve the administration of the social security system.
Right to equality and non-discrimination
To avoid doubt, the Bill does not engage the right to equality and non-discrimination
contained in articles 2 and 26 of the ICCPR either on the basis of race or ‘other’
status.
Article 2(1) of the ICCPR obligates each State party to respect and ensure to all
persons within its territory and subject to its jurisdiction the rights recognised in the
Covenant without distinction of any kind, such as race, colour, sex, language,
religion, political or other opinion, national or social origin, property, birth or other
status1.
Article 26 not only entitles all persons to equality before the law as well as equal
protection of the law, but also prohibits any discrimination under the law and
guarantees to all persons equal and effective protection against discrimination on
any ground such as race, colour, sex, language, religion, political or other opinion,
national or social origin, property, birth or other status2.
1
2
CCPR General Comment No. 18
CCPR General Comment No. 18
7
Statement of compatibility with human rights
It is important to note, however, that not all differential treatment will be considered
discriminatory. The Committee on Economic, Social and Cultural Rights has
provided the following commentary on when differential treatment will be considered
discriminatory:
Differential treatment based on prohibited grounds will be viewed as
discriminatory unless the justification for differentiation is reasonable and
objective. This will include an assessment as to whether the aim and effects
of the measures or omissions are legitimate, compatible with the nature of the
Covenant rights and solely for the purpose of promoting the general welfare in
a democratic society. In addition, there must be a clear and reasonable
relationship of proportionality between the aim sought to be realised and the
measures or omissions and their effects. A failure to remove differential
treatment on the basis of a lack of available resources is not an objective and
reasonable justification unless every effort has been made to use all
resources that are at the State party’s disposition in an effort to address and
eliminate the discrimination, as a matter of priority3.
Discrimination on the basis of race
The Bill will apply an interest charge to all social security debts including ABSTUDY
payments, which supports Indigenous Australians. However, there is no differential
treatment on the basis of race as the interest charge will apply equally to all debtors.
For these reasons, the Bill will not engage the right of equality and
non-discrimination.
Discrimination on the basis of ‘other status’
The Bill applies an interest charge to former recipients of social welfare with
outstanding debts, rather than all customers with outstanding debts.
This will not limit the right to equality and non-discrimination as the differential
treatment is for a reasonable and objective purpose.
In most circumstances, current recipients of social welfare payments with debts have
their payments reduced until their debts are repaid. By comparison, former
recipients who are no longer dependent on the social security system, have no
incentive to repay their debts and may actively avoid repayment.
Debtors who are no longer eligible to receive financial support through social welfare
payments are more likely to have the financial capacity to make repayments than
those in receipt of income support or family assistance.
The introduction of the interest charge will ensure that people who once received
social welfare payments do not receive an unfair advantage by having received what
is, in effect, an interest-free loan from the Government.
3
CESCR, General Comment No 20
8
Statement of compatibility with human rights
To ensure all debtors are treated consistently and fairly, the interest charge will also
apply to those in receipt of only child care assistance and/or payments under the
Paid Parental Leave Act 2010 (and no other social welfare payment) with
outstanding debts. These debtors are not subject to deductions from their payment
and should be required to enter into an acceptable repayment arrangement to repay
the debt as with other debtors.
It is therefore reasonable and objective to apply an interest charge to debts with
respect to former recipients of social welfare payments to ensure that people with a
debt repay the outstanding amount in a timely fashion. Recipients of these
payments will be able to avoid the interest charge altogether by either repaying their
debt within 28 days of being notified of the debt or by entering into an acceptable
repayment arrangement.
For these reasons, the Bill will not engage the right of equality and
non-discrimination.
Conclusion
This Bill is compatible with human rights. To the extent that it may have limited
adverse impact on a person’s access to education, social security, an adequate
standard of living or the right to equality and non-discrimination, the limitation is
reasonable, proportionate to the policy objective and for legitimate reasons.
Circulated by the authority of the Minister for Social Services,
the Hon Christian Porter MP
9