EXPLANATORY STATEMENT
Social Security (Administration) (Income Management – Crediting of Accounts) Rules 2008
Summary
These Rules are made under section 123WN of the Social Security (Administration) Act 1999 (the Act). The Rules are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The purpose of these Rules is to set out particular circumstances in which the Income Management Special Account established by section 123VA of the Act (the Special Account) and a person’s income management account can be credited with an amount that is ascertained in accordance with the Rules. These circumstances all involve a debit from the Special Account under Division 6 of Part 3B of the Act for the purpose of providing a stored value card, or increasing the monetary value stored on a stored value card, under section 123YE or 123YF of the Act.
Background
A package of national Welfare Payment Reform (WPR) measures was announced on 14 July 2007. One of the main aims of the WPR program is to encourage socially responsible behaviour by parents to enhance the well-being of their children. This will primarily be achieved by providing income management assistance for recipients of welfare payments who need help to ensure the well-being of children under their care.
Income management was initially introduced as part of the Northern Territory Emergency Response (NTER) to stem the flow of cash fuelling abusive behaviours in communities, and to ensure that payments intended to benefit children are used for that purpose. The income management process involves withholding a portion of welfare payments, followed by individual case management that will direct the withheld amount to pay essential expenses such as food, clothing and housing. The individual case management process is managed by Centrelink and involves the payment recipient deciding upon their priority needs. There is no overall loss or reduction of payments to any recipient as a result of these measures.
Income management is utilised in the following WPR measures:
- the Northern Territory Emergency Response;
- the Child Protection Measure in Western Australia; and
- the Cape York Welfare Reform Trials.
To support income management arrangements, the Australian Government is implementing an Income Management Card (the BasicsCard). The BasicsCard is PIN-protected and purchases will be made through the existing EFTPOS network to allow efficient and secure access to income managed funds.
The BasicsCard will provide income managed customers with greater choice and flexibility to purchase priority goods and services such as food, clothing and basic household items from a broader range of merchants. A key benefit of the BasicsCard is that it can be reloaded with income managed funds without the need for customers to visit Centrelink and will prevent cash-out transactions from EFTPOS and automatic teller machines. The BasicsCard will also reduce some of the administrative burdens for merchants, particularly those in remote communities, and it will also increase opportunities for both large and small merchants to participate in the income management regime.
The BasicsCard is supported and supplied by a card transaction provider who is responsible for providing the card itself and undertakes the processing required to facilitate transactions through the EFTPOS system.
These Rules set out the circumstances in which an amount that is ascertained in accordance with these Rules is to be credited to the Special Account and a person’s income management account. The circumstances specified in these Rules all relate to debits that are made from the Special Account and a person’s income management account for the purpose of giving a BasicsCard to a person or increasing the monetary value stored on a BasicsCard.
Explanation of the sections
Name of Rules
Section 1 sets out the name of these Rules.
Commencement
Section 2 provides that the Rules commence on the day after they are registered.
Definition
Section 3 contains definitions for terms that are used in the Rules.
Rules
Section 123WN of the Act allows for rules to be made specifying circumstances in which certain amounts, which are to be ascertained in accordance with the rules, are to be credited to the Special Account and a person’s income management account. This instrument is made under section 123WN and the circumstances and rules for ascertaining the amounts are set out in section 4 of this instrument.
There are two requirements set out in subsection 4(2) that must be met in order for an amount to be credited to the Special Account and a person’s income management account under these Rules.
Threshold circumstances
The first requirement is that the threshold circumstance, set out in subsection 4(3) must be satisfied. The threshold circumstance is that the Special Account and a person’s income management account have been debited for the purpose of giving the person or their designated nominee a stored value card under either paragraph 123YE(2)(a) or 123YF(2)(a) of the Act, or increasing the monetary value stored on a stored value card under paragraph 123YE(2)(c) or 123YF(2)(c) of the Act.
Subsection 4(4) provides a debit referred to in susection 4(3) may be in the form of a single transaction or made through a series of transactions.
Particular circumstances
The second requirement is that one of the particular circumstances set out in the table in subsection 4(6) must be satisfied.
The table in subsection 4(6) outlines the particular circumstances that are relevant for paragraph 4(2)(b) of the Rules. The table also sets out the amount that is relevant for the purpose of paragraph 4(5)(a) of the Rules.
Subsection 4(5) sets out the amount that can be credited to a Special Account and a person’s income management account if one of the particular circumstances in the table in subsection 4(6) occurs and subsection 4(2) is satisfied.
