EXPLANATORY STATEMENT
Social Security Matched Savings Scheme (Income Management) Payment (Qualification) Principles 2010
The Social Security Matched Savings Scheme (Income Management) Payment (Qualification) Principles 2010 are made under subsection 1061WG(3) of the Social Security Act 1991 (the Act). The Minister for Families, Housing, Community Services and Indigenous Affairs, as well as making the Principles in her own capacity, is also making them on behalf of the Minister for Education and the Minister for Employment and Workplace Relations.
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, 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 assist those on compulsory income management to improve their financial literacy and to encourage saving.
New section 1061WG of the Act contains the qualification criteria that a person must satisfy in order to qualify for a matched savings scheme (income management) payment (a matched savings payment). A person is qualified for the new payment if, amongst other things, the Secretary is satisfied that the person has maintained a pattern of regular savings throughout a specified period (the ‘qualifying savings period’) and the person has an amount of savings (a ‘qualifying savings amount’).
In addition to the Secretary being satisfied of these things, the person must have completed an approved course. The details of courses that have been approved for these purposes are set out in the Social Security Matched Savings Scheme (Income Management) Payment (Approved Courses) Determination 2010.
Subsection 1061WG(3) of the Act provides for the Minister to make decision‑making principles that the Secretary must comply with in deciding whether he or she is satisfied that a person has maintained a pattern of regular savings throughout the qualifying savings period and the person has a qualifying savings amount.
Purpose
These Principles set out the decision-making principles that the Secretary must comply with in deciding whether he or she is satisfied that the person has maintained a pattern of regular savings throughout the qualifying savings period and has a qualifying savings amount.
If the Secretary decides that he or she is satisfied of these things, and the other qualification criteria are satisfied in relation to a person, the person will be qualified for a matched savings payment.
Section 1061WH of the Act sets out the amount that a person will receive if the person qualifies for a matched savings payment. The person will receive $1 in matched savings for every $1 of their qualifying savings amount, to a maximum of $500. Subsection 1061WH(2) provides that the matched savings payment will be paid as a lump sum, and section 123XPI of the Administration Act provides for the entire amount of a matched savings payment to be income managed.
Subsection 1061WH(3) provides that a matched savings payment can only be paid to a person once. For this reason, if a person has a qualifying savings amount of less than the maximum amount of $500, the person will be asked to confirm whether they would prefer to claim when they have saved a more significant qualifying savings amount.
These Principles are a legislative instrument and commence on 9 August 2010.
Explanation of provisions
Section 1 sets out the title of the Principles.
Section 2 provides that the Principles commence on 9 August 2010.
Section 3 contains definitions and interpretation provisions for the purposes of the Principles.
In particular, account is defined as having the meaning given by subsection 23(1) of the Act. The definition of ‘account’ under subsection 23(1) refers to an account with a financial institution. Financial institution is also defined in subsection 23(1) of the Act, and that definition encompasses authorised deposit-taking institutions (that is, banks, building societies and credit unions in Australia).
Section 4 explains the purpose of the Principles, as described above.
Part 2 of the instrument sets out the decision-making principles that the Secretary must comply with in deciding whether he or she is satisfied as mentioned in subparagraphs 1061WG(1)(b)(i) and (ii) of the Act.
Section 5 requires the Secretary to work out the duration of the ‘qualifying savings period’ in relation to the person. Establishing this period is necessary to enable the Secretary to form an opinion in relation to other matters that make reference to this period. For example, it will be necessary to know the duration of the period in order to determine whether the person was subject to compulsory income management during the period (as required by paragraph 1061WG(1)(c) of the Act) and the quantum of the person’s qualifying savings amount (accumulated during the period) under subsection 1061WG(4) of the Act.
Paragraph 1061WG(1)(b)(i) of the Act sets out certain conditions that the qualifying savings period must satisfy: it must be a period of at least 13 consecutive weeks, and it must commence after the person has commenced the relevant approved course. Section 5 of the Principles allows for the start date, and the end date, of the period to be nominated by the person who is claiming a matched savings payment, and obliges the Secretary to have regard to the start and end dates nominated by the person in working out the duration of the qualifying savings period in relation to the person.
