Anne Ruston (SA, Liberal Party, Assistant Minister for Agriculture and Water Resources) Share this | Link to this | Hansard source

I move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bill read a first time.

I seek leave to move a motion to exempt this bill from the bills cut-off order.

Leave granted.

I move:

That the provisions of paragraphs (5) to (8) of standing order 111 not apply to the bill, allowing it to be considered during this period of sittings.

The statement read as follows—

STATEMENT OF REASONS FOR INTRODUCTION AND PASSAGE IN THE 2015 SPRING SITTINGS

SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL

Purpose of the Bill

From 1 July 2016, this Bill will remove family tax benefit Part B for couple families (other than grandparents) with a youngest child aged 13 or over.

Reasons for Urgency

Passage in Spring is necessary to allow the significant system and customer communication changes to be completed in time for implementation from 1 July 2016, as intended.

I table a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

SOCIAL SERVICES LEGISLATION AMENDMENT (FAMILY PAYMENTS STRUCTURAL REFORM AND PARTICIPATION MEASURES) BILL 2015

This Bill will introduce a package of new reforms that helps us support families while encouraging parents' participation in the workforce.

This Bill will supersede measures stalled in the Senate, including:

This present Bill anticipates withdrawal of the measures relating to FTB from the 2014-15 Budget and to instead propose changes which focus squarely on the principles of structural reform of the social welfare system by simplifying the payment structure of the FTB system. At the same time, the Bill provides more assistance to families when they need it most, and it is fiscally responsible.

The measures in this Bill have been introduced in order to make sure the Jobs for Families package, introduced in the 2015-16 Budget, is fully paid for. This package contains the required savings to offset the additional investment in the childcare package which, as well as helping families and encouraging workforce participation, also represents substantive reform of a complicated, inflationary child care system.

In this Bill, the government is increasing the fortnightly payment rates of Family Tax Benefit Part A by $10.08 for each FTB child in a family aged up to 19. This has the effect that around 1.2 million lower income families (including income support families) who receive Family Tax Benefit Part A for around 2.2 million children – will now receive higher fortnightly payments from 1 July 2018. The increase in their fortnightly payments will help families better manage their day-to-day budgets by providing them with timely, regularised assistance when they need it the most.

We will also provide an additional $10.44 per fortnight for under-18 year old Youth Allowance recipients who are living at home, bringing the payments to the same standard rate as a Family Tax Benefit Part A child aged between 13 and 19.

Aligning these two rates of payment, is itself a much needed part of the reform process to align the large variety of payment rates where possible. These alignment reforms will avoid confusion for families, and make sure there is no financial incentive for an FTB child to leave full-time secondary study to claim Youth Allowance.

Importantly this alignment reform will also flow on to people who are on a disability support under the age of 18, special benefit and ABSTUDY.

These alignment changes are based squarely on the McClure reform recommendations; they simplify the system making it easier for parents and their older children to navigate the system in order to get the assistance appropriate to their circumstances.

The Bill will introduce a new rate structure for Family Tax Benefit Part B, and make other amendments to the rules for Part B, from 1 July 2016.

Firstly, the maximum standard rate will increase by $1,000.10 per year for families with a youngest child aged under one. This will provide more choice for families when their children are very young.

Family Tax Benefit Part B will be limited where a family's youngest child is aged under 13. This supports the Government's broader participation agenda which is central to the child care reforms introduced in the 2015-16 Budget and strongly supports the policy imperative that families be encouraged and enabled to re-enter the workforce as their children begin secondary school.

A new Family Tax Benefit Part B rate of up to $1,000.10 per year will be available for single parent families and grandparents with a youngest child aged 13 to 16.

The Government also recognises that Grandparent carers take on a big responsibility when caring for their children, yet are less likely to be working and more likely to be retired. Family assistance, it is acknowledged, helps grandparent carers meet the cost of raising their grandchildren. Similarly, we also recognise that sometimes it is difficult for single parents to transition into work even when their youngest children are into secondary school, and this is why we are applying different payment assistance for these categories once the relevant children turn 13, providing them with some additional appropriate assistance while they prepare to re-enter the workforce.

This Bill will also provide for the phase-out of both the Family Tax Benefit Part A supplement and the Family Tax Benefit Part B supplement.

The Part A supplement will reduce to $602.25 a year from 1 July 2016, and to $302.95 a year from 1 July 2017. The Part B supplement will reduce to $302.95 a year from 1 July 2016 and to $153.30 a year from 1 July 2017. Both supplements will then be withdrawn from 1 July 2018.

The Family Tax Benefit Part A and B supplements were introduced at a time when, under the Howard Government, the surplus anticipated in the 2004-05 Budget paper was $13.6 billion and it was contemplated that a substantial use of the supplements would be used to offset potential Family Tax Benefit overpayments arising from underestimation by recipients of FTB of their annual income. In the near future, the Australian Taxation Office is introducing a single-touch payroll system, a system which will allow for accurate fortnightly reporting of income, which measure in 2018-19, will significantly reduce the problem of Family Tax Benefit debts.

The fundamental and critical reform component inherent in the changes now proposed is that the measures reduce the number of supplements in the system. One of the biggest frustrations of the social security system expressed in the report by Patrick McClure, entitled "A New System for Better Employment and Social Outcomes", is that there are far too many payments and supplements – in fact there are some 20 main payment types and 53 supplements (that second figure has been reduced from 55 because the government has already removed the Seniors Supplement and the Low Income Supplement). This measure will further reduce the amount of supplements in the system (as will the associated reform measures in child care).

In summary, this package of Family Tax Benefit and dependent youth measures enhances support for families with their day-to-day living expenses and so helps them support their children from birth through education and the transition to independence. This increase in day to day support has been achieved through reforming the supplements and increasing fortnightly payments including aligning the rates of reduced youth payments.

