Michael Johnson (Ryan, Liberal Party) Share this | Hansard source

I am pleased to speak in the parliament today on the Family Assistance, Social Security and Veterans’ Affairs Legislation Amendment (2005 Budget and Other Measures) Bill 2006. I am very happy to support it very strongly in my capacity as the elected representative of the people of Ryan. As I say in this parliament whenever I have the opportunity to speak here, I have the great privilege of representing the people of Ryan. Having just heard the member for Sydney, the shadow minister for child care, speak on this bill, one would think that there are all kinds of things wrong with the national economy and the Howard government’s management and stewardship of it, with the Howard government not having the full confidence of the Australian people. I very strongly repudiate the shadow minister’s presentation just a few moments ago in which she certainly presented a picture of doom and gloom across the Australian economy and in the areas that she touched upon.

This economy is growing very strongly. We have tremendous figures that testify to the great policies that the Howard government has initiated. I think it is important that from time to time members of the government remind the Australian people of why in fact they have confidence in us and have voted for us on successive occasions and given us four election victories. The best thing that any government can do for its people is to provide a very strong economy, to provide strong job growth and real wages growth, because that is when families benefit. None of the stakeholders in the Australian economy—families and those sectors of the Australian economy including low socioeconomic Australians, veterans and those in need of the help of the government—benefits if the Australian economy is in reverse or struggling to compete internationally. We live within an international economy. We live in a globalised world. We have to have a strong economy that supports measures which go to help the Australian people. I want to make it very clear that the underlying principle of the government’s policies is to have a strong economy, one where jobs continue to be provided. Indeed, we have a situation where the economy is so strong and vibrant that employers are struggling to find people with skills and talent to fill vacancies.

The assistance given to middle- and low-income families by this government is certainly one of its strongest achievements. In 1996, when the Prime Minister as the then Leader of the Opposition was campaigning against the Keating government, he talked about the importance of families and about how important it would be for a coalition government in office to look after the families of Australia. I want to quote the Prime Minister when he talked about the weakness of the then Keating government and about how ‘the Keating government was forgetting Australian families because not only was the economy in tatters but the employment rate was very low and the taxation system did not recognise the cost to parents of raising their children’. I think it is very important that this is not forgotten.

Certainly, under the Keating government, there was scant relief for Australian families. I think the support they received was tied in with Mr Keating’s phrase ‘the recession we had to have’. How can that be family friendly? How can having an economy in recession, in a mess, with high unemployment and mortgage rates, be family friendly? When this government took office, its policies were focused very much on correcting the economy and that meant that the families of Australia, young people of Australia and business people of Australia could all benefit. That in turn allowed government revenue to expand, which in turn provided the social services that Australians were in need of and entitled to.

It is important enough for me to stress this very strongly. We all know—and members of the government continue to speak about it—of the country’s massive government debt. When we came to office, there was a $96 billion debt. Had government policy not been targeted at correcting that, the families of Australia would now be crippled to the back teeth by paying off the enormous debt principal, as well as the interest on that debt. The unemployment rate was almost 11 per cent—almost one million fellow Australians could not get a job. That is certainly not family-friendly policy or Australia-friendly policy.

With this bill, the Howard government not only have ensured that Australian parents have a greater opportunity for employment and lower mortgage repayments and real wage increases of 16-plus per cent but also are taking a very strong initiative to ensure that Australian families are compensated for the extra costs associated with raising a family—an initiative only made possible by prudent economic management, which delivers the budget surpluses that we have.

Ryan families will be interested in this bill because they are very much affected and concerned about how their government manages the economy in their interests and in the interests of their fellow Australians. The introduction of the family tax benefit on 1 July 2000 provided real assistance for families. Over 2.1 million families with four million children are now receiving on average $7,500 a year in family tax benefit to assist with the cost of raising their children. I want to make a comparison with the situation in 1996 when just 1.8 million families were receiving family assistance under the Keating government. The base rate of family assistance is now almost three times higher than it was under Labor: over $1,700 per child compared with less than $600 in the Keating years.

Schedule 1 of the amendment bill raises the family tax benefit A income test-free area threshold. This initiative is part of the Howard government’s 2005-06 budget commitment. It is also a key support brace for the 2005-06 budget Welfare to Work reforms. Currently, the family tax benefit A, which is a supplement payment for families with dependent children, has an income tax free area of up to $33,361 per annum. Once this amount of annual income per family is reached, the maximum family tax benefit A payment level is reduced. The income test-free area is currently linked to the consumer price index and is annually indexed. The amending legislation before the House will therefore raise the family tax benefit income test-free area from $33,361 to $37,500 per annum, to take effect from 1 July 2006. Low- and middle-income families will see a significant financial benefit from this amending legislation. Around 400,000 families will get an average $24 a fortnight boost to their family tax benefit part A payments.

The bill will also complement the government’s Welfare to Work reforms by addressing the barriers faced by families in attempting to increase their earnings from employment, while at the same time seeing decreases in government assistance. The Howard government recognises that, if it is asking family tax benefit recipients to work more, to become more self-supportive, the financial disincentives to earning more from employment should be removed as far as is possible. We want to have in place incentives that encourage as many recipients of government support as possible to go into the workforce.

The rise in the threshold also reflects the fact that, while the rate and income test limits for family tax benefit A are indexed once a year to the CPI, the average weekly earnings have been increasing at a greater rate over the period due to the strengths of the economy. So fewer people are entitled to the maximum rate because it follows that their incomes have increased.

The threshold increase represents an investment in Australian families by the government to the tune of $788-plus million over four years—in anyone’s language, no small amount of money. This increase in the threshold builds on nearly $17 billion paid in family assistance in 2003-04 and on the $22 billion in extra assistance allocated by the government in the 2004-05 budget, including an ongoing $600 per child increase in the rate of family tax benefit part A and an additional one-off $600 per child payment, as a result of the economy being very robust and very strong.

