Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 3) Regulations 2025

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Finance

Financial Framework (Supplementary Powers) Act 1997

The Financial Framework (Supplementary Powers) Act 1997 (the FFSP Act) confers on the Commonwealth, in certain circumstances, powers to make arrangements under which money can be spent; or to make grants of financial assistance; and to form, or otherwise be involved in, companies. The arrangements, grants, programs and companies (or classes of arrangements or grants in relation to which the powers are conferred) are specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the Principal Regulations). The powers in the FFSP Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non‑corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

The Principal Regulations are exempt from sunsetting under section 12 of the Legislation (Exemptions and Other Matters) Regulation 2015 (item 28A). If the Principal Regulations were subject to the sunsetting regime under the Legislation Act 2003, this would generate uncertainty about the continuing operation of existing contracts and funding agreements between the Commonwealth and third parties (particularly those extending beyond 10 years), as well as the Commonwealth’s legislative authority to continue making, varying or administering arrangements, grants and programs.

Additionally, the Principal Regulations authorise a number of activities that form part of intergovernmental schemes. It would not be appropriate for the Commonwealth to unilaterally sunset an instrument that provides authority for Commonwealth funding for activities that are underpinned by an intergovernmental arrangement. To ensure that the Principal Regulations continue to reflect government priorities and remain up to date, the Principal Regulations are subject to periodic review to identify and repeal items that are redundant or no longer required.

Section 32B of the FFSP Act authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Principal Regulations. Section 32B also authorises the Commonwealth to make, vary and administer arrangements for the purposes of programs specified in the Principal Regulations. Section 32D of the FFSP Act confers powers of delegation on Ministers and the accountable authorities of non-corporate Commonwealth entities, including subsection 32B(1) of the FFSP Act. Schedule 1AA and Schedule 1AB to the Principal Regulations specify the arrangements, grants and programs.

Section 65 of the FFSP Act provides that the Governor-General may make regulations prescribing matters required or permitted by the FFSP Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the FFSP Act.

The Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 3) Regulations 2025 (the Regulations) amend Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on an initiative to support the resolution of income apportionment. The initiative will be administered by the Department of Social Services.

Income apportionment was a historical debt calculation method that is now recognised to be inconsistent with laws governing social security entitlements and other entitlements as they applied at the time. Income apportionment was used (at various times) to determine entitlements for means tested payments under the Social Security Act 1991, including unemployment benefits, student payments and age pensions, where people had income from employment.

The Government is providing grant funding of $0.8 million in 2025-26 to the Australian Council of Social Service and Economic Justice Australia to support and inform the Government’s resolution of past practice of income apportionment in the administration of relevant laws governing social security entitlements and other entitlements.

Details of the Regulations are set out at Attachment A. A Statement of Compatibility with Human Rights is at Attachment B.

The Regulations are a legislative instrument for the purposes of the Legislation Act 2003.

The Regulations commence on the day after registration on the Federal Register of Legislation.

Consultation

In accordance with section 17 of the Legislation Act 2003, consultation has taken place with the Department of Social Services.

Attachment A

Details of the Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 3) Regulations 2025

Section 1 – Name

This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Social Services Measures No. 3) Regulations 2025.

Section 2 – Commencement

This section provides that the Regulations commence on the day after registration on the Federal Register of Legislation.

Section 3 – Authority

This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.

Section 4 – Schedules

This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 (the Principal Regulations) are amended as set out in the Schedule to the Regulations.

Schedule 1 – Amendments

Financial Framework (Supplementary Powers) Regulations 1997

The item in Schedule 1 amends Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on an initiative to be administered by the Department of Social Services (the department).

Item 1 – In the appropriate position in Part 4 of Schedule 1AB (table)

This item adds one new table item to Part 4 of Schedule 1AB.

Table item 760 – Supporting the resolution of income apportionment

New table item 760 establishes legislative authority for government spending on an initiative to support the resolution of income apportionment (the initiative).

Income apportionment involved allocating employment income over two or more entitlement periods based on available probative evidence. Payslips and payroll records generally show the work period for which weekly, fortnightly or monthly earnings were paid by the employer, but not the workdays, shifts or hours the person worked.

Income apportionment was used in circumstances where the evidence obtainable after the fact did not permit Services Australia to work out the exact amount earned by a person in each entitlement period. This was common where payslips did not show amounts earned per working day, and where work periods and payslips did not align with social security instalment periods.