Together, the revised package demonstrates the Government's commitment to assisting families:

At the same time these reforms will improve the sustainability of family payments ensuring we can achieve three important goals:

1. continue to assist families in raising their children over the long-term;

2. fund the Child Care reforms designed to enable and encourage greater workforce participation; and

3. continue a deservedly needed process of simplifying FTB, consistent with the recommendations of the McClure review which highlights the unworkability of a system that maintains 20 main payment types with in excess of 50 supplement categories.

Claire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | Link to this | Hansard source

As we have just heard, the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 comes back to this chamber in yet another incarnation. As we know, since the budget in 2014 the government has been trying to convince the community and senators that the best way to raise money is to take it off the low income families in this country and to affect family payments. We have had a series of attempts to bring the legislation to this chamber. Only a few weeks ago we had the first incarnation of the family payments structural reform and participation measures bill 2015. The bill that came before us had a range of processes around attacking family tax benefit for low income families.

In terms of the process, it was duly sent off to the Senate Community Affairs Legislation Committee where we had a very short time frame—in fact, in my experience in this place it was one of the shortest time frames—to consider a very detailed piece of legislation. We did so, because that is what committees do in this place. As always, when we go to the community, particularly community organisations, and seek their help when we are considering pieces of legislation in the community affairs area, they respond. Even with the very short time frame we had, 19 submissions came forward, all talking about the bill and all opposing the bill. That is not unusual in that the people who care most about legislation are those who are concerned about it and think it will be negative. But, again, when it comes to the government's proposals on family tax payments and the linking of family tax payments with the child care package, there is a degree of threat that if the family payment legislation is not passed, the child care benefit package will not be able to be introduced. What happens is that people then react. People are concerned about how they will be impacted and how people who are already on fairly limited budgets will react to further reductions in their entitlements.

One thing that was most clear to our committee when we were considering the bill was that we had very little information from the department on which to consider the impact of this legislation. There was no modelling put before us. When we asked for circumstances we were told in the committee process that if we gave the department information on the kinds of families we were concerned about they would give us back information on how they would be impacted. I just want to put it on record that I do not think that is good enough. I have been working on this committee for many years, with other members of the committee, and we have built up great respect for members of the various departments with which we have been dealing. We have been able to realise the commitment and knowledge that they have on the issues and their real desire to provide information to senators both in the Senate estimates process and in committee inquiries to help us get a full picture of the situations we are considering.

But I am finding that that is not happening as openly as it has in the past—and it is not just me. Sometimes you begin to doubt whether it is only you who is feeling negative or concerned about the process, but I want to put on record the evidence that was given by the CEO of UnitingCare, Ms Lin Hatfield Dodds, when she came to our inquiry. She said:

It is paramount, we think, that the impacts of any reform are thoroughly and transparently assessed prior to changes being implemented that might result in adverse impacts on the most vulnerable members of our community.

It is therefore with concern that we note, in relation to the bill—

which was the previous bill—

that the government appears not to have released substantive evidence to highlight the impact of its proposed changes on families. It is our view that, in the absence of data sets and evidence to support or explain the measures in the bill, UnitingCare Australia is unable to support the proposed reforms.

That is the reaction that we heard from a number of the organisations who came to our inquiry and it was also the reaction from members of the committee.

This is not a new process. We have been looking at attempts to adapt the family tax benefit program for two years now. As I said, there has been great discussion and debate. We then had the bill come before us and, again, there was not open modelling about what would happen. In fact, we got more information from the Bills Digest from the Parliamentary Library, which did come forward with information on how this bill would operate and some of the impacts. It was not in a submission from the department but, nonetheless, we got the information from the Bills Digest.

I want to put on the record, that whilst this bill has now been split and Labor will be supporting the one element of the bill that is actually the new bill that is front of us, I do think that it is very important that, when discussing where we are this afternoon, we put this in context and explain what the bill was last week before this agreement had been reached. The bill that was before us at that stage—the one that we took to the committee to consider—was looking at significant cuts to family tax benefit A and family tax benefit B for people across a range of different situations. For family tax benefit A there were going to be very major cuts to people's entitlements. In the previous bill, 1.5 million families were scheduled to lose FTB A supplements—a cut of $726 per child every year—and 300,000 of those families would not get the increase to the FTB A per child amount.

I do not like the term 'carrot and stick'—I always think the stick is much bigger than the carrot—but the actual encouragement in that bill was that there was going to be an increase, though we did work out that the balance was not there. Even though the increase of $1,000 had been widely publicised as a positive element, the element had not actually been worked through as to how many people were going to be better off as opposed to those who were not. We were not able to get that data in detail. What we did find, though—and what was particularly worrying in that approach—was that there was a particular focus on sole parents and grandparent carers.

Extraordinarily confronting evidence around FTB cuts was given to the committee by people who come to see us very regularly from the National Council of Single Mothers and their Children. I want to put on record the comments that were made by Ms Terese Edwards, from the National Council of Single Mothers and their Children. She submitted:

What I do know is that it does not make sense to me, or to the sole parents that I am speaking on behalf of, that these two measures are linked.

These two measures are the child-care enhancement measure and the reductions to, particularly, FTB B. Ms Edwards continued:

We know that the families who will be the biggest losers are families who have children who are 13 and older. They will not be accessing child care.

That is because there is no effective child care, except some elements of outside-school care, for children who are over 13. It is one of the big gaps in our system that, for young people over 13, there is no effective process to provide support to those families. I am not saying that that is peculiar to this government; it is just a fact. It has been the case for a long time that, if you have a child over 13, there is no effective care for them, particularly when we are encouraging people to get into the workplace. Ms Edwards went on to say:

So it seems like one group is going to go through an absolute depth of despair and harm to pay for an investment in another group. The first time that this was linked was after a couple of failed attempts to get this measure through. It does not make sense to me for it to be linked at all.

That was certainly the position that Labor senators took.

