Wendy Askew (Tasmania, Liberal Party) Share this | Hansard source

I rise to speak on the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020. As chair of the Senate standing legislation committee on community affairs, I'm pleased to make a contribution to the debate. On 6 February 2020 the House of Representatives introduced the Social Services and Other Legislation Amendment (Simplifying Income Reporting and Other Measures) Bill 2020 to parliament. It was referred to the Senate standing legislation committee on community affairs on 6 February and the committee tabled its report on 20 February 2020.

The bill seeks to simplify the way income support recipients report their employment income to Services Australia. Under the Social Security Act 1991 income recipients who earn income through employment are required to calculate these earnings based on the number of shifts they, or their partner, have worked within a fortnight and report this estimate. This estimate is then used to determine their rate of payment for that period. In theory, this seems simple enough. However, in most cases a person will not know exactly how much they have earned until they are paid at a later date, which often falls after their income support payment is made. They may also have income from more than one source, further complicating the calculation. As a result, this scenario frequently results in social security recipients either over or under estimating their total income for the time period. This may then result in an overpayment or underpayment occurring. Measures introduced in this bill will make it possible for those receiving income support to report their gross earnings as it appears on their payslip from 1 July 2020.

Around $2.1 billion is expected to be saved over four years as a result of amending this legislation to ensure improved payment accuracy. It also implements the 2019-20 budget measure to change the social security income assessment model.

As noted by Senator Siewert, the measures in the bill will affect recipients who report income on jobseeker payment, parenting payment—single and partnered—Abstudy, Austudy, youth allowance, special benefit, age pension, carer payment, disability support pension and farm household allowance. This bill will amend the Social Security Act 1991 and four other acts to ensure that employment income is assessed once it is actually paid to a social security recipient. This will provide a more accurate picture of the amounts of employment income paid to social security recipients and minimise the number of incorrect social security payments resulting from misreported employment income. As mentioned earlier, subject to the passage of legislation, it is proposed that this change in reporting will take place from 1 July 2020. This will allow recipients to adjust to the new reporting requirements prior to the addition of prefilled information being included later in the year.

At that point, Services Australia will use data collected by the Australian Taxation Office to facilitate this change. Payroll information collected through the Single Touch Payroll system, which is administered by the ATO, will be expanded under the changes outlined in this bill. From September 2020, it will be possible for Services Australia to use the data collected by the Australian Taxation Office via Single Touch Payroll to prefill payroll information for income recipients' fortnightly reports. This process is similar to the way the ATO already prefills tax returns in readiness for us to do our tax at the end of each financial year. Income recipients will be prompted to review and confirm or update the Single Touch Payroll data before it is used to assess their entitlements. The bill amends the Social Security (Administration) Act 1999 to remove any doubt that this may be done.

Once the new Single Touch Payroll is introduced, employers can use it to report income, tax and superannuation information to the ATO each time an employee is paid. There are a small number of employers who are eligible for temporary exemptions or for quarterly reporting until 2021, such as microbusinesses with between one and four employees, but most employers have transitioned, or are in the process of transitioning, to Single Touch Payroll. If a recipient works for an employer who is not covered by Single Touch Payroll, they will continue to report their income using their pay slip.

The ATO started sharing Single Touch Payroll data with Services Australia for employees who are customers of Services Australia from July 2019. This data includes the salary and wages, tax, lump sum payments and allowances in a year-to-date format on or before the employee's payday. From 1 July 2020, the ATO will start collecting an expanded set of income data from employers, with full implementation of this expanded dataset starting from 1 July 2021. The expanded dataset includes the disaggregation of gross income, Child Support Agency deductions and garnishee amounts, and reasons for stopping employment.

The bill also amends the A New Tax System (Family Assistance) (Administration) Act 1999 to remove any doubt that Services Australia can use information from the Single Touch Payroll system to administer the family assistance law. It further amends the Student Assistance Act 1973 to remove any doubt that Services Australia can use this information to administer that act and the Abstudy scheme, and it amends the provisions in the Veterans' Entitlements Act 1986 regarding the work bonus and pension bonus scheme.

During the inquiry, the committee received eight submissions regarding the legislation. Submitters were broadly supportive of the bill, noting it would simplify reporting obligations, help ensure income support recipients received the rate of payment they were entitled to and help reduce the number of social security overpayments. The submissions highlighted the complexity of the current system and noted government statistics regarding the significant rate of corrections of reported income due to mistakes being made in estimating and reporting income. The Australian Council of Social Service stated that it welcomed the bill because it will simplify the reporting of income and remove the guesswork involved in the current system.

Despite the broad support for this bill, there was one common concern posed by the submitters. This was the need to ensure that the new reporting system was robust enough and would work for everyone who needed to use it. Submitters highlighted the need for consultation and user testing with a range of income support recipients and organisations that support them, to identify potential risks and unintended consequences. I might just stop there.