EXPLANATORY STATEMENT
Issued by the delegate of the Secretary of the Department of Social Services
Social Security Act 1991
Social Security Foreign Currency Exchange Rate Determination 2017
Section 1100 of the Social Security Act 1991 (‘the Act’) allows the Secretary (or their delegate) to provide for how the value of a payment, received by a person in a foreign currency, is to be determined.
The Social Security Foreign Currency Exchange Rate Determination 2017 (‘the Determination’) is made under subsection 1100(5) of the Act and it revokes the Social Security Foreign Currency Exchange Rate Determination 2014 (No. 2) made under subsection 1100(5) of the Act.
Purpose
The purpose of this Determination is to reflect the names of new currencies, as well as to enable an appropriate market exchange rate to be obtained from a wider variety of sources than that provided for by the Social Security Foreign Currency Exchange Rate Determination 2014 (No. 2).
Background
This Determination remakes and improves the Social Security Foreign Currency Exchange Rate Determination 2014 (No. 2), by repealing redundant provisions, simplifying language and restructuring provisions for ease of navigation.
The Determination also includes some minor, consequential amendments to reflect recent changes made to various currencies and central banking authorities. The key changes are:
• introducing a ‘source hierarchy’ when determining the value of foreign payments;
• updating the names of currencies, to reflect new foreign currencies; and
• making language and formatting changes to reflect contextual changes and to align the Determination with current drafting practices.
Further details of the Determination are set out in Attachment A.
The Act does not specify any conditions that need to be met before the power to make the Determination may be exercised.
The Determination is a legislative instrument for the purposes of the Legislation Act 2003.
Consultation
The Department of Human Services undertook consultation internally, with subject matter experts within the Department of Human Services, and externally, with the Department of Social Services, the Reserve Bank of Australia and the Office of Best Practice Regulation. Consultation outside the Australian Government was considered unnecessary as the Determination is of a minor machinery nature and does not substantially alter existing arrangements.
As the Determination is of a minor machinery nature, the Office of Best Practice Regulation concluded that a Regulation Impact Statement was not required.
Commencement
The Determination commences on the day after it is registered on the Federal Register of Legislation.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Social Security Foreign Currency Exchange Rate Determination 2017
This 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
The Determination remakes and improves the Social Security Foreign Currency Exchange Rate Determination 2014 (No. 2) by repealing redundant provisions, simplifying language and restructuring provisions for ease of navigation.
The Determination also includes some minor, consequential amendments to reflect recent changes made to various currencies and central banking authorities.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
ATTACHMENT A
Details of the Social Security Foreign Currency Exchange Rate Determination 2017
Section 1 – Name of Regulation
This section provides that the title of the Determination is the Social Security Foreign Currency Exchange Rate Determination 2017.
Section 2 – Commencement
This section provides that the Determination commences on the day after the Determination is registered.
Section 3 – Authority
This section provides that the Determination is made under subsection 1100(5) of the
Social Security Act 1991. Section 4 – Schedules
This section provides that each instrument that is specified in a Schedule to the Determination is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to the Regulations has effect according to its terms.
Section 5 – Definitions
This section contains defined terms used in the Determination. ‘Act’ means the Social Security Act 1991.
New definitions have been introduced which affect the meaning of an ‘appropriate rate of exchange’.
The Determination specifies the sequence of sources to be used, where an amount received in a foreign currency can have an appropriate market exchange rate applied to that currency, in order to convert it to Australian dollars.
Under the Determination, a ‘source hierarchy’ will be used when determining the value of foreign payments in the currencies set out in Schedule 1 to the Determination.
Under this hierarchy, the Secretary, or their delegate, would use the following exchange rates on the 5th business day before the calculation day when determining the value of a currency:
- The daily foreign cheques buying rate available for the currency from the Commonwealth Bank of Australia, if this exchange rate is not available then;
- The daily international money transfer buying rate available for the currency from the Commonwealth Bank of Australia; if this exchange rate is not available then;
- The weekly miscellaneous exchange rate for the currency available from the Commonwealth Bank of Australia; if this exchange rate is not available then;
- The rate of exchange for the currency available from the Reserve Bank of Australia.
- In the event that an exchange rate for the relevant currency is not available from the Commonwealth Bank of Australia or the Reserve Bank of Australia, the Determination allows the Secretary, or their delegate, to use exchange rates available from either:
- The Central Bank of the country of the currency concerned; or
- A source determined by the Secretary, or their delegate, that is appropriate to use under subparagraph 1100(3)(b)(ii) of the Social Security Act 1991.
The definitions of ‘business day’ and ‘calculation day’ have the same meaning as in subsection 1100(6) of the Act.
Section 6 – Person affected by an emergency
For the purposes of paragraph 1100(2)(a) of the Act, it is not appropriate for subsection 1100(2) of the Act to apply in respect of an amount received in a foreign currency that is specified in the table in Schedule 1.
Section 7
For the purposes of subsection 1100(4) of the Act, the value, on a calculation day, in Australian currency of an amount received in a foreign currency in respect of which section 6 applies is to be calculated using the appropriate rate of exchange for that amount on that day.
Schedule 1—Specified foreign currencies
This schedule replicates the corresponding provisions in the Social Security Foreign Currency Exchange Rate Determination 2014 (No.2), with minor formatting changes which do not change the operation of the relevant sections. This schedule also contains updates to reflect changes to the names of foreign currencies.
Schedule 2—Repeals
Section 1 – Repeal of the Social Security Foreign Currency Exchange Rate Determination 2014 (No.2)
This section provides for the repeal of the Social Security Foreign Currency Exchange Rate Determination 2014 (No.2) which is replaced by the Social Security Foreign Currency Exchange Rate Determination 2017.