Disability Services and Inclusion (Consequential Amendments and Transitional Provisions) Act 2023

Understanding the operation of this Act requires a clear grasp of several core concepts defined within the statutory text and transitional framework:

• Commencement Day: Defined in Schedule 3, Part 1, Item 1 as the day on which the new Disability Services and Inclusion Act 2023 commences. This occurred on 1 January 2024. This date serves as the precise boundary separating legacy administrative actions from new statutory arrangements.
• The New Act: This refers specifically to the Disability Services and Inclusion Act 2023. It represents the modernised, human-rights-aligned funding and regulatory framework that replaces the 1986 Act.
• The Former Disability Services Act 1986 (or "the old Act"): This refers to the repealed Disability Services Act 1986. Despite its formal repeal by Schedule 1, specific parts of this Act (notably Parts II and III) are kept legally alive by Schedule 3 to govern legacy grants and rehabilitation programs.
• Receiving Commonwealth Body: This concept, amended across multiple statutes in Schedule 2 (including the Aged Care Act 1997, the Aged Care Quality and Safety Commission Act 2018, the Military Rehabilitation and Compensation Act 2004, the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988, and the Veterans’ Entitlements Act 1986), defines the specific Commonwealth entities authorised to receive and exchange protected information. The Act updates this definition to refer to the Disability Services and Inclusion Act 2023, preserving lawful cross-agency data flows.
• Designated Program Act: Amended in the Child Support (Registration and Collection) Act 1988, the Human Services (Centrelink) Act 1997, and the Human Services (Medicare) Act 1973. This designation allows statutory data sharing and administrative alignment between social security systems and disability service funding. Under Schedule 2, Item 46, this concept is transitional, meaning it encompasses both the new Act and the former 1986 Act to cover old and new programs simultaneously.
• Transitional Code of Conduct: Established under Schedule 3, Part 4, Item 11, this refers to a regulatory code made by the Minister via legislative instrument. It applies to legacy providers operating under saved 1986 Act agreements or historical arrangements under section 32B of the Financial Framework (Supplementary Powers) Act 1997. This ensures that providers who have not yet transitioned to the new Act are still subject to equivalent behavioural and professional standards.
• Key Personnel: Defined by cross-reference to the Disability Services and Inclusion Act 2023. Under the transitional code of conduct provisions, the actions or omissions of "key personnel" (such as directors, executive officers, or influential managers) can directly cause an organisation to be in breach of its transitional obligations.

This legislation directly affects several distinct groups within the Australian disability services sector, each facing different compliance demands and administrative realities:

• Disability Service Providers with Legacy Agreements: Providers operating under funding approvals, grants, or agreements executed under Part II of the 1986 Act prior to 1 January 2024 are profoundly affected. Rather than experiencing an immediate contractual shift, these organisations remain bound by the terms of the former Act, including old principles, objectives, guidelines, and standards. They must manage these legacy obligations until their agreements expire or are formally transitioned, requiring compliance teams to run parallel administrative systems.
• Providers under Section 32B of the Financial Framework (Supplementary Powers) Act 1997: Entities receiving money under arrangements or grants made before 1 January 2024 for specified programs are brought under the regulatory umbrella of the transitional code of conduct. They must adapt to new rules regarding the conduct of their key personnel and staff, even though their funding originates from general financial framework powers rather than the 1986 Act directly.
• Individual Service Recipients and Pensioners: Individuals receiving disability supports or participating in supported employment are affected by the amendments to the Social Security Act 1991 and Veterans' Entitlements Act 1986. The Act ensures that the financial value of their supports is excluded from income-testing and that their participation exemptions remain legally secure.
• Commonwealth Government Departments and Agencies: The Department of Social Services, Services Australia (Centrelink and Medicare), the Department of Veterans' Affairs, and various regulatory commissions are affected. They must manage the administrative transition, update their internal guidance, and issue new legislative instruments. For example, the Secretary of the Department of Social Services must actively compile and register legislative instruments to specify which new supports and services are exempt from social security income tests.
• Key Personnel and Employees of Service Providers: Individual directors, executives, and frontline workers are affected because their conduct can now trigger structural regulatory breaches for their employing organisations under the transitional code of conduct rules.

