Scott Morrison (Cook, Liberal Party) Share this | Hansard source

The Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 fails to understand the purpose of the measures that it seeks to change. I think that is the fundamental point in this debate. The member for Warringah has made some excellent points about the deceit that has been put forward by the government not only on this bill but on a raft of bills that we have seen paraded through this place, particularly over the last few weeks, where they said one thing to the Australian people before the election and then have come into this place and, as the member for Kingsford Smith said they would, changed it all. There has not been a truer word spoken by anyone in the government—other than, I suppose, by the last honest man in the Rudd government: the member for Batman—than when the member for Kingsford Smith said prior to the election in a conversation with Steve Price in the chairman’s lounge in Melbourne, ‘We’ll change it all.’ That is what we are seeing here on a daily basis. We saw it in this place yesterday, we are seeing it in this place today, and I suspect we will continue to see it.

I know that the member for Maribyrnong made reference to a Newspoll poll that has appeared. I am sure he would have read Newspoll’s poll this week because I know the member has a very keen interest in the performance of the government. I suspect we may see him moving forward on these benches very soon. With performances like his in the House today, I am sure it will be only a matter of time before we see him move forward just that little bit further from where he currently sits to the front bench.

The point I am really trying to make here today is that these measures that were designed by the previous government had purposes. The government in their rush to class envy, to symbolism and to punish those whom they simply do not agree with have decided to trample over the merits of those measures. The bill proposes changes to family tax benefit part B, the baby bonus, as well as the seniors health card—and there were other measures announced in the 2008 budget. It is proposed that an income test be applied to the baby bonus from 1 January 2009 onwards to make provision for the payment of the baby bonus by instalment rather than by lump sum. Payments will generally be made to recipients by way of 13 fortnightly instalments. We should remember that these measures were also introduced by the previous government but were only applied to situations where the government had a proven and demonstrated concern that the management of a lump sum payment by an individual might be to the detriment of a child or a family.

Those opposite have taken that measure, which was designed to protect people in the most vulnerable circumstances, and writ it large across the entire Australian population. To every single family who will have a child from 1 January 2009 they have said: ‘We do not trust you with the money. We do not think you are going to spend this money correctly. We think you will just go out there and blow it all.’ They think they are going to blow it all like the government are doing, with $30 billion in expenditure in their first budget and $19 billion of new revenue measures and taxes. They are saying to new mums and dads: ‘You’re not up to this task. This is beyond you, so we are going to give it to you in little bits and pieces.’ As someone who in the last year has done things like buy a pram and other things for a new baby, I know that you get these bills in large chunks. What are we going to do? Are we going to sit on these bills for weeks and weeks as the baby bonus dribbles into the bank account?

This bonus was intended as a fixed payment to address the financial needs of families in those crucial first few months. They are difficult months for families. They are learning many new things and coming to terms with major life changes. The last thing they want to be worried about in that period of time is the dribbling in of the baby bonus cheque. The fact that it has been paid gives some comfort, reassurance and an ability to focus on the most important thing when a family has just had a child—and that is the child. That is where all of the focus should be. I am sure all members in this place would agree with that statement. But this measure highlights the risks and uncertainties and it adds a little bit more pressure to a situation that, frankly, just does not need it.

There are also changes that substitute the current indexation arrangements applying to the payment with a new annual indexation scheme. There are changes to the eligibility conditions for the baby bonus for adopted children. These amendments increase the age limit for baby bonus eligibility from two to 16 years where a child is adopted. The baby bonus one-off payment is currently made on the adoption of a child under the age of two, and the payment is generally made, as I said before, as a lump sum.

To understand the objectives behind the baby bonus payment, I think it is important to understand a bit of the background. Before the government was elected, the former coalition government put in place many initiatives that provided practical financial assistance to families. The family tax initiative started in January 1997 and gave tax benefits to families with children and additional benefits to single-income families. Also, from July 2000, families enjoyed increased tax-free thresholds, providing a further $2 billion of annual benefits to families. An integral part of these changes was the simplification of the family benefits structure, giving families added incentive to work by easing the income test for the family tax benefit and lowering income taxes.

