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Part 1, Document 3,
Attachment 1
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Part 1, Document 3,
Attachment 2
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From: s 22
Sent: Wednesday, 6 October 2021 7:53 PM
To: BLUNCK,Tracey s 22
Cc: s 22
s 22
Subject: Seeking agreement - application of the 26 week rule
Hi Tracey,
AS flagged today, we are
seeking your agreement on two issues regarding the 26 week rule, listed below.
Issues for your agreement:
1. We are seeking your agreement that the application of the 26 week rule, such that it follows the child, be included in the scope (and costs
and IT build) for Phase 2. While this in accordance with the legislation, please note there is risk this application is more generous will
reduce policy integrity in rare family circumstances. The scenarios below provide a detailed overview of this issue, including justifying it’s
value of this approach from a policy perspective.
2. We are also seeking your agreement not to revisit the retrospective application of the 26 week rule. At this stage, retrospective
application of the 26 week rule will not be built in the system (either in Phase 1 or Phase 2). We advise this is the best policy outcome
because the 26 week rule is more stringent than the 14 week rule (as it removes eligibility entirely rather than just entitlement) and
therefore should be applied in a way that is more generous to families. Noting also we are not bound by the legislation on this.
Background and scenarios
As we have discussed previously, the 26 week rule has to follow the child according to the legislation. However, this was not captured in the
Business Requirements of Phase 1 and will now be included in the scope of Phase 2.
The purpose of sessions of care ‘following the child’ for the 26 week rule is to ensure families can receive maximum benefit from the higher
subsidy, while maintaining policy integrity. This application of the rule allows parents/carers to continue to receive the higher subsidy for their
second and younger children, even if/when care arrangements (and liability to pay child care fees) for the ‘other child’ temporarily fall onto
another individual.
The following scenarios demonstrate both the benefits and risks (in rare circumstances) of this application of the 26 week rule.
Example 1: the 26 week rule ‘following the child’ leading to a beneficial outcome for families with non-standard care arrangements
Mary is a single mother with two children aged 5 and under in childcare. Paris is 6 months old, and Tracey is 3 years old.
Tracey spends periods of time with their Grandma (Mary’s mother) to take the pressure off Parent A. Noting – various arrangements of
this kind are likely to be more common amongst vulnerable cohort, particularly single parents.
Grandma has been caring for Tracey from Monday to Friday over the last few months (Mary has Tracey on weekends, maintaining
‘regular care’ as defined under family assistance law), which has resulted in Tracey having no sessions of care with Mary for 26 weeks.
However, because sessions of care ‘follow the child’, this will not influence Mary’s higher subsidy entitlement for Paris’s sessions of
care.
Tracey returns to Mary’s care after 27 weeks, when her work arrangements permit her to again care for her two children. Mary’s CCS
eligibility in relation to Tracey will remain unchanged, and she will not need to reapply for CCS now that Tracey is back in her care.
Although this is a generous application of the rule, we suggest it will ensure families in non-standard circumstances (particularly vulnerable
and disadvantaged families) can still benefit from the measure. In addition, we suggest the policy integrity of the measure will be maintained
by other mechanisms set out in the Act. In the first instance, the core CCS eligibility criteria requiring that an individual has ‘regular care’ of the
child will ensure CCS eligibility is cancelled for individuals who no longer care for children at all. Second, as seen in the below scenario, in
extreme cases where parents have no intention of using child care for the ‘other child’ but still have ‘regular care’ of the child and therefore
benefit from this wider application of the 26 week rule (as their CCS eligibility will not be cancelled on the grounds that they don’t meet the
core CCS eligibility criteria), it is open to the Secretary (delegated to Services Australia) to use their discretionary power under s67CC(2)(e) to
cancel the individual’s CCS eligibility.
Example 2: the 26 week rule ‘following the child’ leading to a reduction in policy integrity
·
Two siblings, a 5 year old and a 3 year old, live with each of their parents (Parent A and Parent B) on alternating weeks (i.e., one week on,
one week off with each parent), and attend child care while under the care of each parent. Custody arrangements then change such that
Parent A now looks after the 5 year old every Monday to Friday and the 3 year old Sunday through Saturday (7 days) every second week.
Parent B now looks after the 5 year old every Saturday and Sunday and the 3yr old Sunday through Saturday (7 days) every other week
(alternating with Parent A).
·
Parent A continues to incur child care fees for both children, and receives CCS for the 5 year old and MCS for the 3 year old. Parent B
incurs child care fees for the 3 year old but doesn’t incur fees for the 5yr old as they look after the 5 year old on weekends when they do
not use child care. Parent B will continue to receive MCS for the 3 year old even though they don’t incur fees for the 5 year old child,
because the 5 year old still attends sessions of care with Parent A (and sessions of care follow the 5 year old and are counted across all
carers).