In the other place, Jenny Macklin, our shadow minister, who has been working in this area for a long time, put some quotes into her contribution around the situation of grandparent carers. This is something that our committee was particularly focused on, because we have done a lot of work in the area of grandparent carers. Grandparent carers had contacted her and the department saying, 'How will I manage if I lose $100 a fortnight?' That was a quote from Marlene Lamb, a constituent from the electorate of Petrie, who contacted Jenny and spoke about her 12-year-old granddaughter who was going to turn 13 very soon. Marlene, the grandmother, had been looking after her granddaughter for a long time, and the proposed cuts at that time were going to have a significant impact on the family and on the way that they were going to be able to survive.

We need to understand that these amounts can be seen to be small when we are talking about the end-of-year bonus payment—which was on the target line before we made the change to the bill this afternoon—but, during the committee's inquiry, it was put on the table that the original reason for the end-of-year bonus was that there were concerns around people being able to fully budget and do the returns that they needed to do with the taxation department. At one stage with the FTB A process debt that could be incurred with the taxation department, and that bonus payment was there to mitigate that process.

The department's evidence was that with the new changes with technology to make it easier for the two systems to operate—the taxation system and the family payments system—there would not be that difficulty in making in sure that you did finalise your accounts in the right way, and that you would be able to know where you were with you family tax payments. We accept that statement. Except that there was absolutely no trust from the community, nor from the committee, that a verbal guarantee that the system would operate well would be able to be fulfilled.

Whilst the academic argument about why there would be no further need for an end-of-year bonus was clearly on the table—that was that—and was accepted, what people like Ms Lamb in Petrie were saying was that the reduction of that amount of money, which was now built into her budget, would have significant impact on the single-parent family's grandparent parent budget because that money was used immediately to provide the kinds of services in their family that were so important, such as the purchase of school uniforms and the purchase of end-of-year processes—the kinds of things a bonus cash budget payment was very useful for. It was important for those families that their need was identified, and that there was some understanding from their government that we are not talking about people for whom these amounts of money are insignificant. These amounts of money make a real difference in the survival budgets of people raising children.

Through the process of our committee, we took evidence from ACOSS and the welfare rights group as always. ACOSS did raise particular concerns about the impact on parents who were trying to raise children and the costs that do go up. I do not think that there is any doubt that there has been significant evidence over many years that you do not have a reduction in the costs of raising children just because they turn 13. We have significant evidence—and I know the department has significant evidence, which they presented in previous inquiries—that indicates that it is no cheaper to have a child at 13 or 14 than it is to have a child at seven or eight, or even as a newborn.

The reasoning provided by the department and the government was that the FTB payments would be reduced so that there would be a greater incentive for people who are receiving that payment to then go and seek work and go into the workplace. That is the linkage with the argument that was presented to us for why there would be a reduction in the payments. There was some push-back from the evidence that we received, on the day of the committee hearing, about how difficult it is when you are trying to seek work and continue to raise children. And, whilst it may be seen that there would be an extra financial incentive to seek work, because you have had your FTB payments removed, in terms of whether that actually provides you with any greater skill or any greater ability to find work, there was some scepticism in the evidence that we received.

It certainly could be seen that the theory of the evidence is real—the theory that if you remove a payment that will be more than incentive for someone to go out and seek employment. I will not use the standard statement that is made many times in this argument about what the best form of welfare is. Nonetheless, when you are trying to balance the various responsibilities that you have, particularly in the case of children over 13, for whom there is no really firm child care available, it does not seem to add up how it will work if you are going to link these two things.

We had no evidence before us that any element of the previous legislation, or in fact with the current legislation before us, denied the fact that we need to ensure that when people are able to seek work they should be able to do so. There was no organisation or individual who rejected that premise. What they did question was how this particular bill would enhance that opportunity. What they wanted to do was ensure that the element of fairness, which has been quoted significantly by the minister, would be sensed by the people who were most in need of the support of their government—to raise their children and to balance that child-raising responsibility with the need to seek work.

In terms of the new bill—and I am not even sure whether it has an absolutely new title—which is the one that relates particularly to partnered families with children over 13, it has not been an easy decision for the Labor Party to support the recommendation that we would cease the payments of people in that situation. We did have concerns raised by people who came to our inquiry around that element.

It is really very important that as we move forward with the legislation we understand that there needs to be close monitoring of the change that may go forward after the bill is passed and what exactly the impact will be on families, and that there is no automatic assumption that there will be this natural link between the reduction of the payment and the ability to seek work.

I ask that the department provide information to us that would show how they are going to monitor that process; whether we are going to have data that will show the impact; how families who will have their family payments changed will be traced; what support they will receive in returning to the workplace, which is the intent of the legislation; and how the department is going to work with the organisations who are in the field, who are working all the time with families who are finding it tough and who are working with families legislation. We would like to get some information back from the department about how that is going to interact. Where families with children over 13 will lose family tax benefit B, how will that be monitored to see where the link will be with increased employment? And how will we know families in that situation have the support they need to find the work which we all know the government is seeking that they should have?

We will be supporting this new legislation but the new legislation needs to be considered with what has gone before, with the various attempts the government has made to make changes and also to ensure that we know there will not be ongoing attacks on family payments in the system, particularly not when there is put forward this immediate link between having to cut this element of family payments in order to pay for the child care package. That is not being seen by the community or in fact by people on this side of the chamber as an automatic link and the way we should be proceeding in these arguments about true fairness in our community.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 in its new form, although I will be referring to elements of the bill considered by the Senate committee which tabled its report 20 minutes ago. The Greens will not be supporting this bill, the same as we would not have supported the previous bill which the Senate committee considered. We will not be supporting another bill when comes in if the government attempts to bring in the measures they cut out of this bill.

