Tanya Plibersek (Sydney, Australian Labor Party, Shadow Minister for Childcare) Share this | Link to this | Hansard source

I rise today to speak on the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006. This bill seeks to implement a number of 2006 budget measures, certain other measures associated with the 2005 budget and the government’s welfare changes, as well as to introduce a new disaster recovery payment. The government plans to implement various of these measures as of 1 July. Labor intends to support the passage of this legislation, which will provide much needed financial assistance to Australian families.

Labor is pleased to note that the government has picked up on some of the concerns that Labor raised at the last election in regard to the family payments income-free threshold and the large-family supplement and has introduced some changes in these areas. The principal measure in the bill is an increase in the income threshold for family tax benefit part A. This will increase from the current $33,361 to $40,000. This will then be subject to annual CPI indexation from 1 July 2007. The 2005 budget included a measure to increase the threshold to $37,500 from 1 July 2006, so the measure in this bill supersedes that previous increase. As a result, half a million families will receive, on average, an additional $37 per fortnight as of 1 July. The measure will cost a little over $993 million over four years.

We also note that as a result of this change in the threshold more than 40,000 families will now become eligible for the low-income health care card. We are certainly pleased that the government has recognised that the current income threshold is too low and has recognised that this low threshold has been a disincentive for people moving into the workforce. At the last election Labor proposed an increased threshold for the commencement of the withdrawal of family payments. We are certainly glad that the government has listened to Labor’s concerns and picked up our suggestions.

Families are under increased financial pressure—we all know that; we hear it every day from our constituents. They are paying more for their petrol, they are paying more for their private health insurance, they are feeling the squeeze when it comes to child care and other costs associated with going to work and, in an environment where they are not certain of their employment at the end of the day, let alone at the end of the week, this added financial support is welcome. Unfortunately for a lot of families it will be pretty much chewed up by the increased expenses they face in their daily lives.

The bill also makes a significant change to eligibility for the large-family supplement. Naturally, Labor also welcome this. Currently the supplement of $248.20 a year is paid on the birth of the fourth child and any subsequent children in each family. Under this bill the supplement will be paid to all families who have a third child, and of course will continue to be paid for each additional child. The cost of this change will be just under $497 million over four years. Labor recognise the financial strains felt by many larger families and supports this additional assistance. We welcome the fact that the government has picked up on another policy idea raised by Labor at the last election.

In 2004 we proposed the doubling of the then large-family supplement to $489.10 a year for each child. Under the change in this legislation, a family with four children will receive the supplement for both their third and fourth child. In a sense you could say then that the benefit has been doubled. Families with more than four children will, of course, receive the extra $248, paid now for their third child, although they will not receive the same boost that would have been paid under Labor’s proposal. Nevertheless, we are certainly pleased that the government has followed our lead in recognising the financial pressure that many large families are feeling. That has led to an increase in their assistance.

I will now turn to some of the other measures outlined in this legislation. The bill seeks to extend eligibility for the utilities allowance to people who are under the age pension age but who are in receipt of the mature age allowance, widow allowance and partner allowance. This will provide the individuals affected with an additional $102 per annum and cost about $27½ million over four years.

The bill also introduces a new disaster recovery payment into the social security law. Previously, disaster recovery payments have been made on an ad hoc basis, such as those paid to the people affected by Cyclone Larry. This payment will be non-means-tested and non-taxable and will be paid to all Australian residents affected by an eligible natural or non-natural disaster in Australia or overseas. The payment rate will be $1,000 for an adult and $400 for a child. This measure will take effect as of 1 December this year and total resourcing is estimated at $13.2 million over four years.

The bill also seeks to implement a maintenance income credit from 1 July. This will allow individuals to claim a previous year’s maintenance income-free area for family tax benefit part A on late child support payments received in the current year. This means that individuals who receive backdated child support payments from a previous year do not face a reduction in their current year’s family tax benefit part A payments. Certainly we see the importance of this measure, which will cost just under $52 million over four years.

The bill introduces two changes with regard to severely disabled people. The first is an extension of the qualification for the carer payment to carers of children under 16 years with a severe disability. The extended eligibility for the carer payment will exempt current recipients of the parenting payment who meet the qualification from the activity tests applied under the government’s Welfare to Work changes. Resourcing for this is $55 million over four years, and naturally Labor welcome this. The notion that parents caring for their disabled child would be forced to jump through hoops and have to prove that they were looking for work was cruel and unnecessary, and we welcome this change.