In the absence of daily earnings, income apportionment involved apportioning employment income received by a person for work undertaken in a payroll period (reflecting the employer’s payroll arrangements) by dividing the amount of the income by the number of days in the payroll period, then allocating that daily amount to each day in the payroll period. The daily amount was then attributed to the relevant social security entitlement periods (generally a 14-day period over which social security payments are payable). The sum of all employment income amounts allocated to an entitlement period were then taken to be the employment income “earned, derived or received” in the entitlement period. This method of calculating income apportionment is now recognised to be inconsistent with various provisions of social security law in effect between 1991 and December 2020.

Income apportionment also had indirect consequences on other payments under family assistance law, veterans payments, and farm household support, among others. This is because these payments, in some instances, were contingent on a person also being eligible for a social security payment that was affected by income apportionment. For example, debts could arise under the A New Tax System (Family Assistance) (Administration) Act 1999 if it is later found that a person (or their partner) was not entitled to a social security payment for part of an income year in which they received family assistance.

The Parliament is currently considering amendments to the Social Security Act 1991 (and other relevant legislation) in the Social Security and Other Legislation Amendment (Technical Changes No.2) Bill 2025 (Bill) to enact its resolution approach, including retrospectively validating the use of income apportionment and establishing an Income Apportionment Resolution Scheme (the Scheme). The validation also extends to the flow-on effects of using income apportionment to other benefits and payments, including the effects on the payability of payments under other enactments (for example, Family Tax Benefit).

Subject to the passage of the Bill, the Scheme would acknowledge both the error of income apportionment and facilitates a pathway for compensation in a manner that is streamlined, fair and fiscally responsible.

Engaging with the resolution of income apportionment will require applicants to make legal decisions which people may require support to navigate. On 27 August 2025, the Government announced a $300.0 million package in a range of measures to ensure Australia’s social security system is producing fairer outcomes for Australians (https://ministers.dss.gov.au/media-releases/18381). The package includes funding of $0.4 million each to the Australian Council of Social Service (ACOSS) and Economic Justice Australia (EJA) to assist those affected to navigate the Scheme.

Funding to ACOSS and EJA forms part of the Families and Communities Service Improvement (FCSI) Activity, which was established in 2014 to contribute to, and provide feedback on, the Government’s social policy and issues affecting the community sector. Six national peak bodies, including ACOSS and EJA, support the continuous improvement of the sector by delivering sector relevant conferences, research, evaluations, and other service improvement initiatives.

Since the establishment of the FCSI Activity, ACOSS and EJA have received total funding of $16.0 million to support the Government’s policy agenda through providing advice on policies and programs administered by the department. The organisations do this by providing submissions to open consultations/inquiries and are representatives on many committees/groups, including the Community Services Advisory Group (CSAG), Blueprint Expert Reference Group (BERG), Economic Inclusion Advisory Committee (EIAC) and the Child Support Stakeholder Consultation Group. The representation of the peaks within these key committees/groups demonstrates their ongoing engagement in departmental policy and program design.

The Government is providing additional funding totalling $0.8 million in 2025-26 to ACOSS and EJA to support and inform the government’s resolution of past practice of income apportionment in the administration of relevant laws governing social security entitlements and other entitlements. This will in turn assist people to understand and navigate their eligibility for a resolution payment under the Scheme through information to organisations within ACOSS and EJA networks.

The additional funding will support an increase in ACOSS and EJA’s workload arising from the resolution of income apportionment, including to:

assist their members, the sector and broader community to understand and navigate the Scheme through education, support and resources such as developing factsheets or process maps for publication on their websites for broader community use. While the large number of ACOSS and EJA’s members will be key beneficiaries of this support, information on the Scheme will be passed from ACOSS and EJA’s members on to the sector and broader community they serve;
disseminate information to their members, the sector and broader community on the Scheme. This would be done in a variety of ways to ensure information is appropriate for different audiences, and through a range of methods to ensure the greatest reach such as newsletters/e-bulletins, social media channels, webinars and events;
communicate information about the resolution of income apportionment to their members, including eight state and territory Councils of Social Service and community legal centres across Australia, and the sectors they represent;
contribute to and provide feedback on the Government’s policy around the resolution of income apportionment;
facilitate engagement between the department and the sector on the resolution of income apportionment; and
provide education and professional training to those engaging with the resolution of income apportionment.