·
Parent B still meets the ‘regular care’ core CCS eligibility criteria, and therefore cannot have their CCS eligibility cancelled for this reason.
Although Parent B does not meet the core eligibility criteria of being liable to pay child care fees for the 5 year old, the system will not
cancel CCS eligibility for this reason. Further, their CCS eligibility status will continue even if a child’s enrolment is cancelled after 14 weeks
of no attendance.
Note: this is because the way CCS eligibility status is applied in the CCSS is not dependent upon an individual having a Complying Written
Arrangement (CWA) enrolment in place with a service provider and being liable to pay child care fees. This is only required for a
payability determination i.e., when a service provider lodges a session report and the system pays CCS entitlement to the service
provider. Services Australia has advised that this was an underpinning requirement for the original CCS build, which sought to enable
parents to assist in families’ planning of their child care needs and work arrangements, prior to using child care. This system design also
means that CCS eligibility status is maintained even when they don’t have an active enrolment for their child (e.g., if enrolment is
cancelled due to 14 weeks of no attendance).
·
Therefore, in this circumstance, Parent B will continue to receive MCS for the 3 year old for as long as the 5 year old is receiving sessions
of care with Parent A (this could be until the child turns 6 years of age). However, in this case, it is open for the Secretary to use their
discretionary power to cancel CCS eligibility if they are satisfied that Parent B has no intention of using child care for the 5 year old (if
Services Australia became aware or was notified that the individual was not using child care (not liable for child care fees) for the eldest
child).
Happy to chat!
Thanks,
s 22
s 22
Subsidies Implementation Team | Subsidy Implementation Taskforce
Australian Government Department of Education, Skills and Employment
s 22
www.dese.gov au
s 22
The Department of Education, Skills and Employment acknowledges the traditional owners and custodians of country throughout Australia and their continuing connection to land, waters and
community We pay our respects to them and their cultures, and Elders past, present and emerging
OFFICIAL: Sensitive
Part 5, Document 1
FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 1 –
increase to child care subsidy rates)
Schedule 1 – increasing child care subsidy rates
Schedule 1 wil commence on 1 July 2023.
Item in Schedule
Effect of item
Reason for/importance of amendment
Items 2, 4, 6, 8, 10
Removing the definitions of the lower, second,
These are technical amendments to facilitate
third, fourth and upper income thresholds
new terminology needed for the new child care
rates.
There will now be separate thresholds for the
majority of children (called “base rate”
thresholds) and higher rate children (called
“other rate” thresholds).
Item 1, 3, 5, 7, 9
Introducing new definition for:
Each of these terms represents an income
•
fourth income (other rate) threshold
threshold where the taper changes.
•
lower income (base rate) threshold
•
lower income (other rate) threshold
For the majority of children (base rate children),
•
second income (other rate) threshold
the applicable percentage for calculating CCS will
•
third income (other rate) threshold
be 90 until the lower income (base rate)
•
upper income (base rate) threshold
threshold of $80,0000 is reached. It will then
•
upper income (other rate) threshold.
taper down by 1 percentage point per $500
income until the upper income (base rate)
threshold of $530,000 is reached.
For other rate children – generally, the second or
further child under the age of 5 – the applicable
percentage will start at 95%. It will taper down to
until it reaches the second income (other rate)
threshold, then continue straight until it reaches
the third income (other rate) threshold, then
taper down to the fourth income (other rate)
threshold, then continue straight until the upper
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income (other rate) threshold, at which point it
joins the base rate.
Item 11
Introducing the new rate for base rate children
This measure is intended to make the cost of
child care cheaper for all families with an
This introduces a table that sets out the
adjusted taxable income under $530,000.
applicable percentage for base rate children. The
table states that the percentage wil be 90% for
This means that more families will fall below the
families on incomes under $80,000, and 0% for
upper income threshold and wil be entitled to
families on incomes over $530,000.
receive CCS, whereas previously they may not
have been entitled to CCS at all.
In particular, families earning $80,000 or less will
now get 90% of the CCS hourly rate. In other
words, not only will more families be entitled to
receive the highest percentage of the hourly CCS
rate, but that percentage has also been raised,
meaning that they wil also be entitled to a
higher rate of CCS.
Item 12
Introduces the percentage for families between This measure is intended to make the cost of
$80,000 and $530,000
child care cheaper for all families with an
adjusted taxable income under $530,000.
This item introduces a formula that states that
the percentage between $80,000 and $530,000
This amendment means that individuals earning
will taper down from 90% for each $5,000 over
between $80,000 and $530,000, the percentage
$80,000 the family earns.
of the hourly CCS rate they are entitled to will go
down by 1 percent for every $5,000 above
$80,000 they earn.
Item 13
Removes a formula no longer needed
The formula was previously used to calculate the
percentage for the old CCS rates, but the new
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CCS rates are simpler and only require one
formula.