Other measures will allow families with the financial means to do so to set up a trust to provide for the future care and accommodation of a family member with a severe disability. The value of the trust can be up to $500,000 without affecting the person’s pension eligibility. Gifts to the trust to a total of $500,000 from parents or immediate family members will not affect the donor’s eligibility for social security or Veterans’ Entitlements Act payments. Resourcing for this measure is just over $218 million over four years. It is important to acknowledge at this time that many parents who are caring for severely disabled children have very deep and very real fears about what will happen to their children as the parents age and are no longer able to look after them, and Labor hopes that this measure will allow some peace of mind for those people into the future.

The bill also implements the recommendations of the Uhrig review with regard to the governance arrangements of the Australian Institute of Family Studies. Further, the bill seeks to make minor technical amendments to the social security law to address certain anomalies. In conclusion, Labor has indicated its support for the assistance to families outlined in the budget and will support this bill today.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Whilst I noted within the comments of the previous speaker, the member for Sydney, that she kept pointing out recommendations, suggestions and policy positions of the opposition with regard to the bulk of the provisions in this legislation, let me say that they are entirely an invention of the coalition government under Prime Minister Howard. They are among the great reforms of tax law and social support that have been implemented in the 20-odd years that I have been a member of this parliament. They recognise a fundamental principle that, irrespective of your wealth, the raising of children, as many of us would know, is a very expensive business. I get quite concerned from time to time when certain people are quoted in the press as saying there are too many benefits for functional families with children and they should be extended in some form to single people or couples in employment with no children.

I do not think it would be an exaggeration at all to say that a family on $40,000 a year—after tax even, for the purpose of the example—would be $20,000 a year worse off with one child, and certainly with two, compared to a couple on the same income with no children. Therefore, in recognition of this, the government provides this very strong support for functional families and the retention of same. Might I put on the record a quote oft said by my mother, who knew a bit about it: when poverty walks through the door, love flies out the window. Whilst it should not be said in a callous way, the pressures that families experience during hard times certainly can eventually lead to family breakdown. So every effort the government can make to keep families together and to assist parents in the fashion that the bulk of this legislation does is of course to be commended. I am delighted that this support has been increased.

Various aspects of the explanatory memorandum talk about the financial impact of increases in the family tax benefit part A income-free area. From 1 July 2006, the lower income-free area for family tax benefit part A will be further increased to $40,000. The amount will then be indexed in accordance with movements in the consumer price index on 1 July 2007 and on each subsequent 1 July. The cost to the revenue is listed as being $241.8 million in 2006-07 and $256.3 million by 2009-10. The member for Sydney made approving comments about the large-family supplement, and the explanatory memorandum advises me:

From 1 July 2006, families with 3 or more children will be eligible for an additional amount of family tax benefit Part A, known as the large family supplement.

And of course my remarks regarding small families become exponential as we move to talking about large families, notwithstanding the fact that there is another little homily I can draw to the attention of this House concerning the actual nominal value of the wages that people receive, and I think that male total average weekly earnings are now of the order of $900 a week. It is interesting that people struggle with that amount of money, but that is the downside effect of the more we pay ourselves the more it costs us to live situation. This comes to the real terms argument that the government puts forward when it says it has improved the spending power of families and wage earners by 16 per cent. That is an improvement in their living standard simply because the balance has been towards higher wages and lower increases in costs. But when, as we experienced for probably 50 years in this country, there was a situation where as soon as one wage increase was approved the next one was applied for, we saw a change.

It is my personal observation that my father was able, on ₤6 a week, to keep four kids and own a motor car and his own home—a careful man, I might add, who had a wife who never had paid employment. So one might wonder just what we have gained between six quid a week and $900-odd a week, other than that the latter is a lot of money and typically the tax commissioner has an ever increasing share, which we politicians then take credit for as we distribute it in manners such as the one that we are dealing with at the moment. Nevertheless, that is a matter of history and it is nice occasionally to put it on the record. In truth these measures are a redistribution of that tax revenue in a very appropriate way. The large-family supplement will also represent a cost to the revenue in 2006-07 of $113.7 million and $129.4 million in 2009-10. That is a substantial amount of money paid only to people who have large families.