The previous unamended version of this bill was simply another attempt at the government's cruel budget cuts to family tax benefits it has been trying to get through in the last two budgets. We opposed those cuts then and, having examined these in detail, we oppose these cuts and the cut in the bill we have just been just talking about and to which Senator Moore was referring in her contribution just then. Many of the points she made apply to the very measure that the ALP am now going to support, it seems, through the chamber. The cuts are still crawl, they are still unfair and they still impact on those who need support the most. Before the Community Affairs Committee had even reported on the previous elements of this bill, the government and Labor had agreed to a watered-down version of the cuts which focus on couples or partnered families with children over 13. As I said, we will be opposing these cuts.

In the second reading speech in the other place, the Minister for Social Services several times mentioned supporting families. This is typical of the government. They talk about a bill which enhances support but what they are really doing is taking away support and resources from those most vulnerable people in our community, from the families who really do need this support. I cannot see have can call it supporting when they you are taking money out of the pockets of some of the most disadvantaged members of our community.

The bill as originally introduced would have been a $4.8 billion cut to supports that the government provides for the family tax benefits system. Slashing family tax benefit B would have cut support to thousands of Australian families including single parent families, grandparent carers and low-income coupled families who are going to be significantly affected by the agreement that the Labor Party and the government have come to. One of the key features in the original bill was that the government would cut family tax benefit for all carers with children over the age of 13 and then put a little bit back in for single parents and grandparent carers.

The government seems to have learnt little from the last attempt at doing this with cuts to grandparents and single parents. Even so these were supposedly less harsh, it is very clear that they were cuts to vulnerable people who are supporting children. Also they have forgotten that it still damages—and even the current measures agreed to by the government and Labor hurt other carers—grandparents, who are not the only people in this country beside children's' parents who care for children. The government seems to have forgotten that. While I am really pleased that they are finally paying attention to grandparent carers because for so long they have ignored them, they now seem to forget there are foster carers and in particular kinship carers. Grandparent carers are fewer in number than other kinship carers but we do not seem to worry about kinship carers. I will come back to that issue in a moment but I do not want anyone to think for a minute that I am not really pleased that at least grandparent carers are being acknowledged now and that there is a modicum of attention paid to them. But there are a whole lot of other carers who are supporting children in this country.

The government's decision to cut a payment as children grow older runs counter to all the evidence. In our inquiry hearing, departmental officials referred to the cost-of-children table being used to calculate child support. This was brought up by Terese Edwards from the Council for Single Mothers and Their Children, who very clearly said that on one hand the government is implying a child costs less when they are 13 because they are cutting the payments but, on the other hand, through child support, they acknowledge that children cost more once they turn 13. This reflects the fact that children cost more as they grow older. Similarly, the government's own McClure report said:

The costs of children increase markedly at key points in the lifecycle, such as starting primary school, starting secondary school—

around 12 and 13—

and entering the final two years of secondary school.

The report recommended that a new payment to cover children's' costs should be higher for older children. That is what the experts have told the government, but it does not take an expert to know. I consider myself an expert. I am a mother of a slightly older child but I was the mother of a teenager. I can testify to the fact that sometimes they go to sleep one day, but when they get up the next day you have to buy them a different sized shirt or shoes, not to mention the fact that you can never keep food in the fridge unless you have put a lock on the fridge. Their activities are more expensive and again, I am an expert on that. All up, the evidence clearly shows that children cost more once they turn 13.

The government has argued, wrongly, that part of its goal is to force people into the workforce. The National Foundation for Australian Women—who were, in fact, emailing people today—said that the proposed cuts to family tax benefit A and family tax benefit B are not likely to have any positive impact on female workforce attachment. They will hit hard in identifiable regions with high concentrations of low-income families and lack of employment opportunities—outer suburban areas of capital cities and in the regions.

The coalition has form in claiming that cuts will improve workforce participation. That was the rationale when they were moving people from the parenting payment for single people, which effectively cut their payments and forced thousands of single parents into poverty by living on Newstart. The evidence shows that an approach like this will not work, but this government appear not to care about the evidence or about what their cuts will do to families. They are continually cutting payments from the most vulnerable. But simply bullying people will not mean that they can find work; simply cutting out their supports and making it harder for them to raise children will not mean that the jobs are there for people to be able to find work. As the National Foundation for Australian Women points out, the areas where this will hit hardest are, in fact, those where people are less likely to be able to find work.

During our Senate inquiry we heard evidence from a range of groups and organisations about the impact of this bill. Down Syndrome Australia provided valuable evidence to our inquiry. They spoke about the challenge that people with an intellectual disability can face in transitioning from one school environment to another, and the risks involved in cutting supports to a family during that period. We received submissions from single parents who have already been impacted by successive cuts by both the Labor government and the Liberal government, when they were forced from parenting payment single on to Newstart. These cuts forced thousands of single parents onto Newstart and left many struggling in poverty as they were trying to look after their children. Cutting family tax benefit B to single parents would be another cut to an already vulnerable group. As Ms Terese Edwards, on behalf of the National Council for Single Mothers and their Children, told our inquiry:

Sole parents have borne the brunt of successive cuts. They are completely ill equipped to manage any further reductions.

I also want to thank Ms Edwards for highlighting how essential family payments can be to victims of domestic violence, and would like to quote what she said to the inquiry:

With regard to family and domestic violence, our survey of single mothers impacted by family and domestic violence stated that family payments are essential—not just helpful, not just good but essential—when they exhausted their savings and borrowed money.

She continued:

We also heard from families about the ongoing cost to protect themselves, the cost of continuously leaving and running, and the cost of extra medical support, counselling et cetera.

Ms Edwards highlighted very clearly the impact of the cuts to family tax benefits that the government were planning to make, and are still waiting in the wings to make. The cuts the government want to impose have real impacts, and it is incredibly important that we be aware of and recognise what these cuts mean to members of our community.

