Steve Irons (Swan, Liberal Party) Share this | Hansard source

I rise to support the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill (No. 2) 2015. I just listened to the member for Richmond speak to the bill, and I would remind her before she leaves the chamber that we are spending $12 billion a year on interest from the Labor debt, which could be well used to support the families of Australia. That is the legacy they left us. It is interesting to note that most of her speech was focused on the proposal around the GST, which is not what this bill is about.

This bill introduces a package of new reforms that will secure the future of family support payments for those who need it the most while also encouraging parents' participation in the workforce. As the minister said:

The new package will supersede measures stalled in the Senate, including:

maintaining FTB payment thresholds, where savings were estimated at $525 million;

maintaining FTB payment rates, where savings were estimated at $1 billion;

limiting FTB Part B to families with children under six, where savings were estimated at $1.8 billion; and

revising the FTB end of year supplements to their original value of $600 and $300 per year, where savings were estimated at $1.3 billion.

The minister went on to say:

The two bills anticipate withdrawal of the measures relating to FTB from the 2014-15 budget and instead propose changes which focus squarely on the principles of structural reform of the social welfare system by simplifying the payment structure of family tax benefits. At the same time, the bills provide more assistance to families when they need it most and is, therefore, fiscally responsible.

Through structural reform of the social welfare system, this bill simplifies the payment structure of the family tax benefit system and generates some savings in the process. At the moment, our social services system is a bit like maze with overlapping schemes and measures. It is a complex and convoluted system which has grown out of control.

It is worth remembering that family benefits are a substantial area of federal government expenditure. Currently the government spends around $28 billion each year on family support. I just had a call from Robert in my electorate, who is an independent retiree, and he talked to me about his thoughts about where his taxes go. He received a notice from the government that advised him that 37 per cent of his taxes end up in social welfare payments, which he was not that impressed about. Then I spoke to him about the actual figures, and I said that currently the government spends around $28 billion each year on family support, including $20 billion on family tax benefit, $6 billion on childcare benefit and the childcare rebate, and $2 billion on paid parental leave For the purposes of comparison, the projected budget deficit for 2015-16 announced in the Mid-Year Economic and Fiscal Outlook is $37.4 billion. So we can see that the family payments do constitute a significant chunk of our budget. We know that Australia has been in a budget deficit position since Labor came to power in 2008-09, some eight years ago, and the Australian government's spending is simply not sustainable at current levels.

The government wants to continue providing support to families, and it is important that it does, but reforms are needed to make this an affordable area of government spending into the future. This involves some better targeting of available funds at those that need it most.

There is a budget repair job being undertaken by the Treasurer and there are some savings provided for in this legislation. Some of these savings will go to budget repair and some will go to the Jobs for Families Child Care Package.

There are three measures in this bill, which phase out the family tax benefit part A and part B supplements, increase family tax benefit part A fortnightly rates by around $10 for each FTB child in the family aged up to 19, and amend the rules and introduce a new rate structure for FTB part B. The supplements will be reduced in 2016-17 and 2017-18 before being abolished altogether in 2018-19.

These FTB 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. I notice the member for McEwen over there; he does not know what a surplus is. I think it was in 1989 that that side of the House last delivered a surplus. How many years is that? It is nearly 20 years. If you just go back over the Howard years you will see all the budget surpluses you could want to see. I remind the member for McEwen of that. I am sure he will bring that up during his retort as well.

It is worth noting that a substantial use of the supplements was to offset potential overpayments arising from underestimates by recipients of their FTB relevant annual income. In the near future, the Australian Taxation Office is introducing a single-touch payroll system. By 2019-20 most employers will be participating, and the need for the end-of-year FTB reconciliation will be reduced. Single-touch payroll will be introduced and rolled out from 2017-18 and 2018-19, resulting in the reporting of a family's real-time income, which will minimise the risk of underreporting of income and the subsequent debts that go with that.

I know other MPs have spoken about this previously so I will keep this brief, but in the report by Patrick McClure entitled A new system for better employment and social outcomes it is made clear that there are far too many payments and allied supplements. There are some 20 main payment types and 53 existing supplements, and that second figure of 53 existing supplements has been reduced from 55 because the government has already removed the senior supplement and the low-income supplement. This package will reduce the number of supplements in the system, as indeed will the associated reform measures in child care. We must continue to simplify our social welfare system more broadly and the FTB more specifically, consistent with the recommendations of the McClure review, which highlights the unworkability of a system that maintains 20 main payment types within an excess of 50 categorised supplements.

With these savings we can secure the future of family payments for the people who need it most, as I said. I would like to reiterate that: it is for the people who need it most. And there are families out there that do need the support, including in my electorate of Swan.

Bentley, in my electorate of Swan, sits within the first decile in Western Australia on the ABS's index of socioeconomic disadvantage in its Socio-Economic Indexes for Areas. Its neighbouring suburb of Karawara sits within the second decile, and several other suburbs in my electorate sit on the third and fourth deciles.