I come to the extension of eligibility for utilities allowance. Also from 1 July, the eligibility for utilities allowance will be extended to ‘persons who are under pension age and are receiving mature age allowance, widow allowance or partner allowance’. The impact of this starts at $7.5 million and actually decreases to $6.4 million as time goes by.

There are other provisions in this bill. For the Australian government disaster recovery payment there is an expenditure that is not that large, but of course it is a very important one where it applies. The payment is to be exempt from all Australian government means-testing arrangements and will be non-taxable. In other words, a disaster is something that can attack the wealthy and the less well off in equal terms, and it should be addressed in the way provided in the bill. The amounts of money range from $4.3 million to $3 million. There are other extensive measures in this bill. I think they are all a case of spending money to help people, so they should be supported accordingly.

In fact, I will be making some further media comment in half an hour on a Perth radio station, at their request, resulting from an interview I gave yesterday that resulted from a journalist coming to me and saying, ‘Well, here’s what we asked the people in the street. It was whether they would take a job in the Pilbara.’ Each person was unemployed, as I recollect. The interesting thing was that one fellow said, ‘I don’t know if I could go to the Pilbara. I don’t know that there would be enough sport.’ I can tell him, as others who have lived in that part of the country could, that there is plenty. People in small communities rely heavily on sport and support sports clubs with their own money and time.

As for the point that I really want to make, not long ago I read a letter to the editor from a woman who said she was a qualified school teacher. I think she was a single mother with children. The basis of her argument, which has been put in this place more particularly by the member for Jagajaga, is that if someone moves from welfare to a job their wages have to be calculated on the basis of first deducting the welfare benefit. That argument, if taken to its logical conclusion, says that every kid leaving school and seeking work should ask for a $1,000 a week on the basis that, if they did not seek work, they would get a certain level of welfare payment. That raises a very interesting question. Over the years this parliament has made the welfare safety net fairly generous. I support that where a person genuinely needs that support. But what about people who say, ‘I’m not going to work because the discounted rate after tax and a few other things means I only get paid’—as the member for Jagajaga used to claim—‘90c an hour’ or ‘$2 an hour’? You can make that calculation, but everybody is in that situation and of course everybody does not do that. They work and pay their taxes, and it is their taxes that support other people.

If people take the attitude that they do not need work, then there is a question that I would rather not have debated but think should be put on the record: are our welfare benefits too high? I do not think so. I think that if you have a genuine problem, whether it be disability or a lack of employment opportunities, you should have benefits. I was more than sympathetic to the million people who were thrown out of work by the ‘recession we had to have’. But I reject totally the argument that you have a right to stay on welfare in a very buoyant labour market because you do not get a 100 per cent increase over and above your welfare payment. That is not a fair argument. It is an imposition on taxpayers and, as things stand, it is also an imposition on our economy. It is ridiculous to complain about overseas workers when people take that attitude.

This is a matter of concern. In my electorate, prior to the last harvest, TAFE offered training courses to people of both sexes to learn how to drive harvesting equipment. The equipment used today is not just a steel seat, sitting out in the sun. There is highly sophisticated equipment which is fully airconditioned and very safe. It is an interesting point to know, when one considers what sex might be found at the driver’s wheel, that in the Pilbara and in the mining sector of the Pilbara women are preferred for the driving of large equipment like dump trucks because they treat the equipment better than some of the fellows do. So when those particular courses were offered, and we had a significant number of people in my electorate claiming single parent benefits and other benefits, why were they undersubscribed? People did not volunteer to learn. It might be because of the argument that I have just promoted, and which I reject.

So it is no good people saying that overseas workers are taking their jobs when they do not even turn up to learn for the job opportunities that exist. I can tell you that there is many a farmer who, from time to time, has the kids in the cab of the harvester because the wife is indisposed or otherwise. I had a classic case brought to my attention in that regard. A woman had to go away in the early stages of her pregnancy and her two small children, for the lack of any other assistance, went around in the header all day with dad; just what condition he was in at the end of the day I would like to know. What I am saying is that these sorts of things can and do happen if you are on a farm, but apparently others who do receive these welfare benefits believe that it should not happen to them. I wanted to take the opportunity to put those remarks on the record, because I think this is an issue we must confront.