The government's proposals to cut family tax benefit A and B supplements—which they are still planning to do—will be a massive hit on support for families that rely on them. Again, we received evidence to the inquiry of the value of these supplements. No matter what the government says they were originally intended for, and I will go into the issues around IT in a minute, this money is real money to real families. This is, in fact, something that you could almost think that the government were trying to hide, and I will speak more about that in a minute. But the family tax benefit supplements are a significant amount—$726 on family tax benefit A and $354 for family tax benefit B. When you are only on a little bit of money, that is an awful lot of money, particularly when it comes in as a bulk payment. There are lots of things that you can do with that money.

The minister may have no idea about this, but this is something that makes a real difference to those who are struggling. It is something they can rely on because they know it is coming; they know they can pay those bills that come in at that time. They know they can perhaps pay for that white good that has broken down and has needed repairing for ages, or for the car repairs or the car insurance. We heard in our inquiry about the very practical needs that the supplements are meeting. As I said, some families are able to meet larger expenses like car registration or replacing products that have broken down. These can be major challenges when you are struggling as a family and, as I said, every dollar literally counts.

Another issue in the government's original proposal is that it relies on IT systems that are not yet in place. This is where, in fact, we had another discussion about—surprise, surprise—the ineffectiveness of myGov. The government argued that the Australian Taxation Office's one-touch system would allow people to estimate their income more accurately. They also said that because of that the need for the end-of-year supplements would be removed, but the IT system the government is relying on does not yet exist. After consulting with stakeholders we understand that the government has delayed its rollout because of the practical challenges of implementing the system. We have heard from multiple witnesses in our inquiry about the problems they are encountering with the Department of Human Services' computer system and the myGov site. The government may be delaying the IT system, but they wanted to start these cuts and roll them out, potentially before the IT system was actually up and running. Because of the damage these cuts would do and their impact on the most vulnerable in the community, we oppose these cuts. We opposed them in the bill that we were originally sent and we will oppose them when they come back.

Since the bill was introduced, but before our rapid Senate inquiry—and Senator Moore has highlighted that it was a very rapid Senate inquiry; it was not even a full day—and before that even had time to report, the government had amended their own bill. They negotiated with Labor for a smaller impact, to cut out some of those measures that I have just spoken about, and will cut family tax benefit B to couple families whose children are aged 13 and over.

We know from Senate estimates that there are 76,000 families that would lose family tax benefit B when this measure is legislated. There are about 25,000 families with a family income of less than $40,000. ACOSS estimates the poverty line for a couple with two children at $840 a week. In annual terms, that figure is around $43,000. This legislation will cut family tax benefit B support to thousands of families, coupled families, who live below the poverty line.

We are also concerned about kinship carers and other groups who may not receive an exemption in the way that grandparents will. Departmental officials told us that where kinship carers receive family tax benefit B but are not grandparents there will be no special consideration. They will simply lose the payment as the child turns 13. These are kinship carers who are in the same place as grandparent carers. The difference is that maybe they think grandparent carers might not go back into the workforce—and there was some discussion about that—but kinship carers will. You have to remember the nature of the care that they provide to the children who are in their care. More often than not, these children will be very damaged, coming from very traumatic circumstances, whether it is because of the outright of their death of their parents or some other reason that children have to go into care.

The inquiry into out-of-home care that the Community Affairs References Committee recently carried out showed really clearly that children are traumatised and damaged by the circumstances which lead to their care. Kinship carers go above and beyond when they are looking after these children, and here is the government saying: 'We don't care. They can have the cuts as well.' Kinship carers face a unique set of circumstances. If the government has the wit to address the issues for grandparent carers, surely they can address the issues around kinship carers. These cuts will hurt the most vulnerable in our community and this is an issue we are deeply concerned about.

I said I would touch on transparency and the impact of these cuts. As was discussed by Senator Moore earlier, the government could not tell us. When we asked for the figures, they said they could do cameos. Those cameos conveniently did not cover all family types and did not cover some of the essential impacts on families. It is unfortunate, to say the least, that the government cannot provide us with the detail. I am particularly concerned that this reflects a failure by government to uphold the standards that are essential to our democracy if it is to function effectively. It is essential in a well-functioning democracy that citizens be able to trust the government and that it be open and honest about its policies, and try not to hide information from citizens or from the institutions that are intended to hold government to account. Where a government tries to hide information, it can have a corrosive effect on the trust that is essential in our society.

I am disappointed that the government have not been fully transparent about the impact of these cuts. In a press release announcing these changes, the government included cameos that were supposed to show the impact of these cuts, but they included the impact of the childcare changes because they are linking the childcare changes to these changes. If you have a child over 13, it is very unlikely that you will be accessing child care. Again, I will speak as a parent of a child who used to be a teenager: you could not get child care for after-school care when a child was in high school.

So the government are taking from this group of parents, as Ms Edwards pointed out, and giving to another group of parents. Do not pretend that the overall benefit is going to be to everybody who will be cut off family tax benefit B because they it will not. The low-income couples are going to be losing money as a result of these cuts that are about to pass this chamber because the government and the opposition are in agreement. They are definitely going to impact on one group of parents to the benefit of another. Did anybody ask those low-income parents who are going to lose this money whether they think that this a good idea? No, you did not ask them. We asked at the Senate inquiry. Unfortunately, we did not have the time to ask individuals but we certainly asked organisations, and I have had emails about it.

People are clearly very annoyed and concerned that the most vulnerable in our community will, yet again, pay for cuts to the budget where the government are too gutless to face up to big business and properly address tax evasion which is where they could be saving money and where they could be dealing with revenue. Instead, some of the most vulnerable members of our community, those on low incomes, are the people who will bear these cuts.

