EXPLANATORY STATEMENT

Issued by the authority of the Minister for Education

A New Tax System (Family Assistance) Act 1999

Child Care Subsidy Amendment (Third Party Payment and Discounts) Minister’s Rules 2022

AUTHORITY

The Child Care Subsidy Amendment (Third Party Payment and Discounts) Minister’s Rules 2022 (Amendment Rules) are made under subsection 85GB(1) of the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act) as construed in accordance with subsection 33(3) of the Acts Interpretation Act 1901 (Acts Interpretation Act).

Under subsection 33(3) of the Acts Interpretation Act, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend or vary any such instrument.

PURPOSE AND OPERATION

The Amendment Rules amend the Child Care Subsidy Minister’s Rules 2017 (Principal Rules). Schedule 1 to the Amendment Rules will allow state and territory governments to make payments to reduce session fees for families with children attending preschool programs delivered by approved child care services, without that payment having an adverse impact on the rate of Child Care Subsidy (CCS) the families can receive.

In addition, Schedule 2 to the Amendment Rules makes technical changes that are consequential to the Family Assistance Legislation Amendment (Cheaper Child Care) Act 2022 (2022 Amendment Act).

• Schedule 6 to the 2022 Amendment Act repealed subsection 201B(1A) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance Administration Act), which allowed the Minister to prescribe events and circumstances when the provider is not required to ensure eligible individuals pay the provider the gap fee, and replaced it with a similar power, subsection 201BB(1), allowing the Minister to prescribe events and circumstances when the provider may allow the eligible individual a discount on their gap fee. This measure will ensure the continuation of fee relief to be passed on in situations such as emergencies or natural disasters, by lowering an individual’s liability to pay for sessions of care. The events and circumstances that were prescribed under subsection 201B(1A) will continue to be prescribed, but now for the purposes of subsection 201BB(1).
• Schedule 5 to the 2022 Amendment Act inserted provisions which allow child care providers to provide discount on the gap fee for an eligible individual who is an educator or a cook; the current provisions within the Principal Rules will be repealed as a consequence.

REGULATORY IMPACT

The Office of Impact Analysis (OIA) has advised no Regulatory Impact Statement is required for the Amendment Rules and assessed the Amendment Rules as having no more than a minor regulatory impact (OIA ID: 22-03741).

COMMENCEMENT

Sections 1 to 4 of the Amendment Rules commence the day after the Amendment Rules are registered. Schedule 1 to the Amendment Rules commence on 1 January 2023. Schedule 2 to the Amendment Rules commence immediately after the later of the commencement of Part 2 of Schedule 6 to the 2022 Amendment Act and Schedule 3 to the Child Care Subsidy Amendment (Coronavirus Response, Emergency Support and Other Measures) Minister’s Rules 2022, which will also occur on 1 January 2023.

Certain provisions in the Amendment Rules are made under powers inserted by the 2022 Amendment Act, which had not commenced at the time the Amendment Rules were made. This is permitted under section 4 of the Acts Interpretation Act. Section 4 of the Acts Interpretation Act provides that if an Act is enacted and will be amended by an Act that will confer the power to make an instrument of legislative character, the power to make the instrument may be exercised before the commencement of the amending Act.

CONSULTATION

The Department of Education (department) consulted with state and territory governments with new preschool initiatives regarding the preschool third party payment measure in Schedule 1 to the Amendment Rules. The state and territory governments were strongly supportive of the preschool third party payment measure.

As Schedule 2 only contains amendments consequential to Schedules 5 and 6 to the 2022 Amendment Act, there was no separate consultation on these changes. However, stakeholders were given the opportunity to comment on the 2022 Amendment Act through consultations run by the department and the Education and Employment Legislation Committee of the Senate. The feedback from public consultation was supportive of the changes.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Child Care Subsidy Amendment (Third Party Payment and Discounts) Minister’s Rules 2022

The Child Care Subsidy Amendment (Third Party Payment and Discounts) Minister’s Rules 2022 (the Amendment Rules) are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Amendment Rules amend the Child Care Subsidy Minister’s Rules 2017 (Principal Rules). Schedule 1 to the Amendment Rules will allow state and territory governments to make payments to reduce session fees for families with children attending preschool programs delivered by approved child care services, without that payment having an adverse impact on the rate of Child Care Subsidy (CCS) the families can receive.

In addition, Schedule 2 to the Amendment Rules makes technical changes that are consequential to the Family Assistance Legislation Amendment (Cheaper Child Care) Act 2022 (2022 Amendment Act).

