Andrew Hastie (Canning, Liberal Party) Share this | Hansard source

I rise today to speak on the Social Service Legislation Amendment (Interest Charge) Bill 2016. The measures contained in this bill seek to introduce a new annual interest charge for people with outstanding welfare debts who have not complied with requests to establish an acceptable repayment plan. In this instance, this charge will be applied to former recipients of social security payments, family assistance payments, including for child care, and student assistance payments.

Furthermore, the bill introduces a grace period of 28 days after a notice is given. The grace period will give people the opportunity to avoid paying the interest charge altogether, either if they repay their debt in full within 28 days of being notified or by establishing a repayment plan. Following the 28 days, if no debt repayment plan has been arranged, the interest charge will be applied to the full balance of the debt. This is an important safety measure and will allow us to give people the opportunity to have more time to assess their financial situation and make repayments.

The coalition have made this change because we believe in a sustainable welfare system. We believe in a strong and prosperous economy. We believe in fairness and we believe that the best form of welfare is a job. This new policy incentivises people to pay down their outstanding debts quickly so that we can reinvest that money into those people who desperately need welfare support from the government.

The principle of mutual obligation is at the heart of our welfare system in Australia. In the context of welfare assistance in Australia, this principle of mutual obligation is based on the concept that welfare assistance provided to the unemployed of working age should involve some return responsibilities for the recipient. To date in Australia this has meant unemployed job seekers on Newstart and youth allowance should be actively seeking work, constantly striving to improve their competitiveness in the labour market and giving something back to the community that supports them. This policy supports that general approach to welfare in this country.

Debt only arises where a person receives a payment to which they are not entitled. The main reasons for overpayment, which this bill targets, are the following. Firstly is welfare recipients who have not lodged a tax return. Indeed, until their tax return is lodged, the entire family tax benefit payment is raised as debt. This cohort represents 20 per cent of debts and 39 per cent of the value of total debt. Secondly is former recipients who received an advance payment and, before it could be recovered through withholdings, ceased to be a payment recipient. This cohort represents 15 per cent of debts and 1.5 per cent of the value of the total debt.

Thirdly is undeclared earnings and wrongly declared earnings—former recipients who have, either accidentally or deliberately, failed to declare earnings or accurately declare earnings. This cohort represents 16 per cent of debts and 20 per cent of the total debt value. Fourthly is reconciliation. Family tax benefit and childcare assistance payments through the year are based on a recipient's income estimate, which is then reconciled at the end of a financial year. Debts are raised when a recipient has been overpaid due to underestimating their income. This is not a fraudulent activity in the main and is often the result of the fact that some families have inconsistent income, fringe benefits and other sources of tax offsets, including negative gearing, that can only be finally determined at the end of financial year. This cohort represents 13 per cent of debts and 10 per cent of the debt value.

Understandably, this measure will put pressure on and incentivise debtors to take responsibility for paying their debts in a timely manner where they have the financial capacity to do so. Currently, former recipients have no incentive to enter into a repayment arrangement as they are no longer dependent on the social security system and may actively avoid repayment. This coalition government is committed to a stronger, fairer and more sustainable welfare system. This measure is a step in the right direction. It is time that those people who have rorted the system pay back their fair share so that the welfare payments can go into the pockets of those people who need them most.

At the end of June 2015, there were over one million debts, with a total value of just over $3 billion. We cannot afford to support people who freeload off our government, and it is disturbing that individuals have, in some cases, deliberately cheated taxpayers out of hundreds of thousands of dollars and have done virtually nothing to recover the debt or to pay down the debt. But even worse than that is that there are people out there who do need welfare who are missing out as a result of this fraudulent activity. We all know there is no such thing as free money. When people avoid repaying debts the government incurs unnecessary fees, such as the administrative costs associated with the debt recovery process. Ultimately, at the heart of this, there is also the need to recover the state of our public finances. Currently the Australian government debt to GDP sits at 35 per cent, and we need to pay that down so that future generations of Australians are not left with a debt to pay down that would no doubt affect their standard of living and their economic freedom into the future.