Item 14
Defines lower income (base rate) threshold and This means that all families on incomes less that
upper income (base rate) threshold
$80,000 will have their CCS entitlement
calculated at 90% of their fees (subject to the fee
This item provides that the lower income (base
cap). However, this amount will be indexed over
rate) threshold is $80,000.
time under Schedule 4 to the Family Assistance
Act.
This item also provides that the upper income
(base rate) threshold is $450,000 more than the
At commencement, this also means that families
lower income (base rate) threshold.
with incomes over $530,000 wil not be entitled
to any CCS. However, this will also increase over
team as the $80,000 is indexed.
Item 16
Amendment to the definition of “higher rate
This is needed because if the family earns over
child”
the old upper rate threshold (approximately
$360,000), their CCS rates for second and further
This adds a criteria to the definition of higher
children will be the same as their CCS rate for
rate child, so that a child is only a “higher rate
their first child.
child” if the relevant individual’s adjusted taxable
income is below the upper income (other rate)
threshold.
Items 15 and 17
Introduces the percentage for higher rate
This amendment means that families who have
children – second and further children under 5
several children in child care will receive a higher
years old
rate of child care subsidy.
These items introduce the percentage for higher This is done by identifying a “higher rate child” of
rate children.
an individual who will attract more CCS than a
“standard rate child”. To determine who the
Subclause (2) provides that if the base rate is
higher rate child is, you will need to look at
higher than the other rate, the base rate is
Clause 3B(1) of Schedule 2.
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applicable. This is needed because due to
indexation, the tapers of the base rate and other These amendments mean that if you earn
rate may overlap. The policy intent is that if they approximately $360,000 or less, then the
do, the higher rate will be applicable.
percentage of the hourly CCS rate you are
entitled to receive wil be 30% more than the old
Subclauses (3) to (5) set out the applicable
CCS rates.
percentage according to the table in subclause
(3) and the formula in subclauses (4) and (5).
The maximum amount a person can receive for
their higher rate child is 95%.
The percentage for higher rate children starts off
at 95%, then starts to taper down under
subclause (4), then stays straight at 80% for a
while, then starts to taper down under subclause
(5), then will stay straight at 50% for a while
before joining the base rate.
Subclause (6) defines the income thresholds.
These are the same as currently in the legislation,
to reflect the policy that the rates for higher rate
children wil remain unchanged up to
approximately $360,000.
Item 18
Makes a consequential change to the lower
Currently, families on incomes of $72,466 can get
income activity test result
the lower income activity test result of 24 under
clause 13 of Schedule 2 to the Family Assistance
This substitutes the new “lower income (base
Act.
rate) threshold” of $80,000 for the maximum
income for which the lower income activity test
This means even if their activity level is very low,
result applies.
they can stil access up to 24 hours of subsidised
care per fortnight due to their low income.
Fol owing these changes, this activity test result
will be available for families with incomes up to
$80,000.
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Items 19 to 20
Ensures that the lower income thresholds are
Amounts that are not indexed can erode over
indexed
time due to inflation. For example, $100 in 2020
stretched further than $100 does in 2022.
These amendments ensure that the lower
income thresholds are indexed, in the same way These amendments ensure that the lower
as under the previous rates.
income thresholds are indexed, so that as prices
and wages rise over time, the thresholds for CCS
rise commensurately, rather than eroding away
with inflation.
Item 21
The new lower income (base rate) threshold in
Indexation occurs on the first day of the first CCS
2023 will not be indexed in the 2023/24
fortnight of the income year. This could mean
financial year
that the new $80,000 threshold was introduced
on 1 July 2023 and then indexed around a week
This amendment prevents indexation occurring
later on 10 July 2023.
in July 2023.
This provision will ensure that $80,000 will be the
threshold up to which individuals receive 90%
CCS for the full 2023/24 financial year, before
being indexed for the first time in July 2024.
Item 22
Application provision ensuring the amendments This application provision is needed because it is
start at the beginning of a CCS fortnight
not practicable for the department to change the
rates midway through a CCS week. This would
While the Schedule commences on 1 July 2023,
involve an entitlement decision for a week
this means that the new rates wil not apply until having different rates for some days in a week
the beginning of the first CCS fortnight of the
than others.
new year, which wil be 10 July 2023.
Instead, the new rates will come in at the start of
a CCS fortnight, which will make the transition
much smoother.
Item 23
Amends section 67CC(2)(d) so that the Secretary The multiple child subsidy bil introduced the 26
may cease an individual’s eligibility
week rule and the 13 week rule on the principle
determination if the child does not receive any
that sessions “follow the child”. For example, if
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sessions of care for 26 weeks, for sessions of
the child had two separated parents and each of
care that that individual was the claimant for
them were CCS claimants, the rule would apply
according to whether or not the child was
This amendment wil change the Secretary’s
receiving care, regardless of which parent had
power to end a determination of eligibility
put in a claim for that session. However, this was
(meaning the individual must put in a new claim) going to be very expensive to implement.
when a child has not received any sessions for 26
weeks.