• Schedule 6 to the 2022 Amendment Act repealed subsection 201B(1A) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance Administration Act), which allowed the Minister to prescribe events and circumstances when the provider is not required to ensure eligible individuals pay the provider the gap fee, and replaced it with a similar power, subsection 201BB(1), allowing the Minister to prescribe events and circumstances when the provider may allow the eligible individual a discount on their gap fee. This measure will ensure the continuation of fee relief to be passed on in situations such as emergencies or natural disasters, by lowering an individual’s liability to pay for sessions of care. The events and circumstances that were prescribed under subsection 201B(1A) will continue to be prescribed, but now for the purposes of subsection 201BB(1).
• Schedule 5 to the 2022 Amendment Act inserted provisions which allow child care providers to provide discount on the gap fee for an eligible individual who is an educator or a cook; the current provisions within the Principal Rules will be repealed as a consequence.

Human rights implications

The Amendment Rules engage the following human rights:

• Article 3 of the Convention on the Rights of the Child (CRC) which recognises that in all actions concerning children, the best interests of the child shall be a primary consideration;
• Article 18 of the CRC, which requires States Parties to take all appropriate measures to ensure that children of working parents can benefit from child care services and facilities; and
• Article 13 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), which recognises the right of everyone to education.

Article 3 of the CRC

Article 3 of the CRC states that in all actions concerning children, including those undertaken by administrative authorities or legislative bodies, the best interests of the child shall be a primary consideration.

The Amendment Rules make changes to the Principal Rules to increase affordability of child care, including by allowing child care providers to give a discount to eligible individuals where there is an emergency that prevents children from attending child care. This will promote the best interests of the child by reducing the financial pressure on child care services and ensuring that disruptions to child care are minimised so that services can continue to operate into the future to support children’s wellbeing and their families.

Article 18 of the CRC

Article 18 of the CRC, and particularly paragraph 3 of article 18, requires States Parties to take all appropriate measures to ensure that children of working parents have the right to benefit from child care services and facilities for which they are eligible.

The Amendment Rules support affordability for preschool programs offered at approved, centre-based child care services, by enabling state and territory governments to make contributions to further reduce session fees for these programs.  Delivery of preschool programs at child care services means that working parents have greater access and choice in relation to early childhood education for their children of preschool age.

Accordingly, the Amendment Rules will support children and families to be able to access child care that is safe and affordable and supports the child to also attend a preschool program.  

Article 13 of the ICESCR

Article 13 of the ICESCR recognises the right of everyone to education.

The Amendment Rules, and particularly the amendments made by Schedule 1, will facilitate the affordability of preschool operated through approved child care services. This will enhance the ease and affordability of children accessing preschool programs for early childhood education.

Conclusion

The Amendment Rules are compatible with human rights because they promote the protection of human rights.

Minister for Education, The Hon Jason Clare MP

CHILD CARE SUBSIDY AMENDMENT (THIRD PARTY PAYMENT AND DISCOUNTS) MINISTER’S RULES 2022

EXPLANATION OF PROVISIONS

Section 1: Name

1. This is a formal provision specifying that the name of the instrument is the Child Care Subsidy Amendment (Third Party Payment and Discounts) Minister’s Rules 2022 (Amendment Rules).

Section 2: Commencement

2.  This sets out the commencement for different parts of the instrument. Sections 1 to 4 of the Amendment Rules and anything else not covered by the table commences the day after the instrument is registered. Schedule 1 to the Amendment Rules commences on 1 January 2023. Schedule 2 to the Amendment Rules commences immediately after the later of the commencement of Part 2 of Schedule 6 to the Family Assistance Law Amendment (Cheaper Child Care) Act 2022 (2022 Amendment Act) and the commencement of Schedule 3 to the Child Care Subsidy Amendment (Coronavirus Response, Emergency Support and Other Measures) Minister’s Rules 2022.

Section 3: Authority

3.  This provision provides that the Amendment Rules are made under the A New Tax System (Family Assistance) Act 1999.

Section 4: Schedules

4.  Section 4 provides that the Child Care Subsidy Minister’s Rules 2017 (Principal Rules) are amended as set out in items in the Schedules to the Amendment Rules.

SCHEDULE 1 – THIRD PARTY PAYMENT

Child Care Subsidy Minister’s Rules 2017

5.  This Schedule amends section 16A of the Principal Rules to allow state or territory governments to make financial contributions towards preschool programs run by approved centre-based day care services, without those financial contributions affecting an individual’s child care subsidy (CCS) entitlement for the session. This will ensure that individuals receive the maximum benefit from both Commonwealth and state or territory funding for preschool, and that their out of pocket costs are minimised.

