EXPLANATORY STATEMENT

 

Select Legislative Instrument 2009 No. 82

 

Subject — Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007

Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009

 

 

The Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007 (the CCMS Act) amended the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the Family Assistance Administration Act) to provide the legislative support and basis to run a new online-based Child Care Management System (CCMS).

 

By 1 July 2009, the CCMS will have fully replaced the Centrelink Child Care Operator System. It will standardise and simplify child care benefit administration, reduce the time required for making payments to approved child care services, reduce the administrative burden on services and improve the management of child care information relevant to the determination of individuals’ child care benefit entitlement.

 

Item 101 of Schedule 1 to the CCMS Act provides that the Governor-General may make regulations prescribing matters of a transitional nature (including prescribing any saving or application provisions, and prescribing any modification or adaptation of the CCMS Act, the Family Assistance Act or the Family Assistance Administration Act) relating to the amendments made by the CCMS Act.

 

The purpose of the Regulations is to amend transitional provisions in Part 2 of Schedule 1 to the CCMS Act to allow for a more efficient transition to CCMS.

 

The Regulations make a number of changes to the CCMS Act, in particular, to permit the Secretary of the Department of Education, Employment and Workplace Relations to re-acquit an advance paid to a child care service when the service provides corrected information to the Secretary after an initial acquittal of its advance, and to adjust money owed to or by a child care service as a result of a re‑acquittal.

 

Further background to, and details of, the Regulations are included in the Attachment.

Background

 

The CCMS Act amended the family assistance law to enable the use of a new online-based Child Care Management System (CCMS). The CCMS will standardise and simplify the administration of child care benefit (CCB), reduce the time required for making payments to approved child care services, reduce the administrative burden on child care services and improve the management of child care information relevant to the determination of individuals’ CCB entitled.

 

The CCMS is being rolled out between July 2007 and June 2009. Each approved child care service is allocated an ‘application day’ by the Secretary to the Department of Education, Employment and Workplace Relations (Secretary), being the day that the new CCMS provisions of the family assistance law start applying to the service. Prior to a service’s application day, much of the family assistance law as in force before the amendments made by Schedule 1 to the CCMS Act continues to apply to the service.

 

The Family Assistance Administration Act as in force before the commencement of Schedule 1 to the CCMS Act provided for payments to approved child care services of an advance amount determined by the Secretary in respect of a ‘reporting period’ (generally a calendar quarter), from which the services reimbursed themselves for the amount of fee reductions provided by the service to individuals eligible for CCB during the period.

 

During the subsequent reporting period the services were required to provide a report specifying, among other things, the amount of fee reductions provided in that period. Taking into account this report, the Secretary would acquit the advance amount paid for the period. The difference between the amount paid and the CCB fee reductions would either be taken out of the advance amount to be paid for a subsequent period or added to the subsequent advance amount.

 

A service may correct its report for a reporting period and this would trigger another acquittal for the same period (a re-acquittal).

 

The overpaid advance amount is not a debt until the time the service ceases to operate. Only at this point the overpayment of an advance amount becomes a debt recoverable under Part 4 of the Family Assistance Administration Act (section 71G as it applies before a service’s ‘application day’).

 

The CCMS does not provide for payment of advance amounts. Therefore, provisions relating to advances (in Division 2, Part 8A of the Family Assistance Administration Act as in force before commencement of Schedule 1 to the CCMS Act) and the debt creation provision relating to advances (in section 71G as in force before commencement of Schedule 1) were repealed by Part 1 of Schedule 1 to the CCMS Act.

 

Part 2 of Schedule 1 to the CCMS Act includes various transitional provisions supporting the transition from the pre-CCMS system to the CCMS system. These provisions include an obligation on a child care service to provide, within a specified time, the required reports for the periods not acquitted at the service’s application day, and set out the acquittal system for those periods, which results in a debt due by a service or an amount to be paid to the service, as the case may be.