The baby bonus was another family orientated initiative that was introduced by the former coalition government, in 2002. The payment recognised the cost involved with the birth of a first child, including the loss of the second household income. The basic principle was that a couple that has a child goes from two incomes down to one at the same time as they have the additional costs associated with a new baby. The underlying principle behind the baby bonus as first constructed was that it enabled a mother to effectively claim back the tax she paid on her income for the previous five years in the year prior to the birth of a child. The maximum amount that could be claimed back was initially $2,500, and this equated to the tax payable on an income of $52,666. At the time, it was estimated that about 93 per cent of partnered women without children earned that amount or less, while those women with a higher base salary could not claim more than $2,500.

The baby bonus also supported mothers on low incomes and those not in the workforce. The minimum annual payment of $500 was available to those with a taxable income of $25,000 or less. The baby bonus has provided assistance to hundreds and thousands of families each year and was only possible because of the former coalition government’s economic credentials.

It has been galling to sit in this place and listen to the Treasurer, the Prime Minister and the Minister for Finance and Deregulation talk about their surplus—the surplus that they created. It is an absolute nonsense. When the coalition came to power in 1996 there was no surplus. People did not talk about surpluses. Surpluses were not the norm in fiscal policy in this country. The current government, elected in November, inherited the best set of books they could possibly hope for. To come in here and seek to undermine that for political purposes betrays the political envy of this government and the fact that they will literally do anything and say anything in order to advance their cause.

Currently the baby bonus is $4,133 for each eligible child and the payment is tax free. There is no income or means test and it is not included as income for social security or other family assistance purposes. It is mostly paid as a lump sum in recognition of the large expenses incurred immediately before and after the birth of a child. The baby bonus was never intended to operate as a form of welfare—and this is an important point. It was a payment from the Australian government to help families, no matter what their income, with the costs associated with caring for a new baby.

At the end of the day these measures were all about fertility. The means test is a nonsense on that basis. It is about fertility. It is not about the obsession that those on that side of the House have about wealth redistribution. That is what they are on about—wealth redistribution. They have sought to apply that philosophy to a measure which it has nothing to do with. If you are trying to boost fertility, if you are trying to get more children born in your country, it does not matter under what roof that child is born—whether the child is born to a low-income family, to a high-income family, to a median-income family, to a family with an overseas born background, to a family with a non-overseas-born background, to a family who is working or to a family who is not working. It does not matter. The point of the policy is to increase the fertility rate to ensure that there are more babies born. So the application of a means test is an absolute violation of that objective, and those opposite should really think hard about these measures because they clearly do not understand the point behind why these measures were first introduced.

Why is fertility so important? The former government understood this and in particular the former Treasurer, the member for Higgins, understood this point. He was the first to confront our demography challenge with the Intergenerational report initiative—the first in 2002 and then again in 2007 and planned for every five years thereafter. It is a great comfort to those on this side of the House that in the shadow Treasurer we also have someone who understands the challenge of demography. In his maiden speech in this place, as he sat over there, the member for Wentworth as he was then—the shadow Treasurer, as he is now—talked about demography being destiny. In that speech he made numerous remarks about the importance of us facing up to these challenges of demography. This is what the former Treasurer, the member for Higgins, was seeking to do. This is what he has been successful in doing with the policies he brought forward.

The Intergenerational report had some staggering statistics and some staggering realities for us to confront. Between 2000 and 2047, our population aged over 65 will increase from 2.8 million, or 13.4 per cent of our population, to 7.2 million, or 25.3 per cent. That is an increase of more than 250 per cent. This will more than halve the ratio of our working age to retirement age population, which will go from just over five to around 2.4. The cost of meeting these changes, which has been included in estimates provided at various times, is something like $50 billion a year in additional taxes to put that bill at a state and federal level.