The City of Belmont holds the second-lowest SES ranking of any local government area in Perth. I know that the local government of Belmont, in the work they do for their local community, are striving hard to lift that second-lowest SES ranking. We are seeing changes in the City of Belmont that are worth noting, and I support and applaud the City of Belmont for the efforts they are making to get out of that second-lowest ranking.

These are the families in my electorate that are struggling and need assistance for the long term, and the second two measures in this bill which provide targeted support are aimed at these families. If this legislation is passed, the family tax benefit part A fortnightly rates will rise by about $10 for each FTB child in the family aged up to 19. This means that around 1.2 million lower-income families will receive higher payments from July 2018.

The government will also increase the fortnightly rates of youth allowance and disability support pension to align with the new FTB part A fortnightly rates. A new rate structure and rules will be introduced for family tax benefit part B. The maximum standard rate will increase by $1,000.10 per year for families with the youngest child aged under one year, helping around 142,000 families. The overall effect of these two measures is to continue providing day-to-day financial assistance to low-income families and also to build in some choice.

Having a support network makes a big difference to parents, and our government is committed to being part of that support network by ensuring the family and childcare systems remain sustainable and effective in the long term, to provide for future generations. The government also recognises that grandparent carers take on a large responsibility when caring for children. Grandparent carers are usually less likely to be working and more likely to be retired. From the contact I have had with the grandparent carers in my electorate I would say that the majority of them came from lower SES areas as well, and they really struggle. So the government has recognised that and recognised the work they do for their grandchildren through the circumstances that are thrust upon them. I applaud their efforts, and this government seeks to support them and help them as well.

The tax benefit part B will be available for single-parent families and grandparents with a youngest child aged 13 to 16. This will help grandparent carers meet the costs of raising their grandchildren.

At the same time, the government recognises that sometimes it is difficult for single parents to transition to work, even when their youngest children are in upper school, and this is why we are applying different payment assistance for these categories once the child turns 13, providing them with some additional appropriate assistance while they prepare to re-enter the workforce.

Part of the savings of this package will be used to help pay for the government's $3 billion Jobs for Families Child Care Package.

The key elements of the Jobs for Families Child Care Package include the childcare subsidy commencing in July 2017. The new childcare subsidy will replace the current childcare benefit and childcare rebate with a single, means-tested payment. It includes the childcare safety net, with some elements commencing in July 2016. The childcare safety net will provide targeted assistance for disadvantaged communities and vulnerable and at-risk children and their families to ensure they get a strong start while supporting parents to enter the workforce. The package represents the government's response to recommendations from the Productivity Commission inquiry into child care and early childhood learning which took into account a wide range of input from families, service providers, early childhood education professionals and businesses.

It is not news to anyone that childcare reforms are needed. Hourly caps on the provider will be introduced which will ease some of the inflationary drivers that exist in the present system. A more affordable, flexible and accessible childcare system is needed today as we see many families making the decision for both parents to work. The government understands the importance of providing a quality childcare system. My electorate of Swan is home to many young families, and those here with young children will understand the struggle it can be to put children into childcare. Sometimes the cost is more than the parent would make re-entering the workforce and decide it is not worth it.

As a result of this package, families using childcare services with incomes of between $65,000 and $170,000 will be, on average, $30 a week better off. The Jobs for Families Child Care package has several components including a two-year national nanny pilot program to support around 10,000 children in families finding it difficult to access standard childcare services. These reforms will give these young families more choice: a choice to utilise childcare and return to work. It will encourage workforce participation and national productivity. It is only though a strong childcare system that we can maximise workforce participation and strengthen families and the economy. In summary, these are sensible changes aimed at ensuring the sustainability of family payments and ensure that the system provides support to families who need it most now and into the future.

The package enhances support for families with their day-to-day living expenses and helps them support their children—the future of Australia from birth through to education to the transition to independence. While it is comprehensive, our system is also one of the most generous, but it needs sustainable changes so it can help those families who need it most. This package will make our system fairer and simpler, more efficient, more effective and more sustainable. We will be removing waste and will be using the dollars more wisely. This government is making progress towards a sustainable social welfare system. This bill ensures that we are making the system more efficient, more effective and, most importantly, more sustainable. It is my view that the intent of social payments is to provide assistance to those who need it most. This package will do that. As we know, welfare payments have always been part of a safety net. Through this bill we are making progress towards a sustainable welfare system. This bill ensures taxpayers that their taxpayer funds are being used to better the lives we live and make our country a more sustainable place.

As I wrap this up, I want to make clear that this government is extremely committed over the long term to continuing to assist families to raise their children. This reform and the package is not just a quick-fix for the now. This will assist families in the long term. This will help shape our future. So I say to those on the other side: support the package, support the government's support of the families of Australia and make sure that we pass the bill this time. I commend the bill to the House.

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