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

It may seem emotionally more difficult, but the fact is that it is economically cheaper, and of course that is simply because of the ability to spread fixed costs among more children—just a classic economic example of economies of scale. That highlights the appropriateness the government believes of the change to the family tax benefit part A payment structure. It is interesting to note that we have acted on the economic evidence and that evidence has been available through modelling in 2002, 2007 and 2013. It is not a simple decision, of course, because it means a reduction in absolute payments to families who have a fourth, fifth and sixth child, but, nevertheless, it is in a context where, again, in deficit with debt, we are trying very hard in difficult circumstances to gain savings to deliver us back to surplus. Is it worth borrowing that money to spend in this fashion? I think the answer to that question would have to be that it is not. There is support for this move even the Henry tax review commissioned by members opposite in 2010, which recommend that the large family supplement be abolished because the policy rationale behind the payment was not strong. The National Commission of Audit reiterated this position in 2004 by stating that the basic rates of family tax benefit part A payment were sufficient for the costs of raising children.

I will pause there for a moment. It raises this question: with 50 different supplements, add-ons and extra payments that were inherited in the welfare system by this government, and with 20 broader categories of welfare, each of those payments have to be examined to see whether they are fit for purpose, and, indeed, there has to be some interrogation of the purpose for which they were originally devised and whether that purpose, if it were ever economically true, still exists. It would have to be said that the arguments with respect to the large family supplement are that the reasons for which it was devised, if they were ever true, are no longer true and therefore it is reasonable to end that supplement. Of course, that is part of the necessary task of budget repair. This is part of an evidence based approach that the government makes best efforts to take in achieving policy outcomes in this area.

I must also note that, importantly, this change is in line with the recommendations of the McClure review and, without labouring that point, as I have just noted, the McClure review was very persuasive in arguing that there are simply too many different individualised payments inside the social welfare system in Australia. The government has made its best efforts to start consolidating the list of 55 different payments, supplements, add-ons and associated benefits that exist in the welfare system.

The government of course acknowledges the costs incurred in raising children, and, whilst we recognise the best economic evidence to suggest that those costs decrease with additional children, the fact is that most families affected by this change continue to receive the per-child family tax benefit part A payments, and that continues to help cover the costs associated with raising children. Family tax benefit part A is currently paid at the maximum rate of $179.76 per fortnight for each family tax benefit child up to 12 years of age and $233.94 for each child aged 13 and over until the end of the calendar year in which the child turns 19 and is in secondary school. The base rate of family tax benefit part A is $57.68 per fortnight, and of course that base rate is the rate that we are ending payment of after six weeks whilst a family is overseas. Families who would no longer receive family tax benefit part A as result of these changes would only have been entitled to a very small amount of payment—indeed, less than the value of the large family supplement.

These two budget measures, along with the reform package introduced recently by the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill, will improve the sustainability of family payments while providing continued support to those most in need of assistance. It should be noted, of course—and it was a point of note by many speakers on this side of the House—that in the 2015-16 budget, notwithstanding the best efforts in as fair a way as possible to rationalise and slow down the growth in expenditure in the family tax benefits system, the government will still be providing around $19 billion in family tax benefit payments. That is in the 2015-16 budget. That is the second biggest item of expenditure within the social services portfolio and the fourth biggest in the Commonwealth budget. This very modest saving of around $177.3 million is a reasonable and prudent measure to ensure that the family tax benefit system remains affordable and the government can continue to assist families in raising their children on a sustainable basis and in the context of sustainable budgets and a return back to surplus.

In summary, we would argue the measures are sensible and practical, they are aimed at ensuring the sustainability of the family tax benefit system and they are designed to guarantee that payments are targeted to those most in need and on the basis of comparative need. Of course, sustainability and fairness are at the heart of these reforms. I commend these measures to allow us to support those most in need in the future. I do thank the assistance, albeit modest assistance, that has been offered by members opposite. (Time expired)

See this speech in context