This provision reverses this, so that sessions
follow the eligible individual. That is, the
Secretary may cease a determination of eligibility
if the child has not attended any sessions for 26
weeks for which that individual is the claimant. If
the child is attending care under a different claim
(e.g. the other separated parent), this is not
relevant.
Item 24
Application provision ensuring sessions previous This means that the Secretary wil be able to use
to 1 July 2023 may be taken into account
this power, as amended, from the
commencement of the provision on the day after
The Secretary may rely on section 67CC as
royal assent.
amended from the commencement of Schedule
1 part 2, the day after royal assent.
It doesn’t matter if the 26 weeks without a
session of care being attended started before
commencement.
This will ensure this amendment has the
maximum effect and the Secretary does not have
to wait before making decisions according to the
“follow the individual” principle.
Item 25
Repeals part 2 of Schedule 2 to the Family
Assistance Legislation Amendment (Child Care
Phase 2 is being removed as the benefits did not
Subsidy) Act 2021
outweigh the implementation costs.
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This will remove what was known as “phase 2” of
the multiple child subsidy measure.
Phase 2 would have implemented the 13 week
rule, meaning that families would only receive
the higher CCS rate if an older child had attended
a session in the last 14 weeks.
OFFICIAL: Sensitive
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FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 2 –
improving transparency)
Schedule 2 – profit reporting by large child care providers
Schedule 2 wil commence on 1 July 2023.
Item in Schedule
Effect of item
Reason for/importance of amendment
Items 1, 2
Removing the definition of “large centre-based These are technical amendments to facilitate
day care provider” and inserting a new
new terminology needed for the transparency
definition for “large child care provider”
measure.
The family assistance law previously included a
regime to ensure the financial viability for large
centre-based day care provider. The new
transparency scheme wil build on this but
expand it to apply to large providers regardless
of the kind of service they operate.
Items 3, 4
Amending the definition of “large child care
This measure is intended to capture all large child
provider”
care providers regardless of whether they
operate centre-based care services, outside
The family assistance law previously included a
school hours care services, family day care
regime to ensure the financial viability for large
services, etc.
centre-based day care provider. The new
transparency scheme wil build on this but
This definition ensures that a provider will be
expand it to apply to large providers regardless
captured by the transparency regime if they
of the kind of service they operate.
operate 25 or more approved child care service,
including if they do so together with a related
provider, or if they plan to do so in future.
Items 5 to 9, 12
Consequential amendments to reflect change in These are technical amendments to facilitate
terminology
new terminology needed for the transparency
measure.
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These amendments replace the term “large
centre-based care provider” from the old
legislation to the new term “large child care
provider”, to reflect that the measure covers all
large providers, regardless of service type.
Item 10
Introduces an obligation for large child care
This measure is intended to increase
providers to report financial information
transparency in the child care sector by requiring
all large providers to report certain financial
This item introduces a new provision requiring
information to the Secretary. That information
large child care providers to give the Secretary a can then be published online (see below).
report for a financial year, setting out certain
financial information.
The information will be given in a form and
manner approved by the Secretary, and include
the financial information to be prescribed by the
Minister’s Rules.
If the provider fails to do so, they will be liable to
a civil penalty of 60 penalty units. They will also
be in breach of a condition of continued
approval, and could be subject to a sanction such
as cancellation or suspension.
Item 11
Consequential change for the new reporting
This is a technical amendment to reflect the new
obligation
financial reporting obligation.
This item expands the application of section
203C, which allows the Secretary to require a
provider to be audited, so that this audit power
may be exercised on the basis of information
col ected under the new provision.
Item 13
Introduces a definition for ABN
New section 162B wil permit the Secretary to
publish certain information about a provider,
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including the provider’s ABN. This is a technical
amendment to provide a definition for “ABN”.
Item 14
Introduces a power to public information about This measure is intended to provider greater
approved provider
transparency regarding the child care sector by
allowing the Secretary to publish information
This item introduces a new provision that will
online about an approved provider.
allow the Secretary to publish, by electronic
means, certain information about the provider.
The information that may be published about
any provider includes the name of the provider,
Subsection (2) clarifies that this is not a breach of the approved provider’s ABN, the name of each
the Privacy Act.
child care service, the fees charged by the
service, and any increases in fees.
Subsection (3) sets out the constitutional basis
for this provision.
The Secretary may also publish financial
information reported to the Secretary under new
section 203BA.
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FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 10 –
First Nations activity test result)
Schedule 3 – Activity test for Aboriginal or Torres Strait Islander children
Schedule 3 commences on 1 July 2023
Item in Schedule
Effect of item
Reason for/importance of amendment
Item 1
Inserts definitions for certain term into the
This schedule introduces a new activity test
definitions section of the Assistance Act
result, that applies to children who are Aboriginal
or Torres Strait Islander children.
