Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 2nd Reading
Senator FIFIELD (Victoria) (9.33 pm)-I rise to speak on the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008. The bill introduces a means test for family tax benefit part B and the baby bonus.
Additionally, the bill makes a number of changes to the administration of the baby bonus. Payment is changed from a lump sum to 13 fortnightly instalments and the baby bonus will be indexed once yearly rather than twice yearly. The age limit at which an adoption gives access to the baby bonus will be increased from the current two years to under 16 years of age.
The bill introduces a requirement for claimants of the Commonwealth seniors health card to provide a tax file number and reduces access to the partner service pension for partners, raising the access age from the current age of 50 to the age service pension qualifying age. The bill also contains changes relevant to the issue that arose in the public domain last week in relation to changes to fringe benefits tax and charities.
I will come to the other matters later; first I would like to deal with the issue of the charities. Last Friday, the Senate Standing Committee on Finance and Public Administration conducted a hearing into this bill as part of its inquiry. As deputy chair, I begin by thanking the representatives of the charitable organisations, who generously gave of their time at short notice to present evidence to the committee. It seems giving up their time is something that comes naturally to these individuals, and the committee was very grateful to them for it. At issue was the fact that from 1 July 2008 more fringe benefits would be included in the income that is used to calculate payments to families of family tax benefit A and B and the child care benefit. This would have a significant impact for employees of some charities.
The coalition implemented this change in response to a report in 2006 by experts on the Ministerial Taskforce on Child Support, chaired by Professor Patrick Parkinson. That report recommended that calculations of income for child support should include all fringe benefits to ensure that parents could not avoid their child support obligations by converting normal income into fringe benefits. The report also recommended that the method for calculating child support be extended to the method for calculating family tax benefits, to ensure consistency. It was argued that it would be complex to have different methods for calculating child support and family payments. The coalition accepted both of these recommendations and implemented them in legislation in 2006.
At the time, the Labor Party supported the package of legislation that included this change. In its response to this issue, the government has sought to blame the former coalition government. That is dishonest.
The facts are that Labor supported this measure. On 12 October 2006, the relevant shadow minister, Senator Evans, issued a media release that indicated Labor’s support for the package of changes the coalition introduced. The piece of Labor legislation that we are now debating supports the 2006 change. The explanatory memorandum to the Labor bill discusses the change to the calculation of income for family payments, explicitly states that the change will result in higher calculated incomes for some people and gives a worked example of how the change produces a higher income for the calculation of family payments. The Labor legislation allows Centrelink to use this higher income to determine family payments.
Without this change by Labor the payments to some families would have been higher. Labor cannot therefore claim that this change was all the former government’s doing. Whilst it is true that the coalition’s 2006 change broadens the income that is used to calculate family payments, Labor’s changes in the 2008 budget do the same thing. The government is proposing to include salary sacrifice into superannuation and investment losses in the calculation of income for family payments. The government therefore cannot argue that its 2008 changes are completely separate from the coalition’s changes in 2006.
In particular, any charity worker who salary sacrifices into superannuation or has losses on investments will be affected by Labor’s changes in the 2008 budget. Labor’s measures will result in a much larger reduction in family payments than the coalition’s changes from 2006. It is very concerning that Labor is reducing support for families in the 2008 budget, in contrast with the dramatically increased support for families delivered by the coalition in office.
It was also interesting to hear the evidence at the inquiry into this bill that the Minister for Families, Housing, Community Services and Indigenous Affairs, Ms Macklin, cleared the explanatory memorandum for this bill prior to its presentation to the House on 29 May 2008. Apparently the minister’s awareness of the impact of the 2006 legislation was not aroused by her clearance of the memorandum prior to 29 May, which mentions that notification letters to recipients of family tax benefit and childcare benefit were being issued in April.
The committee also heard evidence that no officers of the Department of Families, Housing, Community Services and Indigenous Affairs were aware, prior to May 2008, of the extent of the impact of the legislated, but not yet operative, provisions relating to the treatment of fringe benefits for the purpose of calculating family assistance payments. It was further acknowledged by the department that no analysis was ever conducted to determine whether any particular sectors, such as the charity sector, would be disproportionately affected. Mr Hazlehurst of the department acknowledged that:
… we did not at that time do an analysis sector by sector of how many people would be affected.
… we did not do any sector-specific analysis. We did not look at how employees in different sectors would be affected.
During the inquiry we also learned that Minister Macklin’s office was provided an oral briefing on the impacts on employees in charitable organisations on 29 May 2008; yet neither the minister nor the Treasurer made any attempt to raise the matter publicly until the publication of an article in the Australian newspaper on 18 June, prompting a joint press conference that day and an announcement on 19 June 2008. It remains unclear whether, if the issue had not received considerable public interest following the media coverage on 18 June 2008, the minister or the Treasurer intended to act on this issue before 1 July, or at all. All we can conclude is that, through her attempts to deny having supported these changes, the minister does not understand her own legislation. To provide certainty to workers in the charity sector, the coalition will support the government’s announced amendments.