There are many things that we could reinvest the money from these debts into, once we have recovered them. I am going to talk a bit about my electorate. Job creation in Canning is the first thing. With my electorate's population growing exponentially—between 2004 and 2014 approximately 40,000 people moved into the seat of Canning—we need to meet this rapid growth by providing jobs to sustain the community. Unemployment is one of the biggest challenges for the Peel region, with overall unemployment in Mandurah, which sits at the heart of Canning, at 8.6 per cent in December last year. Youth unemployment sits just a little over 20 per cent. The federal government has already initiated a number of successful Green Army programs across Canning, including the Harvey River restoration team, the Len Howard Conservation Park, Peel Inlet reserves, and the Birriga Brook and Darling Downs Equestrian Estate. This is a great start to what will become a fruitful, prosperous and self-sufficient Canning, but there is more that can be done.

The Peel Development Commission has identified a number of opportunities where federal government money, if invested, could actually create a lot of jobs for the local community. Regarding the Nambeelup business park, the innovation vision that this government has been arguing for the last six months or so will be at its heart. I have a lot of agriculture, beef, fruit growing and other agricultural businesses in my electorate. Nambeelup park is a location where we can bring them all together, in the heart of Canning, and make the most of the opportunities afforded by the South Korean, Japanese and Chinese free trade agreements.

There is also the Murray equestrian centre, which would basically position Peel, in Canning, as the leader in equine industry in the Indian Ocean rim. In future bushfires, it would also provide a housing facility for the cattle that need to be evacuated in those circumstances. In January we saw the fires in Waroona and the Harvey region, and a lot of livestock needed to be evacuated. The Murray equestrian centre, if we invest in it, would be a good location to evacuate livestock to.

With infrastructure, the continued population growth will increase our demand for facilities. We need more roads, and I think of the Tonkin Highway extension south, which will open up opportunities into Canning. There is also rail. There is a lot of scope for further rail into Canning, which would open up economic and social mobility for a lot of the young people in Canning—I am thinking specifically of a rail line between Mandurah and Pinjarra. It would be great if we could see that sometime in the next decade or so.

Ultimately, this policy is not about hurting people; it is about recovering debt and reinvesting that elsewhere—into either the welfare system or the economy itself. The proposed interest rate charge of about nine per cent will replace the current rate of 20 per cent per year. This is a generous reduction, which the government hopes will ease the burden of repayments for debtors and people currently experiencing financial hardship. It is a compassionate way to make savings, and it does allow for flexibility in personal circumstances. This charge, along with the two other measures contained in the social services bill, provides a comprehensive government strategy that strengthens our ability to rightfully recover debts from former social welfare and family payment recipients. The first measure will abolish the current six-year statute of limitations on the recovery of social welfare debt that would otherwise be non-recoverable. The second measure is the departure prohibition order, which will prevent people from leaving the country in an attempt to avoid making repayments to their welfare debt. This is a progressive initiative from the coalition government, which will bring us one step closer to repairing our budget so that we can continue to build a strong and prosperous Australia in a post-mining economic environment. This will not be possible if we do not keep debtors accountable and reliable in making their repayments in a timely manner.

This bill represents a significant step forward for the constituents of Canning. There are currently 111,000 welfare payments made in Canning, most of which go to age pensioners. To give you a breakdown of how the government is supporting people through our welfare system, I currently have close to 20,000 age pensioners receiving the pension; 3,700 receiving carer allowance; over 5,000 receiving the disability support pension; 22,400 receiving family tax benefits; just over 6,000 receiving Newstart allowance; and we have approximately 31,000 people with a pensioner concession card. This is all good welfare support, and this measure, intended to be implemented from July this year, will greatly benefit the pensioners, parents and students of Canning by ensuring financial assistance is only going to those who are doing the right thing and those who are in the most need of it.

I recognise that there are many people in Canning who rely on government support and welfare payments to support themselves and their families. I want to assure these people that I and my colleagues are working to ensure that their livelihoods will not be compromised because of a fragile welfare system. This bill ensures that we recover money and we reinvest it back into the welfare system. However, I note that there are a number of people who are exempt from this change and are not liable to pay an interest charge. They are people already receiving reductions from their payments in order to pay off their debts, and those with special individual circumstances deemed valid by the minister.

This bill gives me great confidence that the government is taking proactive steps towards a fair and, most importantly, sustainable welfare system for Australia. In a potentially economically austere environment, this is a very sensible, practical and prudent policy, and I commend the Minister for Social Services for initiating it. The measures contained in this bill are just one part of the Turnbull government's commitment to a strong and prosperous economy driven by jobs growth and innovation. With that, I commend the bill to the House.

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