The Act establishes a detailed matrix of transitional duties for service providers and preserves critical statutory rights for service recipients.

Duties of Service Providers

Under Schedule 3, Part 3, legacy service providers must continue to comply with the statutory obligations of the former 1986 Act. Specifically:

• Compliance with Saved Instruments: Providers must adhere to the principles, objectives, guidelines, and standards formulated under sections 5 and 5A of the 1986 Act, which are preserved in force by Schedule 3, Item 5.
• Accreditation and Certification: Legacy providers must maintain active certificates of compliance. Under Schedule 3, Item 6, existing approvals (under section 6B) and accreditations (under Part IA) remain legally active. The Commonwealth retains the power to suspend or revoke these certificates under saved sections 6D, 6DA, and 6E.
• Adherence to the Transitional Code of Conduct: Under Schedule 3, Part 4, Item 11, eligible organisations and parties to legacy arrangements must comply with the transitional code of conduct prescribed by the Minister. Providers have an absolute duty to supervise their staff and executives; under Item 11(3), an organisation is deemed to have breached the code if any member of its "key personnel" or any employee or engaged person commits an act or omission that contravenes the code.

Rights of Service Recipients

The Act actively protects the rights of vulnerable individuals during the transition period:

• Preservation of Income Test Exemptions: Under Schedule 2, Item 14 (inserting paragraph 8(8)(fa) into the Social Security Act 1991) and Item 44 (inserting paragraph 5H(8)(maa) into the Veterans’ Entitlements Act 1986), individuals have a statutory right to exclude the value of supports or services provided under the new Disability Services and Inclusion Act 2023 from their income tests, provided those services are specified in a legislative instrument.
• Retention of Participation Exemptions: Under Schedule 2, Item 22, persons in supported employment have a right to be covered by a participation exemption for social security purposes. This right is maintained whether they are supported by services under the former Act (s 7 of the 1986 Act) or specified services under the new 2023 Act.
• Secrecy and Information Rights: Individuals retain their privacy rights regarding legacy records. Schedule 3, Item 8(6) ensures that the strict secrecy provisions of section 28 of the former 1986 Act continue to apply to information acquired during the performance of duties under Part III of that Act, protecting historical client files from unauthorised disclosure.

The enforcement framework of this Act is characterized by a deliberate division between transitional rules and legacy statutory powers.

Statutory Limits on Rule-Making Powers

A critical aspect of the Act is the strict constitutional and legislative limits placed on the Minister's power to make transitional rules and code of conduct rules. Under Schedule 3, Item 10(2) and Item 11(4), rules made by legislative instrument under this Act must not:

• Create an offence or civil penalty;
• Provide powers of arrest or detention;
• Provide powers of entry, search, or seizure;
• Impose a tax;
• Set an amount to be appropriated from the Consolidated Revenue Fund; or
• Directly amend the text of the Act.

This means the transitional rules themselves cannot be used to impose new fines, civil penalties, or criminal sanctions on non-compliant providers.

Saved Enforcement Mechanisms

Because the transitional rules cannot create new penalties, the Commonwealth relies on saved provisions of the former 1986 Act and contract law to enforce compliance:

• Suspension and Revocation of Certification: Under Schedule 3, Item 6(3), the Secretary retains the power to enforce quality standards by applying saved sections 6D, 6DA, and 6E of the 1986 Act. If a legacy provider fails to meet the required standards, the Secretary can suspend or revoke their certificate of compliance. This effectively bars them from receiving ongoing funding under their saved agreements.
• Contractual Sanctions: Legacy agreements under Part II of the 1986 Act are saved alongside the administrative powers to manage them. The Commonwealth can enforce compliance, suspend payments, or terminate agreements using the terms of the funding contracts themselves, which remain governed by the continued operation of Part II (Schedule 3, Item 4).
• Breach of Transitional Code of Conduct: While a breach of the transitional code of conduct cannot result in a direct civil penalty court proceeding under this Act, it can be used as a trigger under saved funding agreements to suspend payments, terminate contracts, or demand repayment of funds. It may also prevent a provider from successfully applying for new grants under the Disability Services and Inclusion Act 2023.