ACOSS and EJA are best placed to provide this support as they have large national networks and expertise on social security issues that impact the sector and broader community. The ACOSS national member network comprise:

eight state and territory Councils of Social Service, which as the peak body for the community sector in their state/territory, represents a magnitude of not-for-profit community organisations;
79 National Organisation Members; and
six National Constituency Organisation Members (representative bodies).

EJA’s members are specialist community legal centres that operate in all state and territories across Australia. The community legal centres provide free and independent information, advice, education and representation around social security. The large number of ACOSS and EJA’s members will be key beneficiaries of this support, which will then be passed on to the sector and broader community they serve.

Providing additional funding to ACOSS and EJA is an effective mechanism to support these organisations to manage this expected increase in requests for support to those organisations that need to provide information to people seeking to understand and navigate the proposed Scheme. ACOSS is a national advocate supporting people affected by poverty, disadvantage and inequality, and is the peak council for community services nationally. EJA is the peak organisation for community legal centres providing specialist advice to people on their social security issues and rights.

Funding amount and arrangements, merits review and consultation

Funding of $0.8 million in 2025-26 to ACOSS and EJA will be included in the
2025-26 Mid-Year Economic and Fiscal Outlook and the Portfolio Budget Statements for the Social Services portfolio. Funding for the item will come from Program 2.1 – Families and Communities, 2.1.4 – Component 4 (Sector Representation), which is part of Outcome 2.

Funding to ACOSS and EJA will be provided through a Deed of Variation to current grant agreements under the FCSI Activity. The department considers that a variation to existing grant agreements is an appropriate process as it aligns with the aim of the FCSI Activity to support the families and communities’ service sector.

The grant will be administered in accordance with the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013, the Public Governance, Performance and Accountability Rule 2014 and the Commonwealth Grant Rules and Principles 2024.

Information about the grant variation will be made available on the GrantConnect website (www.grants.gov.au), and the grant variation will be administered by the Community Grants Hub in partnership with the Children and Family Programs Branch, which are both part of the department.

The Minister for Social Services will be responsible for approving variations in grant funding to EJA and ACOSS under the Financial Framework (Supplementary Powers) Act 1997.

Independent merits review of decisions made in connection with the grant would not be considered appropriate because these decisions relate to the provision of a one-off grant to specific service providers with prior knowledge and expertise in the social security system. The Administrative Review Council has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.16 to 4.19 of the guide, What decisions should be subject to merit review?).

Although this grant is excluded from the independent merits review process, the review and audit process undertaken by the Australian National Audit Office provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.

Consultation for broader income apportionment resolution occurred across government agencies to develop the Government’s policy response for a resolution of income apportionment. Specifically, this involved engagement with:

the Department of Finance;
the Department of the Prime Minister and Cabinet;
the Department of the Treasury;
the Attorney-General’s Department;
Services Australia; and
other agencies which manage payments potentially affected by income apportionment.

The outcomes from the above engagements included understanding the scope and effect of income apportionment, the impacts of potential options, and the practical and resourcing implications of administering potential resolution options.

The department also met with key welfare rights organisations and oversight groups. The views of advocacy organisations have focussed on the scale of the issue, high cost of recalculations and potential for causing emotional and financial distress for those with potentially affected debts. These views were factored into the assessment of options to resolve income apportionment.

The department has engaged with ACOSS and EJA on the funding through the FCSI Activity, and its purpose, to support the resolution of income apportionment. EJA has consulted with their member centres on the resolution of income apportionment as they specialise in social security legal advice and representation.

Constitutional considerations

Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the following powers of the Constitution:

the express incidental power and the executive power (sections 51(xxxix) and 61);
the trade and commerce power (section 51(xxix));
the defence power (section 51(vi));
the bankruptcy and insolvency power (section 51(xxix));
the invalid and old age pensions power (section 51(xxix));
the social welfare power (section 51(xxiiiA)); and
the external affairs power (section 51(xxix)).

Executive power and express incidental power

The express incidental power in section 51(xxxix) of the Constitution empowers the Parliament to make laws with respect to matters incidental to the execution of any power vested in the Parliament, the executive or the courts by the Constitution. The executive power in section 61 of the Constitution extends to a range of matters, including:

activities that form part of the ordinary and well-recognised functions of government; and
the execution and maintenance of the Constitution, and the laws of the Commonwealth.