So it is absolutely fallacious to put out cameos that imply that these families are going to be better off when quite clearly they are not going to be better off. And the government did not include a whole lot of other variables in those cameos. I am sure the government was able to model the impact that this would have because others have managed to do it. Others have managed to work out how much families will lose. It is all very well, sorry, for Labor to say that they want to monitor this. The government cannot even tell us the bottom line when they are actually presenting this. So how can they monitor it when they do not know or will not admit what the baseline data is in the first place? The Greens will not be supporting this bill.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

I will make a very brief contribution on the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015, as I am a very strong supporter of the need to ensure that our tax system does not reflect the costs of growing and raising a family. The principal way we do that in this country is through the family tax benefit system. However, I am also very much of the view that we have a responsibility to manage our nation's finances in a responsible way. We are far from balancing our budget at this time.

I disagree with Senator Siewert that, somehow, we can simply outsource the budget repair task to some component of the community. It is completely impractical actually that, somehow, big business, in her words, could do that. We all have to tighten our belts to do that. I am prepared, notwithstanding my general support for a supportive family tax benefit system, to support the legislation which responsibly seeks to save money for our budget, for our country, and this bill certainly does that, delivering savings of more than $4½ billion. If we did not do that, that would be a bad thing for Australian families because that would mean our children and our grandchildren would have to pay back the money that we are spending today on parents.

I principally want to say that at the heart of any family tax benefit system, and at the heart of those changes, should be what is best for children. I think the way we can generally get the best outcomes for children is to ensure that parents have the most flexibility in the choices they make for their children, because in the vast majority of cases it is the parents, not government, who are in the best position to decide what is best for their child. My wife and I, I think, are on the same team when it comes to that. I hope my family is on the same team. Sometimes I think my kids are on a different team, but it depends what game we are playing. We try to make decisions together.

One thing I am concerned about—notwithstanding my general support for this bill—is the difference in the relative costs between raising a child yourself and outsourcing at least some of that care to formal childcare or educational means. The budget underlined that relative cost difference very graphically this year when it produced cameo tables showing that a family on $100,000 a year with two children and with two people in the workforce—both parents working—pays a lower amount of tax, to the tune of $23,500, than a family on $100,000 with two children and with just a single income earner. So for two families with two kids and the same amount of household income, $100,000, the single-income family ends up taking home $79,500 and the double-income family actually ends up with $103,500 after tax with family benefits and child care. So there is a $23,500 difference a year for families with the same starting point, the same household income. I think that is blatantly unfair. It is a new car a year for the double-income family, and it has to have, of course, very distorting impacts on what decisions parents make. I think it is very important, as I said, that we try to let parents make their decisions, without socially engineering those decisions through the tax system or otherwise. It is extremely important when children are very young. That is not a view I have come to only through my personal experience; the evidence is stacked far in favour of allowing parents to look after their own children, particularly when they are young. The OECD did a report in 2007 saying:

Taking stock of the evidence … it seems that child development is negatively affected when an infant does not receive full-time personal care (breast-feeding issues aside …) for at least the first 6 to 12 months of his/her life.

The Productivity Commission in 2009, in its Paid parental leave report, said

Most of the more recent evidence tends to support the view that the use of non-parental care/child care (usually necessitated by maternal employment) when initiated within the first year of a child's life can contribute to behavioural problems and, in some contexts, delayed cognitive development …

They have a range of scientific studies showing that. So I think it is very important we promote parental care at those young ages, and that is why I have been a strong advocate for ensuring that parents have assistance if they choose to make that decision so there is not this relative cost difference between the choice to look after your own child and the choice to put them into child care.

I am proud that the National Party, as part of the coalition agreement with the new Prime Minister a matter of months ago, succeeded in obtaining an additional $1,000 for families with a child below the age of one who currently receive family tax benefit B. It certainly does not completely remove that $23,500 gap, but it is a step in the right direction, the direction of making sure that this system is based on what is best for the children, not the costs for the parents involved.

I certainly agree with Senator Siewert that sometimes the older your child gets the more they cost. I have a child of 10 and also one of one year old, and the one-year-old does not need cricket pads and does not demand computer games and all these other things that the 10-year-old does. But I also recognise that the care requirements that the one-year-old places on us and the opportunity costs of not being able to go into the workforce or do other things with our lives are much, much greater. The one-year-old cannot look after himself, and that, of course, comes at a cost to a parent who decides to stay out of the workforce to do that.

So I am very proud that the National Party have stood up for the stay-at-home mums and dads of this country. They do the most important work in this country. They might not get paid the most, but I do not define people's contribution to our nation by how much is in their pay cheque every fortnight. It is my firm view that, while my wife is staying at home looking after the kids, she does much, much more important work than I do—and it is work. When I have to stay home and look after them, it is much harder work than we do here in Canberra, and we should do as much as we can to support that decision, not to penalise it. I am proud that in this bill we move at least partly in that direction.

Deborah O'Neill (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make some remarks on the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015. I just want to take the opportunity, with this piece of legislation before the chamber this afternoon, to indicate that Australians generally understand and appreciate the contribution of those who raise a family. Certainly it does cost. It is a very important contribution to raise a healthy family that is able to participate fully in the community, and it does take money to make that happen.

One of the things that I am very concerned about with this particular government is its entire attitude to the need for families to have some security about the funding that they are going to receive and also the outrageous way in which it has attacked the family tax benefit A and B schemes since it has come to power. We cannot forget that in its first budget, that horror budget of Mr Abbott in 2014, this government, which now claims to articulate a point of fairness as part of its policymaking, started out by wanting to take $8.5 billion from family tax benefits. The reason I really want to participate in this debate is that people might be listening and might pick up different parts of the debate along its journey, and the reality is that that $8.5 billion worth of cuts would already be a reality if it were not for the passion and energy of people on this side of the chamber, with support from the crossbenches, who prevented the worst excesses of what this government wanted to do. So, when government members stand up and start to act like they want to be the friends of families, I think it is important to record in the Hansard, in this speech, that this is a government that cannot be trusted with family benefits A and B, nor can it be trusted when it starts to use the language of fairness, because fairness is simply not a part of its DNA.