The terms that are defined are:
• Aboriginal or Torres Strait Islander child
This amendment ensures the new concepts that
• Aboriginal or Torres Strait Islander child
are used for eligibility for the test are defined
result
and that their definitions are easy to locate
• Aboriginal or Torres Strait Islander
person
Item 2
Inserts the Aboriginal or Torres Strait Islander
There are a number of activity test results. Under
child result into the table of activity test results clause 11 of schedule 2, the individual is entitled
to the highest result that applies to them.
The Aboriginal or Torres Strait Islander child
result is being added into the first and third
Adding the Aboriginal or Torres Strait Islander
columns
child result into the table will ensure that
individuals can access this result, if it applies to
them and there is no greater activity test result
that applies to them. This means they can access
at least 36 hours per fortnight of subsidised care.
If their Aboriginal or Torres Strait Islander child
result is 36 but another result of 60 applies to
them, they wil get access to 60 hours of
subsidised child care per fortnight.
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Item 3
Introduces the Aboriginal or Torres Strait
This provision will give people access to at least
Islander child result
36 hours per fortnight of subsidised care for
Aboriginal or Torres Strait Islander children for
New clause 15A sets out the Aboriginal or Torres whom they are eligible for CCS.
Strait Islander child result of 36, and when it
applies.
There are three ways a child may be an
Aboriginal or Torres Strait Islander child. The first
Subclause (2) provides that it applies of the
is where the child meets the three part test of
individual is eligible for CCS for the child, the
descent, identification and community
child is an Aboriginal or Torres Strait Islander
acceptance. This three part test has been used in
child and the Secretary has been notified of this. many government programs, including the
Australian Education Act. The second is where
Subclause (3) defines “Aboriginal or Torres Strait the child is biologically related to an Aboriginal or
Islander child” and subclause (4) defines
Torres Strait Islander person, whether or not the
“Aboriginal or Torres Strait Islander person.”
child is in the care of an Aboriginal or Torres
Strait Islander person. This enables the inclusion
of children who may be too young to have
formed a sense of cultural identity. The third is
where the child is a member of a class prescribed
by the Minister’s Rules. This is to provide some
flexibility to expand the definition in case it is
identified as being too narrow.
An Aboriginal or Torres Strait Islander person is a
person who meets the three part test.
Item 4
Inserts a new subsection into section 67FB to
This will ensure that individuals who choose not
provide that there is no obligation to notify the to notify the Commonwealth that their child is an
Commonwealth of whether a child is an
Aboriginal or Torres Strait Islander cannot be
Aboriginal or Torres Strait Islander child.
punished for this choice.
Notification of Aboriginal or Torres Strait Islander
status is optional, although, without notification,
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the Aboriginal or Torres Strait Islander activity
test result cannot be applied in respect of a child.
Items 5 to 7
Insert a new provision into section 105C(1)(b) to This is consistent with other provisions across the
deal with reviewing entitlement following
FAL about backpay, including other parts of
notification
section 105C, and section 67CC(4) on backdating
claims.
This new provision means that if an individual
has been receiving CCS for an Aboriginal or
The general principle is that if an individual is late
Torres Strait Islander child, and notifies the
to notify the department of a matter that would
Secretary that the child is an Aboriginal or Torres increase their entitlement, they may only receive
Strait Islander child on a particular day, that
backpay for at most 4 weeks prior to that
individual can receive backpay for at most 4
notification. This creates an incentive to notify in
weeks.
a timely manner, and an appropriate limit on
how much backpay the Commonwealth may be
liable to pay.
Item 8
Inserts an application provision
This has the effect that individuals will start to
receive the benefit of the new Aboriginal or
The application provision provides that the
Torres Strait Islander child result on 10 July 2023.
amendments will apply in relation to sessions of
care provided in a CCS fortnight that starts in the This is because entitlements are generally
income year in which this item commences or in calculated on a fortnightly basis, and it is not
a later income year.
practical to change the level of entitlement
partway through a CCS fortnight.
Item 9
Introduces a new power to make transitional
The transitional rules may be used, for example,
rules
to deal with the case where existing
administrative data could be drawn upon to
This will allow the Minister to make rules dealing apply the new activity test result in respect of
with the transition to the new Aboriginal or
some individuals, removing the need for a
Torres Strait Islander test.
separate Secretary notification from these
individuals.