This Act is primarily an "interface" statute. Its sole purpose is to manage how the transition from the old disability funding regime to the new one affects other areas of Commonwealth law. Its interactions with other statutes are highly technical and structured:

┌────────────────────────────────────────────────────────┐
│ Disability Services and Inclusion (Consequential      │
│ Amendments and Transitional Provisions) Act 2023       │
└───────────────────────────┬────────────────────────────┘
                            │
       ┌────────────────────┼────────────────────┐
       ▼                    ▼                    ▼
┌──────────────┐    ┌──────────────┐    ┌─────────────────┐
│Social        │    │Veterans'     │    │Freedom of       │
│Security Act  │    │Entitlements  │    │Information Act  │
│1991          │    │Act 1986      │    │1982             │
└──────┬───────┘    └──────┬───────┘    └────────┬────────┘
       │                   │                     │
       ▼                   ▼                     ▼
Preserves income    Excludes support    Saves historical
exemptions and      values from pension secrecy rules;
participation       income tests via    updates list of
exemptions.         parallel mechanisms. exempt documents.

The Social Security Act 1991

The interaction with the Social Security Act 1991 is the most complex component of Schedule 2. The Act establishes a parallel structure to handle both historical and contemporary claims:

• The Historical Track: The Act inserts the word "former" before references to the Disability Services Act 1986 in multiple provisions (e.g., sections 8(8)(f), 23(1), 31(a), 33(1)(a), 94E(2)(a), 1035(3), 1035A(8)(c), 1035A(9)(e), 1046(6)). This ensures that anyone receiving benefits or exemptions based on historical rehabilitation or employment programs under the 1986 Act remains legally protected under the social security system.
• The Contemporary Track: The Act inserts new provisions that refer to the Disability Services and Inclusion Act 2023. For example, section 8(8)(fa) is inserted to exclude the value of supports or services provided under the new Act from the definition of "income". Crucially, this exclusion is not automatic: the supports must be "employment supports or services" specified in a separate legislative instrument made by the Secretary of the Department of Social Services under new section 8(8AAAB). Parallel instrument-making powers are inserted under sections 23(4BA), 94E(3), 1035(2A), 1035A(10), and 1046(2AA) to manage participation exemptions, pensioner education benefits, and rent assistance calculations.

The Veterans' Entitlements Act 1986

The Act mirrors the social security treatment in the veterans' affairs jurisdiction. Under Schedule 2, Item 44, a new paragraph 5H(8)(maa) is inserted into the Veterans’ Entitlements Act 1986. This paragraph excludes from the definition of "income" the value of supports or services specified in an instrument under subsection 8(8AAAB) of the Social Security Act 1991 that are provided under the new 2023 Act. Additionally, section 131 of the Veterans' Entitlements Act is amended to update the definition of "receiving Commonwealth body", ensuring the Department of Veterans' Affairs can exchange information with agencies administering the new Act.

The Freedom of Information Act 1982

The Act maintains the confidentiality of sensitive historical records while transitioning to the new regime. Under Schedule 2, Item 6, Schedule 3 of the Freedom of Information Act 1982 (which lists legislation that contains secrecy provisions exempting documents from disclosure) is amended. The old reference to "Disability Services Act 1986, subsections 28(2) and (6)" is substituted with "Disability Services and Inclusion Act 2023, section 28".

However, to ensure that historical documents are not suddenly exposed to FOI requests due to the repeal of the 1986 Act, Schedule 2, Item 46(3) provides a saving provision: section 38 of the FOI Act continues to apply on and after commencement as if the reference to section 28 of the new Act included a reference to subsections 28(2) and (6) of the former Act.

Other Consequential Amendments

• Age Discrimination Act 2004: Paragraph 41(1)(f) is updated to reference the new Act, protecting actions taken in compliance with the new Act from age discrimination claims. Schedule 2, Item 46(1) saves this protection for actions taken in compliance with the continued parts of the 1986 Act.
• Information Sharing and Receiving Bodies: The Aged Care Act 1997 (s 86-3(4)), Aged Care Quality and Safety Commission Act 2018 (s 61(3)), Military Rehabilitation and Compensation Act 2004 (s 409(5)), and Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1988 (s 151A(4)) are all updated to substitute the Disability Services and Inclusion Act 2023 for the Disability Services Act 1986 in their definitions of "receiving Commonwealth body". This aligns the legal gatekeeping for cross-agency data transfer.