Indeed, in her remarks in the other place, Shadow Minister Macklin indicated the only reason that the government were pulling back from cuts of $4.8 billion as recently as just last week. This is how she expressed it:

Today the government are admitting they cannot get these cuts through the parliament. Australian families now want to know what this Liberal government are going to do next. Are they still committed to these cuts or will they be abandoning them forever? It is time … for this Turnbull government to come clean with Australian families. Next week—

she was referring to this week—

is the last week of the parliament before Christmas. It is time for this Prime Minister to give families the certainty that they will not be faced with another round of cuts in 2016.

It is a fact that it is only continued resistance and opposition from the Labor Party that have prevented the whole of the community being incredibly negatively impacted by the values choices of who the government want to support and who they are ready to hurt.

On the other side, in the government, people are more than willing to impact negatively on families. There are large businesses, multinationals, which we know from much evidence before the Senate are avoiding any taxation at all in this country. This government chooses for big businesses to keep their taxation dollars in their corporations and was ready to slug every Australian family across the country and claw back $8.5 billion from families.

Let us talk about the new changes to child care. First of all, child care was taken away from education, its natural place, and put with social security. I can put on the record that I spoke with people in the great state of New South Wales who were subjected to a diatribe from Minister Morrison about his view of child care and the shameful way in which he completely ignored the responsibilities of childcare workers to support families and to engage in education rather than childminding, slowly driven at pushing people to jobs. Can I say that, if you live in regional or rural Australia, finding those jobs that we keep hearing about that people are being pushed towards is a pretty hard thing to do. In addition to that, where those jobs do exist in regional and rural Australia, particularly in the retail and hospitality sector, this government is going after those workers and trying to take money away from them as well, getting rid of penalty rates and imposing terrible restrictions on people in the workplace.

Can I make a couple of remarks also around the argument that is being put by this government in its various iterations, with regard to this particular policy area, that it can only deliver childcare changes if it makes these sorts of cuts. That is a modesty skirt, really, for a shameful attack on families. Labor rejects this entirely. Senator Sinodinos actually said in budget estimates that there is only one reason that this government has decided to link child care with cuts to family tax benefits, and that is for political purposes. Those are his words: 'They're linked for political purposes.' This is what we see from this government all the time: an attempt to pull the wool over the eyes of the Australian people and to damage families, to hurt families, as much as it possibly can while propping up the other end of town.

In terms of child care, let us just get on the record a couple of points that the shadow minister for education, Kate Ellis MP, made today. One is that one in four families stands to be worse off under the government's childcare changes. So here they are saying, 'We're making these changes because we're going to really improve child care,' and the reality is that the impact is that one in four is going to be worse off under the government's childcare changes. I think the shadow minister was right in indicating that a methodology of the government is that they choose sound bites over substance every single day, and they are simply not putting the facts on the table. I was listening to the contribution of Senator Moore, who pointed to some very significant evidence that the committee had acquired and also the importance of the information that was in the Bills Digest about the way in which the piece of legislation that is before us needs to be given very close scrutiny moving forward.

I want to close my remarks by indicating that, if the beneficiaries of these cuts are to be childcare providers and the families who need to seek child care, we have many, many more questions that need answering before we can trust this government. After 21 months of waiting, three different ministers and the rising out-of-pocket fees that have happened on this government's watch, parents still have no idea about how that change is going to impact them. The modelling on that, which the government is not releasing, is akin to the kind of deceptive behaviour, the hiding of information, that so characterises this government at every turn.

In closing, I would like to just indicate that Labor will support this particular piece of legislation. But we will continue to fight for fairness for families and to prevent the worst excesses of a government that pretended to be the best friend of families but continues through its legislation at every turn to demonise families and to make it harder for families to raise children healthily and well. In doing that, it is wasteful in the way that it is distributing the money across the economy and across our community needs.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Family payments are a complicated policy area. It is therefore unsurprising that the changes proposed by the government in the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 have been subject to appropriately intense scrutiny in the media and most particularly by those who would be most deeply affected by them. This particular social services legislation amendment bill contains three schedules. I note that the government has amendments to this bill, which I will address shortly, but for the sake of clarity I will spend a short time going through each of the three schedules.

Schedule 1 of the bill seeks to increase the family tax benefit A fortnightly rate by $10.08 for each family-tax-benefit child aged up to 19. That amounts to an additional $262.80 per child per year for families with children eligible for this payment. It also modifies the methods used to calculate the maximum rates of youth allowance and disability support pension in order to ensure that there is no financial incentive for an FTB child—for want of a better word—to leave full-time secondary study to claim youth allowance. These changes will take effect from 1 July 2018, two years later than the cutbacks proposed by this bill.

Schedule 2 of this bill relates to payment rates for family tax benefit part B. It is also the schedule the government's own amendments relate to. In its original form, schedule 2 provided that from July 2016 a new tax structure will apply to family tax benefit part B. It also makes amendments to the rules relating to part B payments. The explanatory memorandum provides the following summary of the changes to family tax benefit part B proposed by the bill. It will increase the standard FTB B rate by $1,000.10 per year for families with a youngest child aged under one, and introduce a reduced rate of $1,000.10 per year for single-parent families with a youngest child aged 13 to 16. The current FTB part B rate for children in this age range is $2,737.50, so there is a significant difference. Schedule 2 of the bill will also extend the $1,000.10 rate to couple grandparents with an FTB child who is aged between 13 and 16. Finally, schedule 2 will remove family tax benefit part B for couple families other than grandparents when their youngest child is aged 13 or over.