Let me say of the buoyant labour market, as someone was saying to me the other day, that there are still plenty of people who can take a job in Australia because they are still five per cent of the participating workforce, if we can put it in that context. When I did economics at Perth Modern School they taught me that four per cent unemployment means full employment, and that that four per cent is just the number of people shifting from one job to another. Of course, as a statistical measure, it would be a wonderful circumstance to think that we could throughout the country get the figure below four per cent. So at five per cent we have not got a lot of people who should be actively employed, which is another argument for why we bring people in from other parts of the world: to retain our industry, our GDP and our tax base. I think doing that on a temporary basis is very sensible in terms of the employment of Australians because, later on, there may be a downturn in the economy, but I hope there will not be.

I note by the way that the state governments are going to borrow billions of dollars; the bond market is thrilled to bits about that. If they are going to increase competition for money, we are going to have the same outcome that occurs when there is overcompetition for any commodity, which is that the price goes up. In the case of money, that price is interest rates. If that were to happen, no doubt we would have members of the frontbench of the opposition attacking the Treasurer for these increases, which of course would have been generated by the borrowings of Labor governments. They are back into it again, as has been demonstrated in my state of Western Australia. We have a huge works program to build a railway line, which is competing with the mining industry and everybody else for available workers. These people are rushing into infrastructure programs because they neglected them throughout ‘the recession we had to have’, and Mr Keynes, the one-time noted economist, would have told them that it was the right time to spend the money. They did not spend it then, and now they want to spend it and put more pressure on the labour market, particularly in infrastructure areas, when of course the private sector needs those people. These are peripheral issues, but interest rates are extremely important to the people whom we intend to assist with this legislation.

I welcome this legislation. As I said at the beginning of my remarks, I think it is one of the best initiatives that has been brought to parliament because it is targeting people. I often speak of funding people not institutions. Institutions always cover their mistakes and failings by telling the government of the day, ‘You didn’t give us enough money.’ In education and health it is quite a simple process to follow the basic principles we see here of direct, targeted payments to people. In the case of education it will probably not be cash but a voucher. Of course, the education establishment reckons that is a dreadful word. But a cheque is a voucher, and I have never seen anyone knock one of those back as long as it is cashable.

The reality is that we could give every secondary school parent in this country a $5,000 voucher a year to contribute to their children’s education. That is what we give state governments anyway—about half the cost of running their schools. If we gave it to parents directly, everybody would get the same. There is an opportunity for targeting on socioeconomic and geographic grounds, but otherwise there would no longer be all this hoo-ha about whether the King’s School gets more than some small state school, because parents would get the money. That is the basic principle of this legislation. When the parliament decides this is the best way to help people with their education and the education establishment is answerable to parents—and they will vote with their feet, as they do now, at significant cost in many respects—people will get a better service. I raise it because this is an example of how that is working. I thank members of the House for giving me their attention.

Daryl Melham (Banks, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006 on behalf of the Centrelink and Veterans Affairs’ income support payment recipients who live in the electorate of Banks. There are two million people nationally relying entirely on income support payments who have literally become invisible people as far as the 2006 budget papers are concerned. While the government spent up big on its mates at the top end of town, the Treasurer did not see fit to include those on incomes under $10,000. In fact, in the charts produced by the Treasurer which purported to show how families benefit from this budget, there was literally no mention of those under the $10,000 level. The reason is fairly obvious: there was no benefit.

In the electorate of Banks in 2005 there were 13,557 people on age pension, 3,295 people on disability support pension, 2,123 people receiving the carer allowance, 1,936 people receiving Newstart allowance, 1,713 people on youth allowance, 2,045 people receiving the single parenting payment and 1,118 people receiving the partnered parenting payment. That is a total of 25,287 people in my electorate who receive precisely nothing from this so-called big-spending government.

But it does not stop there. This year the government provided an additional $20 million over four years for increased access to mental health services for veterans. I note that $17 million was provided for various commemorative activities, yet so many of our veterans are doing it tough. In the electorate of Banks there were 3,178 DVA pensioners as at 6 January this year. This figure includes 926 disability pensioners, 1,041 war widows, 1,995 service pensioners, 839 partner service pensioners, 853 on income support supplement and 52 social security age pensioners. In addition, there are 3,497 beneficiaries of DVA treatment cards.

While I acknowledge the desperate need for mental health services for our veterans, I despair at the lack of increased support for this group in the area of general health. Australia’s targeted benefit system has been battered by this government. As Senator Evans stated on 29 March this year in a speech to the Senate on a welfare related bill:

We need a simple, streamlined, integrated system which is transparent, user-friendly and well administered.