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FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 8 –
integrity measures)
Schedule 4 – Dealing with serious non-compliance
Items 1 to 4 wil commence the day this Act receives Royal Assent. Items 5 to 9 wil commence on 1 July 2023
Item in Schedule
Effect of item
Reason for/importance of amendment
Items 1 to 3
Moving the requirement to have arrangements Compliance with the family assistance law is
in place to comply with the family assistance
essential for providers. As part of the fit and
law into the eligibility rules
proper person test, this was just a single
consideration among many which were relevant
Currently, providers must be fit and proper
to determining whether the provider is a fit and
persons in order to continue as approved
proper person.
providers. One of the considerations as to
whether they are fit and proper persons is
This amendment wil promote the importance of
whether they have arrangements in place to
having arrangements in place to ensure
ensure that they have arrangements in place to
compliance, by making it a rule in its own right,
ensure that they and their staff and contractors
rather than just being part of the eligibility rules.
comply with the family assistance law.
If the provider does not have suitable
arrangements in place, they will be in breach of
This requirement will now be moved into the
the eligibility rules, regardless of other fit and
provider eligibility rules and the service eligibility proper person considerations.
rules.
The intent is not to change the obligation, but
merely to give it a higher status by making it an
eligibility rule in its own right.
Items 4
Application provision to determine when the
This is a technical amendment to clarify when the
new change takes effect
change in legislation takes effect for decisions
that are underway at the time of
commencement.
OFFICIAL: Sensitive
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Items 5 to 7
Introduces a new requirement to col ect gap
This measure is intended to achieve a greater
fees by electronic funds transfer
level of payment integrity by ensuring that there
will be reliable electronic records of all gap fee
Section 201B(1) currently requires a provider to
payments.
take al reasonable steps to ensure that
individuals pay the provider the gap fee. Item 6
There is a high level of correlation between
will introduce the words “using an electronic
services that do not col ect gap fees, and services
funds transfer system” so that, by default, gap
that falsely report care. If parents are not obliged
fees must be col ected electronical y.
to pay for care, it makes it easier for services to
report care that isn’t occurring to get payments
Item 7 provides that the Secretary may
of CCS they are not entitled to.
determine exceptions in exceptional
circumstances. This may be applicable where the This measure will address this by ensuring the
technology is unavailable, or where the
department can request reliable information of
requirement to collect gap fees electronically
electronic gap fee payments.
would otherwise have an adverse impact on the
customers of the provider.
However, the department acknowledges that in
some rare instances electronic gap fee payment
In addition, item 7 allows the Secretary to decide is not feasible or appropriate. Therefore, there is
that a particular individual is not to be required
a power for the Secretary to create exceptions.
to be pay an amount using an electronic funds
transfer system in circumstances prescribed by
the Minister’s Rules.
Items 8 and 9
Moves the requirements for a session report
This measure is intended to make it easier to
into the Secretary’s Rules
prove non-compliance where session reports do
not contain al the information that is required.
Currently, a session report must contain the
information required by the Secretary. This is
The Secretary’s Rules wil be an authoritative
done partly through software, and partly through source for what information is required to be
the Child Care Provider Handbook. However,
included in a session report, and it will be easier
these are just administrative documents, which
to track what was required at a certain point of
can make it difficult to prove what was required
OFFICIAL: Sensitive
OFFICIAL: Sensitive
at a particular point in time in the past,
time by using past compilations on
particularly in litigation.
legislation.gov.au.
This will also create better clarity for providers
about what their obligations are.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 3 –
educator discount)
Schedule 5 – Child care discount for early childhood workforce
This schedule wil commence on 1 January 2023 or the day after registration, whichever comes first
Item in Schedule
Effect of item
Reason for/importance of amendment
Item 1
Amend the calculation of CCS such that the
This ensures that if a permissible educator
educator discount is not considered in
discount is applied, it wil not reduce the amount
calculating the rate of CCS
of CCS the educator is entitled to receive.
This means that CCS will be calculated according
to the pre-discount fee payable.
Item 2
Insert a new note at the end of subclause 2(2)
It is intended that employers should not be
required to pay fringe benefits tax for giving their
The note serves as a cross-reference to
educators a permissible educator discount.
subsection 47(2) of the
Fringe Benefits Tax
Assessment Act 1986.
While fringe benefits tax is dealt with under the
Fringe Benefits Tax Assessment Act 1986 and this
Act does not amend this in any way, the
legislation has been designed so that the
permissible educator discount should not result
in fringe benefits tax liability.
Item 3
Introduces a definition for permissible educator This will make it easier to locate the definition of
discount into the definitions section
terms, for people trying to use the legislation.
Item 4
Introduces a note to clarify that providers are
In general, providers must take all reasonable
not obliged to enforce payment of the
steps to ensure that individuals pay them the
permissible educator discount
“gap fee”. This note will clarify that they are not
required to recover the permissible educator
discount as part of that gap fee.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
Item 5
New section dealing with the permissible
This is the substantive provision introducing the
educator discount
permissible educator discount. Under this
measure, approved providers will be permitted
The new section provides that a provider may
to give discounts on their child care fees for their
allow an individual a discount if the individual or educators without that discount reducing the
their partner works as an educator at one of the
amount of CCS the staff may benefit from.
provider’s services, and the service is not a family
day care or in home care service.