Item 1 – The particular circumstance in item 1 of the table in subsection 4(6) is where a person or their designated nominee asks the Secretary to reduce the monetary value stored on their stored value card. If the Secretary agrees to the request, the amount will no longer be available through the mechanism of the stored value card and should consequently be credited to the Special Account and the person’s income management account.
This circumstance may occur where an amount has been credited to a person’s BasicsCard, but the person or their designated nominee has not used this amount to acquire goods or services. If the person or their designated nominee requires the use of these funds to meet another priority need (eg to pay a bill, or to meet funeral expenses) the Secretary may agree to the request and credit the amount to the Special Account and the person’s income management account.
The crediting amount, ascertained in accordance with subsection 4(5), for the particular circumstance in item 1 is: the amount of the requested reduction; or, if the monetary value on the stored value card is a lesser amount, the lesser amount; or, if there is no monetary value stored on the stored value card, a nil amount.
Item 2 – The particular circumstance in item 2 of the table in subsection 4(6) is where the monetary value stored on the stored value card exceeds $1,500.
There is an administrative limit on the amount that can be stored on a stored value card and this has been set at $1,500. The reason for this is to limit liability if there are unauthorised transactions made with the card.
The crediting amount, ascertained in accordance with subsection 4(5), for the particular circumstance in item 2 is: the monetary value on the stored value card that exceeds this limit; or another amount determined by the Secretary; or, if the monetary value on the stored value card is a lesser amount, the lesser amount; or, if there is no monetary value stored on the stored value card, a nil amount.
Item 3 – The particular circumstance in item 3 of the table in subsection 4(6) is where monetary value has been stored on the stored value card, but the Secretary forms the view that the affected person is unable or unlikely to be able to use the stored value card to acquire goods and services.
This circumstance may occur if the person cannot use the stored value card because of circumstances beyond their control such as a faulty card, the unavailability of the EFTPOS system or the unavailability of the card payments system.
The crediting amount, ascertained in accordance with subsection 4(5), for the particular circumstance in item 3 is: the monetary value that is stored on the card; or, if there is no monetary value stored on the stored value card, a nil amount.
Item 4 – The particular circumstance in item 4 of the table in subsection 4(6) is if an error has been made in the amount debited from the Special Account and income management account and stored on the stored value card.
For example, if a person requests that $100 be made available through their BasicsCard for the purpose of acquiring goods and services, but an error resulted in $200 being debited from the Special Account and the person’s income management account, the excess $100 should be returned to the Special Account and income management account and will no longer be accessible through the BasicsCard.
The crediting amount, ascertained in accordance with subsection 4(5), for the particular circumstance in item 4 is: an amount equal to the amount debited in error; or, if the monetary value on the stored value card is a lesser amount, the lesser amount; or, if there is no monetary value stored on the stored value card, a nil amount.
Item 5 – The particular circumstance in item 5 of the table in subsection 4(6) is if a person dies and they have a stored value card with a monetary credit balance and applies whether or not the person is subject to the income management regime at the time of their death.
In this circumstance, the amount stored on the stored value card should be returned to the Special Account and the person’s income management account and be available as part of the residual amount to be paid under section 123WL of the Act to the legal personal representative of the person or to another person ascertained in accordance with paragraph 123WL(3)(b)(iii) of the Act.
The crediting amount, ascertained in accordance with subsection 4(5), for the particular circumstance in item 5 is the monetary value that is stored on the card.
Item 6 – The particular circumstance in item 6 of the table in subsection 4(6) is where the person ceases to be subject to the income regime (other than because the person has died) and there is a request made to the Secretary to cancel the stored value card.
This allows the amount that has been credited to the stored value card to be returned to the Special Account and the person’s income management account and this will be included in the credit balance of the person’s income management account and be available to be paid as determined by the Secretary under section 123WJ of the Act.
The crediting amount, ascertained in accordance with subsection 4(5), for the particular circumstance in item 6 is: the monetary value that is stored on the card; or, if there is no monetary value stored on the stored value card, a nil amount.
Consultation
Consultation on these Rules was undertaken between the Department of Families, Housing, Community Services and Indigenous Affairs and the Department of Finance and Deregulation, and also with the Department of Human Services and Centrelink.
Regulatory Impact Statement
The Determination does not require a Regulatory Impact Statement (RIS) or a Business Cost Calculator Figure. The Determination is not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact. It is not expected that any compliance costs will be incurred by business, as a result of this Determination, against the nine categories listed in the Business Compliance Cost Checklist contained in the Best Practice Regulation Handbook prepared by the Office of Best Practice Regulation.