Item 1

6.  Item 1 removes the heading from subsection 16A(1A), which is no longer required as subsections 16A(1), (2), (3) and (3B) are being repealed.

Item 2

7.  Item 2 repeals subsections 16A(1), (2), (3) and (3B) from the Principal Rules to remove redundant provisions and improve readability.

8.  Subsection 16A(1) created a third party payment to benefit individuals who were impacted by the bushfires over the summer of 2019-2020. This measure expired on 1 December 2020 and is now being removed from the Principal Rules.

9.  Subsection 16A(2) created a third party payment to benefit volunteer firefighters, particularly during and after the bushfires over the summer of 2019-2020. This measure expired on 1 March 2020 and is now being removed from the Principal Rules.

10.  Subsection 16A(3) created an exception to the third party payments prescribed at subsections 16A(1) and (2) and is now redundant as a result of their repeal. Accordingly, subsection 16A(3) is being removed from the Principal Rules.

11.  Subsection 16A(3B) created a third party payment to benefit individuals whose children participated in kindergarten programs in Victoria in the 2021 calendar year. This measure has now lapsed and is being removed from the Principal Rules.

Item 3

12.  Item 3 inserts subsection 16A(3D) into Part 3 of the Principal Rules to prescribe an additional third party payment that does not reduce the hourly session fee for a session of care provided to a child.

13.  Subparagraph 2(2)(b)(i) of Schedule 2 to the Family Assistance Act provides that the hourly session fee is reduced by the hourly rate of any payment which the individual benefits from in respect to that session. Paragraph 2(2A)(c) of Schedule 2 to the Family Assistance Act provides that subparagraph 2(2)(b)(i) does not apply to payments that are prescribed in the Principal Rules.  Section 16A of the Principal Rules prescribes payments for the purpose of paragraph 2(2A)(c) of the Family Assistance Act.

14.  A payment is prescribed as a third party payment under new subsection 16A(3D) if it meets all of the following criteria:

1. the payment is made by a State or Territory, or an authority of a State or Territory
2. the payment benefits the individual for a session of care provided to a child
3. that session of care was provided between 1 January 2023 and 31 December 2025
4. the session of care was provided by a centre-based day care service in a preschool program offered by that service (meaning an early childhood education program provided to children before their first year of school)
5. that preschool program is aimed at children in the 2 or 3 years before grade 1 of school
6. the payment is designed to reduce the individual’s or the individual’s partner’s liability to pay for that session of care.

1. The parameters for which children will benefit from state and territory government preschool payments will be set by those governments, and there may different parameters applied across jurisdictions.
2. While preschool programs aimed at children in the 2 or 3 years before grade 1 are commonly referred to as “three year old preschool” or “four year old preschool”, the prescribed third party payment provision in item 3 does not restrict children from benefitting based on their age.
3. For example, in some jurisdictions, a child may be aged five when entering grade 1. It is therefore conceivable that payments could be made under this provision in respect of a two year old child, if the program is aimed at children in the third year before grade 1.  Similarly, it is conceivable that a child aged five or older may benefit, for example, where they have repeated a year of preschool.
4. The note includes a non-exhaustive list of State and Territory payments that would be captured by subsection 16A(3D).

Item 4

19.  Item 4 inserts a new definition for the term “preschool program.”

20.  For the purpose of the preschool third party payment provision inserted by item 3, “preschool program” is defined as an early childhood education program provided to children at any stage before their first year of full time school (the year of full time school meaning the year before grade 1).

21.  As noted in paragraphs 16 and 17 of this Explanatory Statement, the intention of new paragraph 16A(3D)(e) is to enable third party payments to be made for preschool programs that are targeted to specific early childhood education stages.

22.  The kind of program that will be covered by this measure is called different things in different states and territories. Previously, subsection 16A(3B) only applied in Victoria, where preschool programs are referred to as “kindergarten”. New subsection 16A(3D) will apply in all jurisdictions, so this terminology is being changed to “preschool program”. Subsection (3D) will apply to all state or territory-funded early education programs aimed at children who have not yet started full time school, regardless of what the early education program is called in that state or territory. A note has been included to clarify this.

Item 5

23.  Item 5 repeals the definitions of “kindergarten program”, “registered charity” and “relevant period”, which were previously used in subsections (1) to (3) and (3B) of section 16A. Subsections (1) to (3) and (3B) are now being repealed (see item 2 above) so those definitions are no longer necessary.
 