The initiative will fund organisations to assist the Commonwealth in raising public awareness of the government’s resolution of the past practice of income apportionment, which was used in administering social security entitlements and other entitlements under various Commonwealth laws. The funding to ACOSS and EJA will enable them to inform relevant state and territory Councils of Social Service and community legal centres across Australia of the resolution of income apportionment and allow them to contribute and provide feedback on the Government’s policy around the resolution of income apportionment.

The initiative is also supported by the following constitutional heads of power:

Trade and commerce power

Section 51(i) of the Constitution empowers the Parliament to make laws with respect to ‘trade and commerce with other countries, and among the states’.

Defence power

Section 51(vi) of the Constitution empowers the Parliament to make laws with respect to ‘the naval and military defence’ of the Commonwealth and the States, and ‘the control of the forces to execute and maintain the laws of the Commonwealth’.

Bankruptcy and insolvency power

Section 51(xvii) of the Constitution empowers the Parliament to make laws with respect to ‘bankruptcy and insolvency’.

Invalid and old age pensions power

Section 51(xiii) of the Constitution empowers the Parliament to make laws with respect to ‘invalid and old-age pensions’.

Social welfare power

The social welfare power in section 51(xxiiiA) of the Constitution empowers the Parliament to make laws with respect to the provision of various social welfare benefits including unemployment, pharmaceutical, sickness and hospital benefits, benefits to students, and medical and dental services.

External affairs power

Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to ‘external affairs’. Among other things, the external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party.

The objective of the initiative is to support and inform the government’s resolution of the past practice of income appointment. The relevance of these powers is that they support the existing Commonwealth laws that govern the payment of the social security entitlements and other entitlements impacted by this past practice.

Attachment B

Statement of Compatibility with Human Rights

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

Financial Framework (Supplementary Powers) Amendment (Social Services
Measures No. 3) Regulations 2025

This disallowable legislative instrument 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 legislative instrument

Section 32B of the Financial Framework (Supplementary Powers) Act 1997 (the FFSP Act) authorises the Commonwealth to make, vary and administer arrangements and grants specified in the Financial Framework (Supplementary Powers) Regulations 1997 (the Principal Regulations) and to make, vary and administer arrangements and grants for the purposes of programs specified in the Regulations. Schedule 1AA and Schedule 1AB to the Principal Regulations specify the arrangements, grants and programs. The powers in the FFSP Act to make, vary or administer arrangements or grants may be exercised on behalf of the Commonwealth by Ministers and the accountable authorities of non‑corporate Commonwealth entities, as defined under section 12 of the Public Governance, Performance and Accountability Act 2013.

The Financial Framework (Supplementary Powers) Amendment (Social Services
Measures No. 3) Regulations 2025 (the Regulations) amend Schedule 1AB to the Principal Regulations to establish legislative authority for government spending on an initiative to support the resolution of income apportionment. The initiative will be administered by the Department of Social Services.

The Government is providing grant funding of $0.8 million in 2025-26 to the Australian Council of Social Service (ACOSS) and Economic Justice Australia (EJA) to support and inform the Government’s resolution of past practice of income apportionment in the administration of relevant laws governing social security entitlements and other entitlements.

Human rights implications

This disallowable legislative instrument engages the right to social security – Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR), read with Article 2.

Right to social security

Article 2 of the ICESCR requires that each State Party ‘take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the ICESCR by all appropriate means, including particularly the adoption of legislative measures’.

Article 9 of the ICESCR acknowledges States Parties’ recognition of the right of everyone to social security, including social insurance. This includes establishing a social security system under domestic law that provides a minimum essential level of benefits to all individuals and families that will enable them to cover essential living costs. In order to effectively provide those benefits, 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 acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.

The funding to ACOSS and EJA under this initiative promotes the right to social security under Article 9 of the ICESR. The purpose of the initiative is to support and inform the government’s resolution of the past practice of income apportionment with the large number of ACOSS and EJA’s members being key beneficiaries of this support, which will then be passed on to the sector and broader community they serve. This will in turn promote peoples’ right to social security in understanding their social security entitlements and other entitlements, including eligibility for a resolution payment.

Conclusion

This disallowable legislative instrument is compatible with human rights as it promotes the protection of human rights.

Senator the Hon Katy Gallagher

Minister for Finance

Administered by Department of Finance

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