The Disability Services and Inclusion (Consequential Amendments and Transitional Provisions) Act 2023 (No. 103, 2023) was introduced into the Commonwealth Parliament on 14 September 2023. It was passed by both houses of Parliament and received Royal Assent on 28 November 2023.

The commencement profile of the Act is structured around two distinct operational phases as set out in the section 2(1) commencement table:

• Phase 1 (Royal Assent - 28 November 2023): Sections 1, 2, and 3, along with any introductory or administrative provisions not covered elsewhere, commenced on the day of Royal Assent. This allowed the Minister and the Department to draft and prepare legislative instruments, transition rules, and the transitional code of conduct prior to the formal repeal of the old Act.
• Phase 2 (1 January 2024): Schedules 1, 2, and 3 commenced simultaneously with the commencement of the Disability Services and Inclusion Act 2023. The commencement table contains an explicit dependency clause: if the main Disability Services and Inclusion Act 2023 had not commenced, Schedules 1 to 3 of this Act would not have commenced at all. This clause prevented the accidental repeal of the 1986 Act without its replacement framework being active.

The Act remains in its original form as enacted. There have been no subsequent amending Acts or legislative modifications. Because it is a transitional statute, its operational significance will naturally decline over time as legacy 1986 Act funding agreements expire and are systematically replaced by modern grants under the Disability Services and Inclusion Act 2023.

As of mid-2024, there are no reported judicial decisions or significant tribunal rulings from the Administrative Appeals Tribunal (AAT) or the Federal Court of Australia directly interpreting the provisions of the Disability Services and Inclusion (Consequential Amendments and Transitional Provisions) Act 2023. This is common for transitional machinery statutes, which are designed to maintain administrative continuity rather than establish new, litigious rights of action.

However, the Act preserves historical administrative review pathways that remain potential sources of future litigation:

• Saved Section 26 Review Rights: Schedule 3, Item 8(4) explicitly dictates that section 26 of the Disability Services Act 1986, as in force immediately before the commencement day, continues to apply in relation to decisions made under Part III of that Act (rehabilitation programs). Any decision made regarding a legacy rehabilitation program (whether before, on, or after the 1 January 2024 commencement) remains subject to administrative review under the old rules.
• Saved Disability Standards Review Panels: Under Schedule 3, Item 7, Disability Standards Review Panels established under section 14B of the 1986 Act are preserved in existence. Their role is saved in relation to grants of financial assistance made under the old Act. Disputes regarding compliance with legacy standards must be processed through these saved panels, and their operations remain subject to judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth).

Practitioners, compliance officers, and executives should be aware of several high-risk legal "gotchas" embedded in this transitional legislation.

The Legacy Funding Rigidity (The "Dual-Track" Trap)

The most significant operational risk arises from Schedule 3, Item 3, which states that the new Disability Services and Inclusion Act 2023 applies only to arrangements and grants made on or after the commencement day (1 January 2024). The Note to Item 3 explicitly states:

"The effect of this item is to make clear that the new Act does not apply in relation to (and cannot be used to vary or administer) arrangements or grants of financial assistance made under the former Disability Services Act 1986..."

This creates a strict operational division:

• If an organisation operates under a legacy 1986 Act funding agreement, the Department cannot use the administrative mechanisms or variation powers of the new 2023 Act to modify it.
• Any variation, extension, or administration of that legacy contract must comply with the provisions of the former 1986 Act.
• If a legacy contract requires major restructuring, compliance teams must verify whether to proceed under the saved 1986 Act rules or terminate the contract entirely and negotiate a new grant under the 2023 Act. Mixing these statutory regimes is legally invalid.

Attribution of Key Personnel Actions

Under Schedule 3, Part 4, Item 11(3), the transitional code of conduct rules can deem a service provider to have breached the code due to an act or omission of a single member of its "key personnel" or any employee or engaged person. This is a form of statutory attribution that creates compliance risks:

• An isolated action by an employee or contractor can immediately place an entire organisation in breach of its saved transitional funding agreements.
• Because the term "key personnel" is imported from the new 2023 Act, legacy providers must ensure that their executive and managerial structures comply with the definitions and governance standards of the new Act, even while operating under a contract governed by the old Act.