SCHEDULE 2 –DISCOUNTS

Child Care Subsidy Minister’s Rules 2017

24.  The amendments in Schedule 2 are technical in nature and consequential to amendments made in Schedules 5 and 6 to the 2022 Amendment Act.

25.  Schedule 2 to the Amendment Rules will continue certain exemptions for providers from the obligation in subsection 201B(1) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance Administration Act) to take all reasonable steps to ensure that individuals pay them the difference between the total of the hourly session fees payable, and the amount of CCS the individual is entitled to (sometimes known as the “gap fee”).

26.  Subsection 201B(1A) provided that the provider did not have to take all reasonable steps during a particular event or circumstance prescribed by the Minister’s Rules. This was previously used to provide the option for providers to give fee relief during times of hardship, such as during COVID-19 lockdowns or during natural emergencies, however the impact on the individual’s fee liability was unclear.

27.  The amendments within Schedule 6 to the 2022 Amendment Act replaced subsection 201B(1A) with an improved measure, section 201BB, allowing providers to give a discount on the pre-discount fee for the measure in events or circumstances prescribed in the Minister’s Rules (the “prescribed circumstances discount”). This will provide clearer fee relief by allowing providers to discount the amount the individual is liable to pay them, without affecting the individual’s CCS entitlements.

28.  The same events and circumstances that were previously prescribed for the purposes of subsection 201B(1A) will continue to be prescribed for the purposes of subsection 201BB(1). Schedule 2 to the Amendment Rules makes consequential amendments to clarify that each of the events or circumstances prescribed has effect under subsection 201BB(1).

29.  Schedule 5 to the 2022 Amendment Act inserted provisions which allow child care providers to provide a discount on the gap fee for an eligible individual who is an educator or a cook; the current provisions within the Principal Rules will be repealed as a consequence.

Item 1

30.  Item 1 makes a technical consequential change to subsection 48B(2)(d). This is to ensure that permissible discounts under new sections 201BA and 201BB of the Family Assistance Administration Act are not caught up by the condition of continued approval preventing providers for offering inducements.

Item 2

31.  Item 2 repeals the heading of Division 1A of Part 5 and replaces it with a new heading. The new heading reflects that the provisions in Division 1A will now be providing for prescribed circumstances discounts, rather than exemptions from the obligation to collect the gap fee.

Item 3

32.  Item 3 repeals section 54AA and substitutes a new section 54AA, providing that Division 1A of Part 5 sets out events or circumstances for which a prescribed circumstances discount may be allowed on the pre-discount fee attributable to a session of care provided by a child care service to a child.

Item 4

33.  Item 4 repeals section 54A. Section 54A has been given effect through new section 201BA of the Family Assistance Administration Act, inserted by Schedule 5 of the 2022 Amendment Act, with minor changes. Accordingly, section 54A is no longer needed.

Item 5

34.  Item 5 repeals the previous section 54B, which had effect under subsection 201B(1A) of the Family Assistance Administration Act, and substitutes a new section 54B. New section 54B has a similar effect to the previous version, but it now has effect under subsection 201BB(1) of the Family Assistance Administration Act. That is, it now prescribes events and circumstances for which a prescribed circumstances discount may be allowed.

35.  The effect of section 54B is that a prescribed circumstances discount may be allowed if the session of care was provided on or after 1 January 2023, the session was provided during a period of emergency, and the child did not attend any part of the session of care because of the emergency, or because the service is closed because of the emergency.

Item 6, 10, 11 and 14

36.  Items 6, 10, 11 and 14 amend various headings throughout Part 2 of Schedule 3 to reflect that the events or circumstances prescribed are now for the purpose of a prescribed circumstances discount, rather than allowing an exemption from the obligation to enforce payment of hourly session fees.

Item 7, 9, 12, 13, 15 and 16

37.  Items 7, 9, 12, 13, 15 and 16 amend various references in Part 2 of Schedule 3 to subsection 201B(1A), which is now being repealed, to instead refer to new subsection 201BB(1) (or the relevant paragraph of subsection 201BB(1)).

Item 8

38.  Item 8 amends clause 2.1A of Schedule 3, which sets out the purpose of Part 2 of Schedule 3. This is to reflect that the purpose of Part 2 is being amended. Previously, Part 2 prescribed events and circumstances and related matters for the purpose of when a provider is exempted from the obligation to enforce payment of hourly session fees. Now, Part 2 will prescribe events and circumstances and related matters for the purposes of when a provider may allow a prescribed circumstances discount.