If I recollect, the shadow Treasurer said this $600 was not real money. Australians who would be receiving this were told by the current shadow Treasurer that it was just fake money, paper money, artificial money—not real money. We should certainly remind our constituents that $600 support from the government is indeed real money.

Currently recipients of family tax benefits and child-care benefits are given the option to receive their payments either in fortnightly instalments or in a lump sum at the end of the year. The amount of benefits a recipient receives is calculated according to the amount of taxable income they receive in a year. The majority of family tax benefit recipients—some 95 per cent—take their payments fortnightly during the year. That adds up to over 1.8 million Australian families receiving their benefits fortnightly.

For the purposes of determining the amount of family tax benefit a recipient receives each fortnight, the claimant is required to make an estimate of their income for the coming year. At present, estimates of income are only provided by the claimants, are often not updated from year to year and are inherently conservative because a lower estimate can of course realise a higher rate of family tax benefit or child-care benefit. Schedule 2 of the amendment bill will empower the secretary to apply an estimate based on the previous year’s actual income indexed to average weekly earnings. At an investment of $18.6 million over four years, this will see the Australian taxpayer save $115.2 million in overpayments over four years. This also means that less money will be expended in following up and compelling the payment of debt. It is important for us to make it clear that the government is very keen to ensure that those who are entitled to payments receive payments and that those who are not entitled to payments also account for that. This is taxpayers’ money, after all, and I think overpayments are most regrettable when they occur.

This amendment bill also makes a commitment to the government’s very successful child-care policy. I know that there has been a lot of talk in recent months about the government’s position on child care. Colleagues in the parliament have been vociferous on this issue and I think it is an important one. The Howard government has made its child-care policy a central element of its economic strategy, recognising that by providing flexible, high-quality and affordable child care parents are better able to balance their work and family responsibilities. In fact, the Howard government has more than doubled funding for child care since it came to office in 1996, investing over $12 billion in the last 10 years, compared to the $5 billion Labor invested during the 13 years it was in government. The Howard government has delivered a record number of child-care places—some 600,000 places in 2005-06. In 1996 there were just over 300,000 places available to Australians.

The Howard government has also recognised the increasing costs of child care in Australia. Through the introduction of the child-care benefit scheme, families are now receiving $2,000 a year on average in assistance. Since its introduction in 2000, the child-care benefit has improved the affordability of child care for low- and medium-income families to the point where it is now assisting over 690,000 families a year. Thanks to the child-care benefit, an extra 130,000 children are now accessing child care. In total, some 778,300 children today are accessing child care, which represents an increase of 21 per cent since 2000.

Of course, in government expenditure there is no limit to how much you can spend in this area, and the critical point for the government is that it must, as much as possible, get the balance right between fulfilling an important obligation to the Australian people and being responsible in its allocation and distribution of taxpayers’ money. I think at the moment it is getting the balance about right. I am certainly one member of the government party who would encourage the government to be generous in this area. It affects families very directly, and whatever the budget in May can produce that will support increased child care for our fellow Australians, where it is appropriate, I would certainly welcome it very warmly. We all know that the new 30 per cent child-care tax rebate provides eligible families extra assistance of up to $4,000 a year for out-of-pocket child-care expenses. That is a very important policy, and maybe that can be tinkered with a little bit to make it more parent friendly, but as a general position I certainly support that 30 per cent child-care tax rebate.

Schedules 4 and 5 of the amendment bill will alter the child-care benefit. Schedule 4 will make it easier to recover debts relating to the overpayment of the child-care benefit by allowing the government to tap into reconciliation top-up payments and tax refunds to clear family assistance debts. This gives the government the same power in relation to debt recovery for overpayment of the child-care benefit that it already holds for the recovery of debt in relation to the overpayment of the family tax benefit. For an investment of only $4.7 million in administration costs over four years, it is estimated that this amendment will reduce debt to the tune of $47.1 million over four years.

Once again, the Howard government is ensuring that, despite massive expenditure on programs such as the child-care benefit scheme, every cent of taxpayers’ money is maximised. We all know at the end of the day that this is the money of the people of Australia, and the government of the day—of whichever political party—has an abiding interest in and responsibility for being conscientious and diligent in its allocation of resources. I think it is one of the primary reasons why the Keating government was thrown out decisively by the Australian people. The people came to realise that, quite frankly, the Keating government had lost the plot in its capacity to responsibly manage the national economy. Again I make the point, which I think is really a no-brainer: unless your budget is strong, unless you have a strong, growing economy and unless the government is able to be in receipt of revenues, there is no money to provide for child-care places, there is no money to provide for hospital services and there is no money to provide for all the important services which Australians, who are entitled to these benefits, are able to use.

This bill will also make important changes to the rules for the backdating of the carers allowance. The carers allowance is provided to a person who is caring for a child or an adult at home. The supplementary payment is tax free and income and asset test free. There are two types of carers payment: CA (caring for a child) and CA (caring for an adult). Currently the commencement date for payment of the carers allowance for a child can be backdated up to 52 weeks prior to a claim. The commencement date for payment of the carers allowance for caring for an adult can likewise be backdated, but only for up to 26 weeks.

The Howard government have a very strong commitment to the carers of Australia. I know of many residents of the Ryan electorate who are caring for adults and for children. I praise them very generously for their fortitude and generosity and for the character that they show in performing this difficult task. I commend the bill very strongly. It is another example of where the Howard government are in the business of providing legislation to the parliament that is in the national interest, and we will continue to do so. If we were to cease doing that, we would lose the confidence of the Australian people. I know that both parties in the coalition govern with the criterion of the national interest at heart. (Time expired)

See this speech in context