 

The need for amendments to these provisions has been identified to support the intended CCMS transitional arrangements. The Regulations amend the CCMS Act for the following purposes:

• to enable re-acquittal of advance amounts paid before a child care service’s application day for a particular ‘reporting period’, to take into account a corrected report (or reports) provided by the service;
• to enable re-acquittal of an advance amount paid before a child care service’s application for a particular ‘reporting period’, to take into account a report provided by the service after a debt has been created under subitem 97 (4), and to enable a further re-acquittal of the amount to take into account any subsequent corrected report (or reports);
• to ensure that the debt amount, or a payment amount, relevant to the advance amount for a particular ‘reporting period’ is adjusted accordingly after an subsequent re-acquittal of the advance amount;
• to ensure that the relevant debt recovery provisions in Division 3 of Part 4 of the Family Assistance Administration Act apply to a debt created under subitem 97 (4) and, if a debt is subsequently adjusted as a result of re-acquittal, to the debt as adjusted;
• to enable review of the debt created under subitem 97 (4) and, if a debt is subsequently adjusted as a result of re-acquittal, of the debt as adjusted, and of the payment under subitem 97 (5) and, if the payment is adjusted, of the payment as adjusted;
• to impose a time limit on the Secretary’s authority to acquit or re-acquit an advance amount paid before a service’s application day; and
• to authorise delegation of the powers under Schedule 1 to the CCMS Act.

 

Details of Regulations

 

The Regulations amend items 94, 96 and 97 and insert new items 97A and 100A into Schedule 1 to the CCMS Act.

 

Part 1 — Preliminary

 

Regulation 1.1 provides that the Regulations are to be named the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Regulations 2009.

 

Regulation 1.2 provides that the Regulations commence on the day after they are registered.

 

Regulation 1.3 provides that for the purpose of the Regulations, ‘Amendment Act’ means the Family Assistance Legislation Amendment (Child Care Management System and Other Measures) Act 2007.

Part 2 — Transitional Arrangements relating to the Amendment Act

 

Regulation 2.1 amends item 94 of Schedule 1 to the CCMS Act. Item 94 provided in paragraph (a) that where a child is already enrolled at a child care service on the service’s application day, the service must give the Secretary notice of the enrolment in accordance with the family assistance law within 7 days after the application day. Regulation 2.1 amends this paragraph to provide that it is a condition for the continued approval of the service that the service gives the Secretary notice under this item. This means that sanctions can be imposed under the family assistance law on a service that fails to provide the required notice.

 

Regulation 2.2 amends item 96 of Schedule 1 to ensure that compliance with the item is a condition of continued approval of the service. This means that sanctions can be imposed under the family assistance law on a service that fails to comply with the item.

 

Regulation 2.3 amends item 97 of Schedule 1, which requires the Secretary to conduct an acquittal of advance amounts paid to the service under section 219R of the Family Assistance Administration Act after the service provides a report for a reporting period. This requires the Secretary to compare the advance amount paid in respect of a reporting period with the amount the service expended on CCB fee reductions during that period which may result in a debt owed to the Commonwealth by the service, or a top-up paid to the service.

 

Regulation 2.3 amends item 97 to ensure that the advance amounts for the relevant period may be re-acquitted when the first report is provided by the service and when a subsequent corrected report is provided.

 

Subitem 97 (1) is amended to clarify what a relevant period is for the purposes of item 97. New subitem 97 (1) provides that a relevant period is (a) a reporting period ending before the application day for the service, if at the closing day there has not been an acquittal under section 219S of the Family Assistance Administration Act of advances paid in respect of the period; and (b) for the reporting period in which the application day falls, so much of that reporting period as falls before the application day.