┌────────────────────────────────────────┐
│  Employee / Key Personnel Contravening │
│             Act or Omission            │
└───────────────────┬────────────────────┘
                    │ (Schedule 3, Item 11(3))
                    ▼
┌────────────────────────────────────────┐
│    Attributed Breach of Transitional   │
│             Code of Conduct            │
└───────────────────┬────────────────────┘
                    │
                    ▼
┌────────────────────────────────────────┐
│     Contractual/Administrative Policy  │
│      Sanctions on Legacy Provider      │
└────────────────────────────────────────┘

The Legislative Instrument Delay Risk

The rights of support recipients to exclude their disability supports from social security income-testing depend entirely on the Department of Social Services registering active legislative instruments under the newly inserted social security provisions (e.g., section 8(8AAAB)). If there is an administrative gap or delay in drafting and registering these instruments for new programs, participants' support packages could technically be classified as income, affecting their social security or veterans' pension entitlements. Compliance officers at service providers must verify that any new services they offer are covered by active legislative instruments.

Parallel Secrecy Frameworks

Because the Act saves the operation of section 28 of the 1986 Act for legacy files (Schedule 3, Item 8(6)) while applying section 28 of the new 2023 Act to new files, organisations must manage two distinct legal standards for information sharing and record keeping. A data disclosure that is lawful under the new Act might constitute an offence or breach under the saved provisions of the old Act if the records in question relate to legacy rehabilitation programs.

For legal advisers, financial controllers, and compliance managers in the disability services sector, structured steps are required to ensure compliance during this transition period.

1. Execute a Contractual and Funding Audit

Organisations must audit all active Commonwealth funding instruments. Every active agreement should be classified into one of two streams:

• Stream A (Legacy Agreements): Agreements approved under Part II of the 1986 Act or arrangements under Part III prior to 1 January 2024. These must be administered under the saved provisions of the Disability Services Act 1986. Compliance officers must ensure that operations under these contracts continue to adhere to the old standards, guidelines, and certification requirements saved by Schedule 3.
• Stream B (New Grants): Grants or arrangements executed on or after 1 January 2024. These must comply with the Disability Services and Inclusion Act 2023.

Do not attempt to apply administrative variations or reporting templates designed for the 2023 Act to Stream A contracts, unless the department has formally terminated the Stream A contract and replaced it with a Stream B agreement.

2. Implement Key Personnel and Employee Conduct Controls

Because the Act attributes the conduct of employees and key personnel to the organisation for the purposes of the transitional code of conduct (Schedule 3, Item 11(3)), providers must:

• Identify all individuals who fit the definition of "key personnel" (directors, senior executives, individuals with significant managerial influence) and confirm they meet the suitability standards.
• Review employment contracts, sub-contracts, and engagement agreements to ensure they contain explicit clauses requiring compliance with the transitional code of conduct rules.
• Update internal whistleblower, disciplinary, and reporting systems to ensure any conduct that could breach the transitional code of conduct is identified, investigated, and addressed before it triggers a systemic contract breach.

3. Update Information-Sharing and Privacy Protocols

To manage the parallel secrecy frameworks:

• Establish clear access controls and labels for client and operational files. Files must indicate whether they relate to legacy programs (governed by saved section 28 of the 1986 Act and saved FOI provisions under Schedule 2, Item 46(3)) or new programs (governed by section 28 of the 2023 Act).
• Train privacy officers and freedom of information coordinators on the dual-track secrecy rules, ensuring that requests for information exchange between agencies are validated against the correct "receiving Commonwealth body" definition.

4. Verify Social Security Status for Participants

For providers delivering employment and supported accommodation services:

• Routinely review the Federal Register of Legislation to confirm that the supports and services delivered are specified in active, in-force legislative instruments issued by the Secretary of the Department of Social Services (under Social Security Act 1991, sections 8(8AAAB), 23(4BA), 94E(3), 1035(2A), 1035A(10), or 1046(2AA)).
• Provide clear, documented assurance to participants that their supports are covered by these active instruments, protecting their pension and benefit calculations from administrative reassessment.