The current system is becoming more complex, inefficient and unwieldy as the government applies another political bandaid. This government provides only quick political fixes for systemic problems. We are seeing that now in the Indigenous affairs area. The minister is taking an overly simplistic view of the problems in remote Aboriginal communities and putting it all down to law and order. It is a lot more complex than that and he is setting himself up for a fall. In the 1996 budget, this government cut funding to the Aboriginal affairs portfolio by $470 million. We have seen youth support services and women’s refuges fall over and there have been changes to Abstudy. All these things have come home to roost.

What we need are solutions which will provide long-term benefits to various communities—not quick political fixes. Senator Evans observed that our welfare system should interact effectively with other government systems to meet meaningful social goals, to provide real incentive for hard work and to encourage workforce participation. Our welfare system should help families tackle disadvantage and should be built on the principles of fairness and equity. It must provide a decent system of support, not punishment, to families and others who have fallen on hard times.

This bill includes measures which will be of benefit to families in particular. There is an increase in the income threshold for family tax benefit part A recipients from $33,360 to $40,000. As a result of this increase to the threshold, more than 40,000 families will become eligible for the low-income health care card. I applaud this change on behalf of the 1,000 to 2,000 families in Banks who will be directly affected.

On the other hand, it might be useful for the government to consider the payment of family tax benefit part B, which reflects the ideology of this government. It provides a non-means-tested taxpayer funded bonus to wealthy families. Because the rules governing the payment of FTB(B) ignore total family income, families earning more than $1 million a year can receive this welfare payment. I understand that nationally there are more than 70 families earning more than $1 million a year who receive more than $3,300 a year in welfare payments.

During the recent debate in the Senate on the Family Assistance, Social Security and Veterans’ Affairs Legislation Amendment (2005 Budget and Other Measures) Bill 2006, Labor moved an amendment proposing that an upper limit of $250,000 be placed on this payment. This amendment was unsuccessful. It is patently obvious that our welfare system has been abused for party political ends and to mould Australian families into the 1950s model that the Prime Minister promotes. Why is family tax benefit part B the only welfare payment that cannot be effectively means tested? I note the extension of the large-family supplement to include families with three children. This used to apply to families with four or more children. Perhaps this is the reward from the Treasurer for those families having another one, or even two, children for the country.

I am pleased to finally see the creation of special disability trusts to assist families to make private financial provision for children with severe disabilities. Over the years, I have had representations from ageing parents who are terribly concerned about their disabled children and what will happen to those children when they die. In my view, this area requires more attention. A lot of compassion was shown recently when the Beaconsfield situation came to national prominence. Provisions were made and special funds were set up for the town by this government. I think that is appropriate, but it seems to me that you should not be paying benefits or lauding people just because they come to national attention. What you need is an appropriate value system that says that all people in a certain category should be looked after to a particular level. The disabilities area is one that continues to sadden me because the government is taking an ad hoc approach, and that is not sufficient. Life is hard enough as it is, but for families looking after people with severe disabilities there are added burdens.

I do not have a problem with having a safety net provided by government. That is the test of a compassionate, fair and decent society—a humane society that does not ignore people as if they were not there. Disabled people are the forgotten people. It is like the Indigenous situation. We have this minister new to the portfolio. Everyone knows he is bagging the previous ministers mercilessly as he travels remote and regional Australia. He thinks he is going to come along and fix the situation—it is not going to happen. I am not saying he is not making sincere commitments, but he does not have the depth or breadth of experience. He is a boy in a man’s job. It might be politically popular to go out there and talk about law and order, but you will be judged over time on the results that you achieve.

My view is that the minister needs to pull back, genuinely seek bipartisan support, pull some of those dusty reports off the shelf and sit down and actually talk to Aboriginal people. When I was Aboriginal affairs spokesman, I was not going in there as a missionary trying to save them from themselves. I took it upon myself to sit in the sand with Aboriginal people, to listen to them and to become their advocate. It strikes me that the minister has talked to the odd person here or there and come up with simplistic solutions.

We live in a country that, in my view, is the best in the world—without peer—but there are those in our society who are suffering. The hallmark of the government in the last 10 years is that they have been awash with money. They have thrown money at certain constituencies like drunken sailors. What worries me is that it will all come home to roost eventually, because it is not good public policy. I support means testing because I think there is a section of our community that can look after itself. There is always an argument about the appropriate level of the means test, and that becomes a public policy argument. With the limited resources that we have, to turn around and say, ‘Nope, no means test will be associated with these payments,’ is not a proper allocation of those resources. The money could be used in other areas.