This measure has been implemented on a short-
term basis through Minister’s Rules made under
subsection 201B(1A) of the Family Assistance
Administration Act but is now being introduced
as a permanent measure.
The objective of this measure is to reduce staff
shortages in the ECEC sector by attracting and
retaining existing educators, particularly those
with young children.
The discount is at most 95% of the “pre-discount
fee” (also known as the gap fee).
If the provider gives the discount, the amount is
not recoverable.
Item 6
Application provision to determine when the
This means that the measure wil take effect
new change takes effect
from the Monday fol owing commencement. As
sessions are reported, and CCS paid, on a weekly
The application provision provides that the
basis, it is impractical for this measure to take
amendments apply to sessions of care in a week effect midway through a week.
that starts on or after the commencement of this
item.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 4 –
clarifying gap fee waiver provision)
Schedule 6 – Discount on fee for session of care in prescribed circumstances
This schedule wil commence on 1 January 2023 or the day after registration, whichever comes first
Item in Schedule
Effect of item
Reason for/importance of amendment
Item 1
Repeal subsection 201B(1A)
The old measure only allowed exemptions from
the obligation the
enforce gap fees. The
Subsection 201B(1A) previously al owed the
individual, in principle, still remained liable to pay
Minister to make rules to provide an exemption
the gap fees.
from the obligation to enforce the gap fee in
prescribed events and circumstances
This measure is being replaced by a new measure
that will allow the provider to actually discount
the fees (including to the level where the gap fee
is nil), providing for relief fee relief.
Item 2
Insert a new provision to al ow for discounts in
It is intended that the kinds of events and
prescribed events of circumstances
circumstances that may be prescribed include
emergencies such as floods, fires and pandemics,
New section 201BB provides that the provider
which make it impracticable for children to
may allow a discount on the gap fee that is
attend care but could threaten service viability.
attributable to one or more sessions of care
provided in the week if the Minister’s rules
In the prescribed events and circumstances, the
prescribe an event or circumstance, and any
provider may allow a discount, which may be the
other conditions prescribed by the Minister’s
whole of the gap fee (or less, at the provider’s
rules are met.
discretion).
This will allow fee relief to be passed onto
families during emergencies while not blocking
an important revenue stream for services at a
time when their financial viability is at risk.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
Items 3 to 5
Amends sections 201C to prevent CCS
This is an important measure to protect against
maximisation strategies
dishonest strategies that could be used to
increase CCS revenue by fabricating fees.
Section 201C ensures that the fees that providers
claim CCS for are consistent with the providers’
Broadly, section 201C ensures that the fees child
general fee policy. That is, it prevents them from care providers charge when individuals are not
specifically increasing fees during periods when
paying gap fees or are paying lower gap fees –
individuals do not need to pay gap fees, or only
for example, during prescribed events and
need to pay much lower gap fees.
circumstances, where the individual is entitled to
ACCS, or where there is a permissible educator
discount. Providers are not permitted to inflate
their fees and charge these individuals more than
they would usual y charge.
Item 6
Amends section 201C to also refer to new
This is a technical amendment to ensure that al
subsection (1C)
of the new provisions in section 201C are
enforceable through means of the existing
offence provision in subsection (2) and the civil
penalty provision in subsection (3).
Item 7
Application provision to determine when the
This means that the measure wil take effect
new change takes effect
from the Monday following commencement. As
sessions are reported, and CCS paid, on a weekly
The application provision provides that the
basis, it is impractical for this measure to take
amendments apply to sessions of care in a week effect midway through a week.
that starts on or after the commencement of this
item.
Item 8
Inserts a reference to new section 201BB into
Clause 2 of Schedule 2 to the Assistance Act deals
subclause 2(2) of Schedule 2
with the calculation of CCS. CCS is generally
calculated as a percentage of the amount that
the individual is liable to pay for the session
(subject to the hourly rate cap).
OFFICIAL: Sensitive
OFFICIAL: Sensitive
This ensures that where there is a prescribed
circumstances discount, CCS is calculated on the
liability the person would have had if no discount
were applied.
Items 9 and 10
Insert a new note to section 201B(1)
Section 201B requires providers to take all
reasonable steps to ensure the individual pays
The note clarifies that a prescribed circumstance the provider the gap fee. This ensures that
discount is not recoverable by the provider
providers do not have to enforce payment of the
discounted amount.
