EXPLANATORY STATEMENT
Social Security (Matched Savings Scheme (Income Management) Payment (Approved Courses)) (DEEWR) Determination 2010
Summary
The Social Security (Matched Savings Scheme (Income Management) Payment (Approved Courses)) (DEEWR) Determination 2010 (the Determination) is made under subsection 1061WG (2) of the Social Security Act 1991 (the Act).
The Determination is a legislative instrument and commences on the day after it is registered on the Federal Register of Legislative Instruments.
The Determination specifies the courses that are approved courses for the purposes of qualifying for the new matched savings scheme (income management) payment.
Background
The Social Security and Other Legislation Amendment (Welfare Reform and Reinstatement of Racial Discrimination Act) Act 2010 (the Amending Act) amended Part 3B of the Social Security (Administration) Act 1999 (the Administration Act) to provide the basis for a national welfare reform initiative aimed at supporting disengaged and vulnerable welfare recipients in disadvantaged locations across Australia.
The Amending Act also amended the Act to establish a matched savings scheme payment which, in general terms, is payable to people who are subject to compulsory income management and who undertake an approved financial management or money management course, and accumulate savings. The new payment, called the ‘matched savings scheme (income management) payment’, is designed to encourage saving and to assist those on compulsory income management to improve their financial literacy.
New section 1061WG of the Act sets out the qualification criteria for the matched savings scheme (income management) payment. A person is qualified for the new payment if, amongst other things, the person has completed an ‘approved course’.
Subsection 1061WG (2) of the Act provides for the Secretary to approve courses for this purpose.
Subsection 1061WG (3) of the Act provides for the Minister to make decision‑making principles that a decision-maker must comply with in deciding whether a person is qualified for a matched savings scheme (income management) payment. These decision-making principles are set out in the Social Security Matched Savings Scheme (Income Management) Payment (Qualification) Principles 2010.
Explanation of provisions
Section 3 of the Determination contains a number of definitions that are relevant to the description of an approved course in section 4 of the Determination. The main definitions of note refer to a training package called the Financial Services Training Package (known by the code FNS04), authored by Innovation and Business Skills Australia and endorsed by the National Quality Council on 29 May 2007. A training package of the same name, but known by the code FNS10, also exists. That later training package is not relevant for the purposes of this Determination, which is concerned only with the content of the training package known by the code FNS04. Training package FNS04 can be downloaded from the following link
http://www.ntis.gov.au/Default.aspx?/trainingpackage/FNS04/download
Section 4 of the Determination provides that a course is an approved course in relation to a person if the conditions in paragraphs 4(a) and (b) are satisfied in relation to the course.
First, under paragraph 4(a), the course must include components (whether these components are referred to as ‘subjects’, ‘units’ or ‘topics’ of the course, or by some other name) that are based on specified units of competency contained in the Financial Services Training Package, and that cover specified topics of study. Schedule 1 sets out the specified units of competency that the components of the approved course must be based on. Schedule 2 sets out the education topics that the components of the approved course must cover.
An approved course does not have to include all of the subject matter contained in the units of competency specified in Schedule 1. The course merely has to include components (subjects) that are based on those specified units of competency. The reason for this is that units of competency under the Financial Services Training Package can only be delivered by a registered training organisation, and are designed to prepare people for employment in the financial services sector. In contrast, approved courses are intended to be courses that provide basic financial literacy education to support individuals to build their capability to manage their own finances. Accordingly, approved courses should not be limited to courses provided by registered training organisations. This enables a person who has undertaken a course that is not provided by a registered training organisation, but that contains subjects that are based on the specified units of the Financial Services Training Package, to qualify for the matched savings scheme (income management) payment scheme under new Part 2.25E of the Act.
The units of competency specified in Schedule 1 are part of the financial literacy component of the Financial Services Training Package.
The unit of competency specified at item 1 of Schedule 1 is a unit that addresses the basic knowledge and skills required to develop, implement and monitor a personal savings budget.
The unit of competency specified at item 2 of Schedule 1 is a unit that covers the skills and knowledge required for developing and implementing a savings plan to achieve identified goals.
The unit of competency specified at item 3 of Schedule 1 is a unit that covers the knowledge and skills required to understand the functions and implications of different forms of credit, and the strategies and methods to make appropriate and effective decisions regarding the management of personal debt and the use of credit facilities.
Research into existing matched savings programs has shown the importance to individuals of financial literacy education in driving behavioural change to develop a savings habit. These three units of competency focus on the behavioural elements that lead to developing a savings habit.
The topics of study set out in Schedule 2 are topics that correspond with topics covered in the three specified units of competency, as those units are described in the Financial Services Training Package. They have been identified as topics that will help people who are subject to income management build their money management skills, leading to better financial outcomes for those people. In the context of the matched savings scheme (income management) payment, education covering these particular topics is a tool that will help individuals to develop a savings habit and to accumulate a savings amount for the purposes of qualifying for the payment.
Second, under paragraph 4(b), in order to be an approved course in relation to a particular person, the course must have been delivered to the person on or after 1 July 2009. The requirement under paragraph 4(b) is that the whole of the course must have been delivered to the person on or after 1 July 2009: that is, the person must have commenced the course on or after 1 July 2009. This requirement ensures that people who claim the matched savings payment are claiming it in relation to recent and up-to-date financial literacy education.
Consultation
Consultation on the Determination was undertaken with the Department of Family, Housing, Community Services and Indigenous Affairs (FaHCSIA) to ensure a co-ordinated approach in respect of welfare payments, for which each Department has responsibility, which may become subject to the income management regime. It is proposed that the Secretary of FaHCSIA make an identical instrument under subsection 1061WG (2), relating to his responsibilities under the social security law.
Regulatory Impact Analysis
The Determination does not require a Regulatory Impact Statement 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.
No statutory preconditions were required to be met before the making of the Determination.