Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Hansard source

It is my duty now to provide some summing up to the contributions in the second reading debate that have been offered by members opposite and by members on this side of the House. As was noted by the last speaker, these are very modest savings measures in the context of the difficult problems that we face. I understand that they are modest savings measures that will be supported by the opposition and I do thank them for that support, although I note that this is one of the very few times in which support for the government's savings measures has been offered. Of course we will accept that support and thank members opposite for it.

As was noted by the previous speaker, the combined savings that are represented by the two measures in the Social Services Legislation Amendment (Family Measures) Bill 2015 are, in context, modest. They achieve combined savings of around $219.4 million over the forward estimates. Of course that is not an insubstantial amount of money, but it is in the context in which it sits that we might describe those savings as modest. To place those savings in context and to place the agreement from members opposite to these two measures in context, we have a situation, as has been noted by many speakers on this side of the House, where in excess of one-third of the Commonwealth budget is represented in the social services portfolio. It represents line items of expenditure that are growing faster than any other line items of expenditure in the entire Commonwealth budget, in a situation where we inherited $190-odd billion worth of cumulative deficits and projected deficits. As Mr Keating has recently said, there is a necessity to restrain growth in expenditure; otherwise, the nation will simply not be able to return to surplus. A failure to restrain expenditure growth in the largest single part of the Commonwealth budget—and, in an unhappy coincidence, the part of the Commonwealth budget which is growing the fastest—means that there is no ability to return to surplus.

Those $219.4 million sit in the context of other savings that have been either proposed by the government and which members opposite are now blocking, or that have been passed but which members opposite say we must restore from banked savings which have not yet been introduced but which members opposite say they will not support, and indeed savings that have been introduced since the 2015-16 budget that members opposite have said they would not support.

And those totals are very large. The savings and revenue measures that have been proposed by the government that are presently being blocked by members opposite total $5.24 billion. Spending decisions that we have made—decisions to restrain expenditure growth that we have made and that have achieved parliamentary passage, which members opposite say they would restore from banked savings, total $30.26 billion. The 2015-16 budget savings measures that the government has announced that members opposite say they will not support total $1.1 billion. Savings since the 2015-16 budget that Labor has said it will not support total $5.57 billion. Added to that list is a $1.22 billion amount representing, astonishingly, savings and revenue measures that were proposed by members opposite when they were in government which they themselves are now blocking.

So, whilst I am thankful to members opposite for their agreement to these two measures, it is not a scenario of enormous glee for the government because, really, should there be much if any debate about these two measures? In the circumstances where it is simply not conceivable that you can return to surplus unless you restrain expenditure growth in the social services portfolio, should there really be any argument about those two measures at all?

Perhaps that question is answered by describing the two measures. The first is with respect to family tax benefit and a range of other additional payments that rely on FTB eligibility for a period of up to six weeks when outside Australia. So the present situation is that family tax benefit part A recipients who are overseas are able to receive their usual rate of payments for six weeks, and then the base rate for a further 50 weeks. So, in effect, a family can leave Australia and receive payments at the usual rate—and then down to a base rate, but payments nonetheless—for a period of 56 weeks whilst outside Australia. The base rate is a not insubstantial amount of money and, obviously, cumulatively, this is where the savings of $42.1 million occur over the forward estimates.

The measure itself can be seen not merely as fair in the context but, I think, as fair in absolute terms—particularly, not just in the context of the budget scenario that we face and the difficult path back to surplus, but also in terms of looking at the portability rules that apply to other payments inside the welfare system. Indeed, this move will align the portability rules for family tax benefit part A with those for family tax benefit part B and, indeed, most other income support payments. So it is consistent with an essential principle: that the primary purpose for family assistance payments is to assist Australian families with the cost of raising children in Australia. Strengthening the family tax benefit residence requirements will better ensure family assistance payments can be targeted to those families who have the strongest residence connection to Australia.

At the same time, the government acknowledges that of course families have business to attend to from time to time overseas. That may involve going on holidays; it may involve visiting family members. But the question here is: what is the appropriate amount of time for which that visiting of a family member can be done or that holiday can be taken overseas, and benefits can still be collected through the family tax benefits system? What we say in this bill is that recipients who stay overseas for more than six weeks will have their payment stopped. Family tax benefit recipients who return to Australia within 13 weeks of their payment being stopped may have their payment restored without the need for a new claim. However, of course, family tax benefit recipients will not be back-paid for any period of overseas travel in excess of the six-week portability period.

Importantly, this change does not affect individuals who are members of the Australian Defence Force or Australian Federal Police deployed overseas. It will not affect individuals who are assisted by the Medical Treatment Overseas Program or those unable to return to Australia for a specified reason, such as a serious accident or a natural disaster. Indeed, the secretary of the Department of Social Services will retain discretion to increase the six-week time frame for up to three years.

If we are considering these measures on the basis of fairness and equity—which should be, reasonably, at the heart of our social security system—we are indeed providing for that six-week time frame to be increased at the discretion of the secretary-general, in extremely unusual cases. But the measure itself is completely justifiable. The notion that we are paying the base rate of family tax benefit part A for 50 weeks for a family who is overseas is not merely a very strange policy situation; it is in the context of the fact that we are in deficit—that, in effect, that extra expenditure is being paid for out of borrowings. It is an extraordinary situation in any context, let alone the context of the fact that we are trying to find reasonable and rational savings to return ourselves to surplus.

I should also note, before closing on the issue of family tax benefit A, that there will be flow-on effects to other payments that rely on the family tax benefit eligibility criteria. They include the childcare benefit, the childcare rebate, the double orphan pension, the schoolkids bonus, and the single income family supplement if the family is outside the portability period.

The other measure that is contained in this bill, with respect to savings, is to remove the large family supplement from 1 July 2016. This is a larger amount of savings and will help the government achieve savings of $177.3 million over the forward estimates. The large family supplement is a very small component of the overall family tax benefit part A structure. It is currently around $12.46 per fortnight, or, cumulatively, $324.85 per year. It is applied to the fourth and each subsequent family tax benefit child in a family. So that is $12.46 per fortnight for the fourth child, the fifth child, the sixth child and so forth.

The notional reason why that amount of money has been paid in the past is that larger families cost more and, because of the fact that the family tax benefit is meant to relate and respond to the cost of raising each child, there was a rationale for a weighting. All of the best evidence now suggests that is not correct. The evidence from the National Centre for Social and Economic Modelling in 2002, 2007 and 2013 consistently found that each additional child in a family costs less than the first child. Indeed, the most recent research found that, on average, a second child costs 83 per cent of the cost of the first child and the third child costs 69 per cent of the cost of the first child.

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