Schedule 3 of the bill relates to the family tax benefit part A and part B supplements. It proposes to reduce the part A supplement from $602.25 a year from 1 July 2016, and $302.95 a year from 1 July 2017. The part A supplement would then be withdrawn completely from 1 July 2018. Schedule 3 also proposes to phase out the family tax benefit part B supplement. It will do this by reducing it to $302.95 a year from 1 July 2016 and to $153.30 a year from 1 July 2017. The part B supplement would then be withdrawn completely from 1 July 2018.

I have set that out, and it is my 'readers digest' version of the bill, because there is a lot of confusion about how these benefits interact and how they will impact on others. I have been getting many calls from constituents in relation to this. The amendments will remove schedules 1 and 3 from the bill. These schedules relate to changes to the family tax benefit part A rates and the phase-out of the family tax benefit part A and B supplements. The government is also amending schedule 2 of the bill to remove the amendments that would increase the standard rate of FTB part B to $1,000.10 for families with a youngest child aged under one. This amendment also removes the changes that would see single-parent families with a youngest child aged between 13 and 16 have their FTB part B payment reduced from $2,737.50 to $1,000.10.

As a result, the bill before us today only deals with the proposal to remove family tax benefit part B for couple families other than grandparents with a youngest child aged 13 or over. The withdrawal of this payment will occur on 1 July 2016. The supplementary explanatory memorandum sets out what that will mean. It also states that the expected savings to government from the measures in this amended bill will be $525.5 million over the forward estimates. The government has amended this bill significantly, and that is welcome. I think that what the government put up last year in the budget was draconian. It was unfair and it would have caused an enormous amount of damage to families. These changes do involve some cuts, and that does concern me. It is, however, positive that approximately 3,900 grandparent carers will continue to access FTB part B when the youngest child in their care is between 13 and 18 years old, and it will help to ease the enormous financial strain facing grandparent carers.

In South Australia, Grandparents for Grandchildren SA is a wonderful community organisation that John and Denise Langton established a number of years ago. I remember it well because I worked with them for the establishment of the organisation when I was a South Australian member of parliament. They have explained to me the additional burdens that grandparents have in relation to this. Without the help of people like John and Denise and many others, thousands of children would be worse off. And I think it is a good amendment in relation to this.

In relation to the bill before us, it is my understanding that the opposition supports this bill in its amended form, and therefore it will pass. I support the measures in this bill as amended. I reserve my position in relation to the measures that have been omitted by the amendment, including the proposed changes to FTB B rates for single-parent families as well as the phase-out of the FTB A and FTB B supplements. I do welcome the government shifting its position from seeking to cut benefits at the age of six, moving it up to 13. I call that the 'Macaulay Culkin' amendment because I feel that it would have meant many kids would have been left home alone because of the severe financial pressures it would have placed on those families. At least that is a small mercy in relation to the scheme of this bill.

So I support the bill and I am looking forward to what the government's position will be in relation to other aspects of this, because I do not want to see single parents, particularly, in effect have to subsidise the government's childcare package. So I think that there is still much work to be done, but this is at least a significant improvement on what was proposed last year.

Concetta Fierravanti-Wells (NSW, Liberal Party, Assistant Minister for Multicultural Affairs) Share this | Link to this | Hansard source

The Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill 2015 will introduce a package of reforms that will assist in supporting families while encouraging parents' participation in the workforce.

Following amendments made in the House, the changes in the bill focus on structural reform of the welfare system by targeting family tax benefit part B payments, which are designed to support families on single incomes, to better balance the work and caring responsibilities of families with the least capacity to increase workforce participation. The bill will remove eligibility to FTB part B for couple families other than grandparents with a youngest child aged 13 or over. This limitation is consistent with this government's broader participation agenda and supports the policy imperative that families be encouraged to enter or re-enter the workforce when their children begin secondary school and become more independent.

As noted, the remainder of the savings proposals will be reintroduced as part of a new bill. After constructive consultations with the Senate crossbench and senators, the government will ensure that single parents aged over 60 years and grandparent and great-grandparent carers with a youngest child aged 13 to 18 years will be eligible to receive FTB B at the standard rate. However, single-parent families and grandparents with a youngest child aged 13 to 18 years will continue to be eligible for FTB part B. This acknowledges the role of grandparent carers, who are less likely to be in the workforce, and helps with the cost of raising their grandchildren. The bill similarly recognises the difficulties encountered by single parents in transitioning into work and so provides additional, appropriate assistance while they prepare to re-enter the workforce.

The level of financial support provided by FTB part B is higher for families with the youngest child aged four and under, in recognition of the higher need for parental provision of direct care of children, and reduces when the youngest child turns five, moves into compulsory education and gives primary carers greater capacity to move into the workforce or increase their workforce participation. Where a youngest child has reached the age of 13, the government considers it appropriate to expect primary carers to engage in the workforce or increase their workforce participation.

While this measure will reduce the assistance to couple families once their youngest child turns 13, they will retain eligibility for income support or social security payments for themselves and assistance for dependant children through FTB part A or youth income support payments.

In summary, this package supports better targeting of FTB part B to families with one main income that have more limited capacity to enter the workforce or increase workforce participation. The reform demonstrates the government's commitment to families by supporting family choice to spend more time with their children when they are very young if they wish to do so and recognising that some of the most vulnerable families, such as grandparent carers and single-parent families, have limited capacity to increase workforce participation as their children age. They should receive support during the child's adolescent years. At the same time, these reforms will improve the sustainability of the family payments system by ensuring that we can achieve three important goals: (1) continue to assist families in raising their children over the long term, (2) fund the childcare reforms designed to enable and encourage greater workforce participation and (3) better target support to those who need it move. The bill also makes it clear that great-grandparent couple families as well as grandparent couple families will not be affected by the initiative introduced in this bill.

I conclude my comments by noting comments made by Minister Porter today in a media release. He states:

When we first announced the FTB reforms, we said we were willing to listen to sensible observations. I thank the senators for their engagement and we will continue to talk to them to work towards securing the passage of this important bill.

Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

The question is that the bill be now read a second time.