 

Subitem 97 (4) provides that a debt created out of an ‘overpaid’ advance amount relevant to the re-application day period is recoverable under the family assistance law. Specifically any amount of the advance which is more than the amount of reduced fees in the relevant period is a debt due to the Commonwealth. Regulation 2.3 amends paragraph 97 (4) (b) to clarify that such a debt is taken to fall within the meaning of debt in subsection 82 (3) and section 94 of the Family Assistance Administration Act. Therefore, a debt created by subitem 97 (4) of the CCMS Act is recoverable by the Commonwealth. This amendment clarifies that for the purposes of the family assistance law, a debt under subitem 97 (4) is recoverable by any means specified in the Family Assistance Administration Act. Therefore, it is open to the Commonwealth to recover debts created under subitem 97 (4) of the CCMS Act by means of recovery dealt with by sections 87A (setting off debts against enrolment advances), 87B (setting of debts against fee reductions), 88 (legal proceedings), 89 (garnishee notice), 90 (time limit on recovery by garnishee notice) and 91 (payment of debt by instalments) of the Family Assistance Administration Act.

 

Regulation 2.3 also inserts a new subitem 97 (5A) into the CCMS Act. Under section 93A of the Family Assistance Administration Act, amounts paid incorrectly to a financial institution are recoverable where that amount is a family assistance payment within the meaning provided in subsection 93A (6) of the Family Assistance Administration Act. The new subitem 97 (5A) provides that for the purposes of section 93A an amount resulting from acquittal or re-acquittal made after a service’s application day is a family assistance payment for the purposes of 93A of the Family Assistance Administration Act. This will allow for recovery of amounts paid to an incorrect account with a financial institution.

 

Regulation 2.4 inserts a new item 97A into Schedule 1 dealing with the adjustment of acquittal of advances. New subitem 97A (1) identifies the relevant period for the purposes of that item. Subitem 97A (1) identifies that the relevant period is where there has been an acquittal in respect of that period under section 219S of the Family Assistance Administration Act or item 97 of the CCMS Act and any of the following events happen within two years after the application day for the approved child care service:

• the service provides a report for the period under subsection 219N (1) of the Family Assistance Administration Act;
• the service corrects a report for the period under subsection 219N (6) of the Family Assistance Administration Act;
• the service provides or corrects a report for the period under item 97 of the CCMS Act;
• the Secretary otherwise believes that the difference between the amount of the advance paid in respect of the period and the amount passed on by the service in reduced fees during the period may have been worked out incorrectly.

 

New subitem 97A (2) allows the Secretary to compare the amount of the advance determined under section 219Q of the Family Assistance Administration Act in respect of a service and the relevant period with the amount passed on by the service in reduced fees during that period.

 

New subitem 97A (3) provides that a comparison over the two amounts described in subitem 97A (2) in respect of a relevant period will override any previous comparison made under item 97 or 97A of the CCMS Act in respect of that period. Therefore, should a reassessment of the acquittal amount (i.e. the difference between the advance payment and the actual amount passed on by the service by way of reduced fees) calculated in item 97 of the CCMS Act occur by way of one of the events identified in new paragraph 97A (1) (b), the new calculation under subitem 97A (2) will be the applicable acquittal amount to be paid or recovered by the Commonwealth.

 

New subitem 97A (4) provides that where the amount of the advance is more than the amount of the reduced fees, that amount will become a debt due to the Commonwealth by the service. That debt will be a debt within the meaning of subsection 82 (3) and section 94 of the Family Assistance Administration Act and therefore the Commonwealth will be able to seek recovery of that debt by the usual methods provided by the family assistance law.

 

New subitem 97A (5) provides that where the advance is less than the amount of the new fees, the difference in the amounts is to be paid to the credit of a bank account nominated and maintained by the service and is a family assistance payment for the purposes of section 93A of the Family Assistance Administration Act. This means that where an amount is credited to the wrong bank account, it is recoverable under the family assistance law.

 

New subitems 97A (6) and (7) provide that the Secretary must give notice of any debt arising under subitem 97A (4) or any payment made under subitem 97A (5) to the service. Notice must be given in the form and in the manner or way approved by the Secretary.

 

Regulation 2.5 inserts a new item 100A into Schedule 1 to allow the Secretary to delegate his or her powers under Schedule 1 to an officer (although the Secretary cannot delegate his or her powers to an officer of another agency without the permission of the head of that agency).