In the disabled area, this bill will allow families to set up trusts to the value of $500,000 to provide for current and future care of a severely disabled family member. I understand that this will not impact upon the person’s pension entitlements. I applaud that. At the same time, it does beg the question of how those unable to find the money will make financial provision for their disabled relative who, I argue, is truly in need and is entitled to assistance from the government. We should not apologise for that, just as we do not apologise for supporting farmers in rural and regional Australia who cop it in hard times. We say that payments need to be made to those people so they can to continue to live and work in those areas—that equality actually requires differential treatment, not the same treatment for everyone.

That is where I think the minister for Indigenous affairs gets it wrong. True equality does not require treating Aboriginal people the same as the rest of the community. It requires differential treatment to bring them up to the same level. That is what the international conventions say. If he did a bit of study before he opened his mouth, he might be a bit better off and he might produce some decent policy.

The extension of the carer payment eligibility to carers of children under 16 years who have a severe disability is a positive step. But I do worry, as I said, that the eligibility criteria to allow others to access carer payments have not been considered. The government’s one-off payment to carer payment and carer allowance recipients in the budget, however, does not make up for the damage of having $107 million removed earlier this year from the carer allowance. The replacement value of carers, according to a recent study by Access Economics, is $30.4 billion per year. Yet this government, earlier this year, ripped $107 million over three years away from carers by reducing the backdating of the carers allowance to only 12 weeks.

In a post-budget media release, Senator McLucas quoted from a recent AMP-NATSEM study which found that the average carer is $5,600 worse off each year than someone with no caring responsibilities. One in every seven Australians is providing primary or informal care for an older, frail relative or one with a disability, with the burden falling mainly on women. The report stated that the demand for care for those with disabilities and older Australians is projected to grow significantly over the next 25 years, but the number of carers will fall.

Carers are more often than not family members supporting those with a disability, chronic condition or mental illness or who are frail aged. They provide services day in, day out, 365 days a year and they need more certainty about their income from the government. Despite the Treasurer’s rhetoric, this government has yet again failed to properly look after the needs of those who make great sacrifices to care for others.

I know several of my constituents who will be very pleased that late child support payments from the previous year will not mean that their family tax benefit part A is accidentally reduced in the current year. This will seriously reduce the distress suffered by some single parents when their payments suddenly stop and they have nothing left to buy groceries or to pay bills. This does happen, as those distressed constituents who have visited my office seeking assistance have found. The government has had an unprecedented opportunity this year to actually deal with some of the social and economic inequities in our society. It is disappointing that the family tax changes we are discussing today do not go further.

In its budget response, the Australian Council of Social Security noted that, while it welcomed the increased investment in mental health, child-care subsidies for parents studying, carer payments and aged and disability care, it would like to see:

... greater investment in services like housing, indigenous health, dental care, child care, supports and services for jobless Australians to change the lives of people on low incomes.

There was nothing in the budget to assist housing affordability. Senator Carr noted in his post-budget press release that:

There is:

not one dollar to support homelessness or related crisis services; and

not one new dollar for the Commonwealth State Housing Agreement under which the Commonwealth provides funding to the states for public housing.

It is a sad fact of life in Australia, in the 21st century, that we see emerging a ‘two Australias’ policy.

Homelessness is an important thing. Public housing is an important thing. When I was the shadow minister for housing in the last parliament, I looked at the Commonwealth-State Housing Agreement. It is going to be a problem in the future because the Commonwealth is continually paring back that agreement. At a state level, that has resulted in very little new public housing becoming available. Queues are growing longer. In future generations we are going to have many more people who will be unable to access public housing. I think we are all diminished by that. At a time when there is great wealth and when productivity is increasing, we should share that productivity.

I came into public life not to help people who can help themselves but to direct my energies towards those who need assistance, who cannot fend for themselves—the disadvantaged, Indigenous Australians and a whole range of other people who, because of their station in life, do not have the same opportunities. We do not all have equal opportunities. As I said earlier, true equality requires differential treatment. If we all sat around the table, we would find that we all have different strengths and weaknesses. For example, if we all wanted to have the same level of knowledge in mathematics, it would require intensive learning at a different level for each person around the table. The same is true with goods and services and in the provision of human services for our fellow Australians.