Section 6 requires the Secretary to satisfy himself or herself about the way in which the savings in respect of which the person has made their claim for a matched savings payment have been established and maintained.
The Secretary must be satisfied that the savings are held in a single account with a financial institution (paragraph 6(a)). The account may be a joint account. However, if the account is a joint account, the Secretary must be satisfied that no other person has been paid a matched savings payment, or has a claim for a matched savings payment that is yet to be determined, in relation to that account (paragraph 6(b)). The principle in paragraph 6(b) effectively prevents more than one person making a claim for a matched savings payment in relation to the same account. The matched savings payment is intended to encourage individuals to improve their savings practices. These principles ensure that the qualifying savings amount reflects the efforts and abilities of the person who is claiming the payment. Making sure that a matched savings payment is made on the basis of the claimant’s individual savings maximises the number of people encouraged to save by this initiative.
Section 7 requires the Secretary to be satisfied that the person has provided an independent record (for example, a bank statement) of the total number, and quantum, of deposits, and withdrawals (if any), that have been made during the qualifying savings period from the person’s account. It will be necessary for the Secretary to use an official record of this nature to establish the deposits that have been made to the account during the qualifying savings period, and to work out the amount of the person’s qualifying savings amount under subsection 1061WG(4) of the Act.
In particular, the Secretary will use the independent record to work out two amounts: the amount of money in the person’s account at the beginning of the qualifying savings period (the first amount) and the amount of money in the person’s account at the end of the qualifying savings period (the second amount). Subsection 1061WG(4) of the Act provides that the difference between the second amount and the first amount is the person’s qualifying savings amount (the amount that will be matched dollar for dollar, up to a maximum of $500).
Sections 8 and 9 allow the person to nominate the quantum of the first and second amounts, and oblige the Secretary to have regard to the person’s nomination working out these amounts. Sections 8 and 9 also require the Secretary to have regard to the amount that the independent record (for example, the person’s bank statement) indicates was in the person’s account at the beginning, and at the end, of the qualifying savings period. In this way, the independent record will serve as evidence, and verification, of the person’s claim.
In order to avoid any doubt, subsections 8(2) and 9(2) clarify that, in working out these two amounts, the Secretary is not required to have regard to amounts (namely fees and charges, and interest) that may be payable in relation to the account but that have not been deducted from, or credited to, the account (as applicable) at the time that the Secretary is working out the quantum of the first and second amounts. As a consequence, an amount that is payable in relation to an account will not be taken into account by the Secretary in working out the quantum of the first and second amount unless the amount has been credited to, or deducted from, the account (as applicable) at the time that the Secretary is working out the quantum of the first and second amount. Amounts that have already been credited to, or deducted from, a person’s account should appear on the independent record provided to the Secretary by a person claiming a matched savings payment.
There is no maximum number of deposits that a person may make to their account during the qualifying savings period. However, section 10 provides that the Secretary must be satisfied that the amount that is deposited to the person’s account during the period of 6 weeks that occurs immediately before the end of the qualifying savings period is not more than 50% of the total amount of the qualifying savings amount. This principle reflects and encourages good budgeting practice. A large deposit would not be indicative of a pattern of regular savings. This principle also discourages potential claimants from borrowing or temporarily obtaining the use of a large amount of money for the purposes of qualifying for the matched savings payment.
There are no restrictions on the amount that a person may save during the qualifying savings period. However, the amount of a matched savings payment will not exceed $500: if a person has a qualifying savings amount greater than $500, the person will receive a matched savings payment in the amount of $500 (assuming that the person is qualified for a matched savings payment).
Nor is there a minimum qualifying savings amount. However, a person can only receive one matched savings payment. If the person’s qualifying savings amount is significantly less than $500, they may wish to wait to claim until they have increased their savings.
Consultation
Consultation on these Principles was undertaken with the Department of Education, Employment and Workplace Relations 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. Centrelink was also consulted on the Principles.
Regulatory Impact Analysis
The Principles do not require a Regulatory Impact Statement or a Business Cost Calculator Figure. The Principles are not regulatory in nature, will not impact on business activity and will have no, or minimal, compliance costs or competition impact.