Item 7
Application provision to determine when the
This means that the measure wil take effect
new change takes effect
from the Monday following commencement. As
sessions are reported, and CCS paid, on a weekly
The application provision provides that the
basis, it is impractical for this measure to take
amendments apply to sessions of care in a week effect midway through a week.
that starts on or after the commencement of this
item.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 5 –
al owable absences)
Schedule 7 – Additional absences in exceptional circumstances
This schedule wil commence the day after the Bil receives royal assent
Item in Schedule
Effect of item
Reason for/importance of amendment
Item 1
Amend 10(1)(b) to refer to new subsection (5)
This is a technical amendment to ensure that the
new circumstance in subsection (5) (below) also
This means that a session wil be taken to have
results in an allowable absence
been provided in the circumstances in existing
(2), existing (3), and new (5).
Item 2
Inserts a new circumstance where an absence is Previously, no CCS was payable for absences
an “al owable absence”
before the child’s first attendance or after the
child’s last attendance. This amendment wil
New subsection (5) provides that if a session is
provide the Secretary with discretion to pay CCS
not an al owable absence under subsection (2) or for an absence in exceptional circumstances only.
(3) only because it occurred before the first
attendance or after the last attendance, and the An exceptional circumstance would be unusual
Secretary is satisfied that there are exceptional
or ‘out of the ordinary’. An example of when
circumstances, the Secretary may determine that exceptional circumstances would exist is where
the session is an allowable absence.
an individual is forced to relocate at short notice
to escape family violence and was unable to
provide notice to their former child care service
for an extended period. In this scenario, the
individual may have already paid gap fees for
absences after their child’s last attendance day
and the Secretary would have discretion to
consider whether CCS should remain payable for
those absences. An exceptional circumstance
would not apply where non-compliance was
involved.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
Item 3
Application provision to determine when the
This means that the measure wil take effect
new change takes effect
from the Monday fol owing commencement. As
sessions are reported, and CCS paid, on a weekly
The application provision provides that the
basis, it is impractical for this measure to take
amendments apply to sessions of care in a week effect midway through a week.
that starts on or after the commencement of this
item.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
FAMILY ASSISTANCE LEGISLATION AMENDMENT (PLAN FOR CHEAPER CHILD CARE) BILL 2022 – Lay person explanation of amendments (measure 6 –
extension for passing on gap fees)
Schedule 8 – Extending period for passing on fee reduction amounts
This schedule wil commence the day after the Bil receives royal assent
Item in Schedule
Effect of item
Reason for/importance of amendment
Item 1
Consequential amendment to section 67EB
In limited circumstances, the Secretary will have
the power to direct that a provider has a longer
Section 67EB provides that the provider owes a
period to pass on the fee reduction amount. This
debt if it receives a fee reduction amount and
ensures that if the Secretary has made a
fails to pass it on.
direction, the amount does not become a debt
until after the end of the extended period.
It would be illogical for the amount to become a
debt while the provider was stil permitted time
to pass the amount on.
Item 2
Consequential amendment to section 71D
This amendment is made to reflect that if the
Secretary has directed an extended period, no
Section 71D is a simplified outline of Part 3A
debt wil arise until the end of the extended
Division 5, which deals with payment of CCS.
period.
Item 3
Inserts a new power al owing the Secretary to
This will allow the Secretary to extend the 14 day
direct a longer period to pass on fee reduction
deadline by a period the Secretary considers
amounts
appropriate, if there may be an adverse impact
on the individual.
The Secretary may give more than one such
direction.
It is envisioned that this amendment may be
used in rare circumstances, such as where a
provider has been paid an amount for a child’s
absence before the service is unexpectedly
closed for an extended period due to extensive
water damage from a burst pipe. It may take
OFFICIAL: Sensitive
OFFICIAL: Sensitive
longer than 14 days to determine whether child
enrolments wil continue and, therefore, whether
a family’s CCS entitlement wil be retrospectively
altered. If the provider were to pass amount on
within 14 days and the individual spent the
amount, this could cause hardship for the
individual later on when the individual was given
a debt notice for the overpaid portion,
particularly for an individual on a low income.
This provision will allow the Secretary to put a
pause on amounts being passed on until the
impact on the service and individual is clear,
before the individual becomes financially
affected. The provider would still have the
discretion to pass on the amounts within 14 days
if it considered this appropriate.
Item 4
Technical amendment to correct a drafting error This wil ensure that section 201A uses the term
by changing “remittal” to “remittance”
“remittance” consistently, rather than
interchanging between “remittance” and
“remittal”.
Items 5 and 6
Consequential amendment to the timing of
If the provider has an extended period to either
giving a notice
pass on the fee amount or remit it, it is not
necessary for them to give notice of the
If a provider remits an amount, they must give
remittance until the end of the extended period.
the Secretary notice of the remittance
This amendment achieves this effect
Item 7
Application provision to determine when the
Any directions made by the Secretary will apply
amendments take effect
to fee reduction decisions made on or after
commencement of this item.
This means that the Secretary cannot give an
extension for fee reduction amounts that were
paid before the Schedule commenced.
OFFICIAL: Sensitive
OFFICIAL: Sensitive
OFFICIAL: Sensitive