I keep getting quoted back to me that 24 per cent of Aboriginal men live to the age of 65 and 35 per cent of Aboriginal women live to the age of 65. And we call ourselves a civilised society. Those figures are not replicated in Third World countries, but they are figures that we have to acknowledge in our country and that are to the eternal shame of parties and governments of all political persuasions. We at least should be doing something about it, not beating a law and order drum that is going to lead nowhere.

Kay Hull (Riverina, National Party) Share this | Link to this | Hansard source

It gives me great pleasure to rise here today in support of the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006. This bill delivers much needed and much welcomed support to many Australian families in a variety of ways. There are several inclusions in this legislation which will certainly bring great benefits to the communities in the Riverina that I represent.

There is the extension of the utilities allowance to people under the pension age who are receiving a mature age allowance, widow allowance or partner allowance. This will be of considerable benefit to people needing assistance in meeting the ever-increasing costs of regular bills for gas, electricity, water and other essentials. Some of these costs are extremely difficult for people to pay, particularly people on low benefits and fixed incomes with no additional assistance. These people will now qualify for the utilities allowance without that age barrier.

Another part of this legislation that I want to make mention of is the introduction of the Australian government disaster recovery payment. This year, in fact on New Year’s Day, many residents within my electorate of Riverina faced a devastating blow when fierce bushfires destroyed thousands of hectares of property. Houses and livestock were lost. Around 17,000 to 20,000 head of sheep were lost. This came on top of a devastating five-year drought, when farmers were using all of their available resources and borrowings from the bank to handfeed their stock so that they had their stock and their breeding stock when the drought broke. Then, of course, they experienced a double blow by having a bushfire go through there that saw the destruction of their entire livelihoods.

In the following months, the community of Junee and all the surrounding districts rallied to raise money for those affected. But in the immediate aftermath of the disaster, it would have been of even greater relief to have been able to determine whether an immediate payment could be made available on a decision by the Minister for Families, Community Services and Indigenous Affairs. Having been involved in the bushfires earlier this year, I welcome this piece of legislation, which will enable adult Australian residents who are affected by an eligible natural or non-natural disaster, whether within Australia or offshore, to claim the government disaster recovery payment and receive financial assistance for themselves and their children to aid with their much needed recovery.

The disaster recovery payment will rightly be exempt from all Australian government means-testing arrangements and will be tax exempt. I am very impressed and very pleased to see that this will take place. It will be of great assistance in disasters such as tropical Cyclone Larry, which caused such devastation earlier this year and, as I said, the bushfires in my Riverina town of Junee and around the Illabo, Cootamundra and Gundagai areas. It will complement the existing arrangements and provide choice in the way in which government may wish to respond when these things take place.

We heard the member for Banks talking at considerable length on another area that is absolutely close to my heart. I commend the member for Banks for his views and his commitment to the families of disabled children and the carers of disabled children. I want to specifically speak on the bill that amends the social security means-testing and gifting rules from 20 September 2006 to enable parents and immediate family members to establish and contribute to a specific trust up to the value of $500,000 for the current and future care of their severely disabled children.

As I said, I commend the member for Banks, because he has always been a supporter and a defender of the rights of the disability sector. Sitting here listening to him, I thought it must have been so frustrating for him to be sitting within the Labor opposition and the Labor Party during its time in government and know that his passion and commitment were not being addressed in any way whatsoever. It must have been frustrating for him to know of the need for so long to have a long-term plan for the families of disabled children and to know that there was no policy and no future thought about how that was going to be delivered by a Labor government. It must be very disheartening for him now to know that Labor in opposition has no policy on this particular issue. I feel for him because he is obviously very committed—and I say that with absolute respect.

It is a pleasure to listen to anybody in this House who supports the families of disabled children, because for far too long—forever—their needs have been overlooked, because we just expect that they will care for their disabled children, and it has become increasingly difficult for these families to do so. I have raised this issue in the House time and time again and I have put forward a private member’s bill. I am committed to ensuring that we put up alternative proposals on this issue in the House, and hopefully I will be able to achieve that whilst I am still a member of this House, which will be at the discretion of my electorate. I commend the former Minister for Family and Community Services, Kay Patterson, and the Prime Minister for hearing the pleas last year, understanding the pressures and putting in place this package that will enable people to save and not be affected tax-wise and not lose benefits. I applaud the previous minister.