The primary cause for these changes, in terms of the movement and statistics and the changes of these ratios of workforce to aged population, is fertility rates. That is understood. In the early 1960s the fertility rate in this country was 3.2 births for every woman. In 2001-02 it had fallen to 1.7. That is still higher than other developed countries, where it is about 1.2 and 1.4 births. But it still represents a failure of our own population to replace itself. The key impediment to families having more children, as identified in the various studies that took place at the time, was the prohibitive cost. The point here is that, as a nation, we need strategies to address our demographic challenges.

The former government was prepared to take on those challenges and the baby bonus was but one measure, non-means-tested, which went a long way to moving those statistics in the right direction. The ABS shows that there was an increase in the total number of births in the country following the baby bonus. In 2001-02, the total number of births in the country was 247,000. By 2006-07 it had risen to 273,000. During the 2006 calendar year there were 266,000 births registered in Australia. This was 6,200 more than the previous year. This was the second highest number of births registered in Australia, with more births registered only in 1971.

Looking at fertility rates—normally expressed, as we said before, in births per woman—we have seen that fertility rate increase since the baby bonus from 1.73 to 1.853. The reversal of Australia’s declining fertility rate, as a result of the non-means-tested measures introduced by the former government, is working. I do not know what it is with those opposite, who seem to think that they have to find every policy that the previous government put in place and change them all, as the member for Kingsford Smith said, and to break them. We have a policy here that is working. It is increasing our fertility rate, and this government seems intent on destroying it. Understanding its commitment to public policy in this country is beyond me when it is being so irresponsible as to undermine this measure at its core.

I am waiting to hear about the government’s plan on fertility. I am waiting to hear the Prime Minister talk of the challenges. I suspect that, if he does do anything, we will only hear him talk, but at least it would be an acknowledgement of the demography challenge our country faces if he would start facing up to this issue. I am waiting to see the fertility policy. This is a government that want to engage in gender equity debates on maternity leave, they want to engage in income redistribution debates on baby bonuses and they want to engage in class warfare debates on workplace relations; but all of these issues are actually about fertility. Changing workplace relations, changing things to do with maternity leave, changing things to do with income benefits and changing things to do with baby bonuses are all about encouraging greater fertility in this country. It is time that those opposite set aside their ideological biases on this issue and actually faced up to and focused on the key challenge we as a country face, which relates to the issue of fertility.

In closing, I make a few other comments about some other matters that relate to this bill and how they fall particularly on those in my home town of Sydney. As the member for Warringah said, we need to understand the impact of this measure, particularly in relation to the $150,000 rich tag—the Rudd rich tag—which has been highlighted, on families. I am quoting here from the Daily Telegraph of 15 May:

Families who wanted to live closer to the city and buy a mid-priced home costing $551,000 would not be able to do so on an income of $150,000.

The article also says:

A THIRD of families potentially hit by the Federal Government’s new $150,000 means test on family welfare benefits live in Sydney.

…            …            …

There are 53,000 families with dependent children on incomes over $150,000 living in Sydney who could be hit by the changes.

What I see on the frontbench opposite is not a great understanding of the cost of living as it applies to families and people living in Sydney. The key decision makers in this government do not come from Sydney—they are from Brisbane, Melbourne and other places—and what they do not understand is that servicing a mortgage in Sydney and taking on second jobs, as families do, is putting families over that $150,000. That is the new Rudd rich, as the member for Warringah says. They are the people the Prime Minister thinks should be penalised—people who are going out and making an effort to earn more to pay off that mortgage and provide for their future. They are being cast aside as the wealthy, the rich and those who do not deserve encouragement. It is a pretty sad message to send to Sydney people and to Sydney families if those in this government are not going to face up to the challenges faced by those families.

I will also touch very briefly on the family tax benefit changes. The family tax benefit provides recognition for families where one partner stays home to look after a child. That was a choice made by families that the former government, and particularly the former Prime Minister, said they were committed to, and the former Prime Minister backed that up. The changes to the family tax benefit flagged in this bill—and I am sure this will see further changes down the track—really speak against those decisions taken by families.

I conclude on the point that I want to see a fertility policy that supports the choices of families. I want to see a fertility policy that supports the choices of families to have parents who decide to stay home and look after their children, not just the choices of those who go out to work.

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