Let me turn now to the rest of the bill. This is a bill of cold hearts and broken promises. It is a bill that seeks to act upon the nasty surprises Australian families found were in Labor’s first budget delivered some six weeks ago. I note that Labor senators are saying that they hope the opposition will not be obstructionist in relation to this bill. What hypocrisy and what contempt for Senate processes! Labor senators well know that when the coalition came to government in 1996 we had been left a $10 billion budget deficit and a $96 billion debt. That was a real crisis, not a false and constructed crisis of the sort that Labor are inventing at the moment.
What happened when the coalition set about repairing the damage caused by 13 years of inept Labor government? As we know, Labor opposed every single measure we introduced to balance the budget and pay off their debt. At the same time, it is very interesting to see Labor now demanding respect for mandate. Unfortunately, this new Labor paradigm has arrived 12 years too late. When we were in government we took numerous policies to the Australian people and were successfully elected on our platforms only to have Labor vote against them time and time again. To come in here now and throw the word ‘obstructionist’ around and lecture this side of the chamber on mandate theory is the height of Labor hypocrisy.
But the point about this bill is not that the coalition will not respect Labor’s mandate because they never respected ours. The point here is that there is nothing in this bill for which Labor sought a mandate.
Labor never once put to the Australian people that they would set a means test of $150,000 for the baby bonus or the family tax benefit part B. Labor never once flagged their intention to slash entitlements to the Commonwealth seniors health card or the partner service pension. There is no mandate here, only broken promises.
The committee heard evidence that the government’s decision to introduce the requirement for tax file numbers to be provided by claimants of the Commonwealth seniors health card will result in loss of eligibility for at least 27,000 people in the next two years. This is not a compliance measure; this is a defacto means test that will strip older Australians struggling under cost-of-living pressures of their entitlements to assistance such as the seniors concession allowance and the telephone allowance.
What is equally concerning is that the department has not modelled how many people will lose their entitlement to the card beyond the forward estimates. It seems that the true number of people to lose entitlement to this important assistance for seniors will be much, much higher.
All of this is against the backdrop of the complete neglect of pensioners in Labor’s first budget. Even more heartless is the government’s decision to strip away entitlement to the partner service pension from some 930 Australian partners of veterans. These are people who in many cases act as carers for their partners. And these are not just any partners. They are veterans who have served the nation in the defence forces. How insulting for veterans that the Prime Minister, when asked about this matter in the House on 19 June, confessed he had no idea about it. And the Minister for Veterans’ Affairs-what was his description of this proposal? How did he characterise the government’s decision to punish the partners of veterans? He said it was a ‘minor’ change. Labor rip away the entitlements of vulnerable people who are caring for veterans, and the minister says it is only ‘minor’. I wonder which Labor MP or candidate went to their local RSL in the lead-up to the last election and said, ‘By the way, we’re going to slash the partner service pension-just so you know.’ I do not think anyone would have.
I would like now to turn to the baby bonus. Add this to the list of Labor’s broken promises. As Senator Bernardi referred to earlier, when a constituent contacted the ALP via the Kevin07 website to ask whether Labor was going to make any changes to the baby bonus, they were told:
We have no plans to make any other changes to the way the Baby Bonus is structured, either in terms of eligibility or payment methods.
And this year the Australian of 14 March 2008 stated:
… Wayne Swan this week ruled out any change to the baby bonus and said Australia’s middle class did not receive too much welfare.
Well, his tune has sure changed. That was a complete and utter falsehood uttered by Mr Swan. Perhaps that constituent who contacted Kevin07 voted Labor as a result of the response they received. That constituent has now been completely short-changed by Kevin08. Not only have Labor broken their promise not to fiddle with the baby bonus; they are seeking to apply the ultimate blunt instrument in a means test with no
taper. So, if someone has a child on 1 January 2009 and earns $75,000 in the following six months, they will receive the full bonus. But if they earn $75,001 they will get nothing. One dollar extra means sudden death. Tapering was not even considered by Labor. Evidence to the committee revealed that no modelling had been
conducted on tapering of the baby bonus means test.
Labor’s means test is an odd beast. Labor are asking people to estimate their income in the six months after the birth of a child and will pay the bonus based on the information provided to them. However, if someone provides information that they will earn income under the means test threshold but then actually earns income that exceeds the threshold, they will not be compelled to pay back the bonus. This means test is therefore completely vulnerable to fraud and dishonesty. Labor’s means test will be almost impossible to police, despite the fact that more than $22 million will be sunk into administrative costs.
Finally there is the family tax benefit part B. Labor promised prior to the election that they would means test this payment at $250,000. Senator Chris Evans, then the opposition spokesman, announced this policy in a press release of 28 March 2006. Yet, just as Mr Garrett prophesised, once Labor got in, they just changed it all. So now families get hit with a $150,000 means test, again with no taper. The Treasurer has confirmed that around 40,000 families will lose their entitlement to family tax benefit part B as a result of this change. We have heard much from Mr Rudd over the past 18 months about working families being under financial pressure. So what is Mr Rudd’s remedy in this bill for that? To strip those very same families of entitlements. And, while he is at it, he is hitting pensioners and partners of veterans too.
We on this side of the chamber will not be bullied by Labor’s rhetoric on obstructionism and mandate theory. We have shone a spotlight on this bill and its litany of broken promises. This bill targets families, pensioners and veterans. For that, Labor stands condemned.