I also applaud the current minister, the Minister for Families, Community Services and Indigenous Affairs, Mr Brough. He is a fabulous minister, doing an enormously good job on a whole host of issues, particularly in the area that he is undertaking at the moment—the most difficult area, as the member for Banks alluded to—requiring a whole suite of packages and issues to be dealt with. The minister, Mal Brough, has had the fortitude and the stamina to stand up and say, ‘Yes, there is a whole host of issues that need to be addressed but the No. 1 issue to start with is law and order and we must not back off on that issue.’

I also commend the minister for the time he and his staff have taken to listen to me and some colleagues of mine out in the private sector. These people are very good friends of mine who have equally as strong a passion for and commitment to the disabilities area—perhaps brought on by my incessant discussion of this during our friendship—and have decided to come on board and assist me in trying to deliver something. These are people out in the private sector who have generously donated their corporate time, energy and vision to come together to assist in putting together a proposal for research funding.

I thank the minister for the time he has spent with my colleagues and me. I look forward to further discussions on our proposal for research funding. Our proposal involves a targeted investigation. I am particularly keen to call it ‘collaborative care’. It is a collaborative care model that recognises what was achieved last year in the form of a savings vehicle for some people to be able to take advantage of, but there is a need to go further. We want to build upon the very good platform put in place by this legislation that we are considering today. As I said, it involves a targeted investigation into the constraints on current arrangements and structures faced by individuals, organisations and governments in providing funds to care for disabled people from birth to old age.

We also want to investigate possible new collaborative models and to reallocate and leverage available resources within extended families and interest groups to enable people to better plan for their future care needs. We want to investigate the types of financial products and other structures that may address this problem. We see superannuation and insurance products for a whole host of things. Surely out there in the realm of financial institutions there has to be a product that can be developed and put in place—dare I say it, a particular future-proofing plan for our disabled children—for the peace of mind of parents and carers of disabled people such that they can start to plan for the future and the future needs of their children when they may no longer be around or able to cope for a variety of reasons. We also want to investigate current obstacles preventing the implementation of any new model, such as the type of model that we would like to research, and the obstacles preventing the implementation of funding vehicles.

I am not saying that this is what is required; I am saying that we need to investigate it. Nobody has actually put the effort into doing so. That may be because the plight of the disabled is not a sexy industry. A more predominant and overpowering area, such as heart or cancer research, gets a lot of attention. The plight of the disabled has brought about some but never enough attention for the actual crisis that exists. What may be required could be similar to our government’s approach—and I applaud our government again for helping to better provide for the costs of retirement through superannuation copayment arrangements. For our low-income earners, we have a copayment and an incentive to save for the future. I say: let us investigate it.

There is now a clear incentive for people to channel their own funds into superannuation as a future-proofing mechanism, and there is a need for the carers and families of disabled children to be able to do the same from the point of birth. A point of difference with our superannuation model is that this would be a collaborative care approach that extends the principle beyond just the personal individual level. It goes to a joint model that would look after the interests of the needy members of the community in collaboration with families and carers and with financial and other service provider sectors, with the entire community and with all levels of government—local, state and federal. The collaborative care approach may have widespread application in our Australian society not only by encouraging people to work cooperatively to meet agreed community needs from their own resources but by dramatically changing the demand for and the shape of recurrent direct public funding for welfare services.

We propose that we research these goals and that this research have a specific focus on financing care for our young disabled people, particularly for the peace of mind of their families and their carers. I put up a private members’ business motion. It was bipartisan—everybody acknowledged the need to do more and to do something like this. There is an acknowledged and urgent need to find sustainable and affordable ways for local communities to care for those of their number who are disabled, particularly disabled young people whose care requirements—we often forget this—will continue beyond the care of the families. They will still be requiring care when their parents have died. They will need care beyond their families’ life for decades into the future. We have highlighted the growing problem, but we do not have the answers. I am trying to develop the answers, in order to better represent not just the great organisation that I am patron of, along with Sir William Deane, which is Kurrajong Waratah in the Riverina—it does a fantastic job—but people right across Australia. Not all Australians have the assistance and help of Kurrajong Waratah type organisations. Even Kurrajong Waratah cannot meet the rising demand of care for ageing disabled children.

I would like to applaud this legislation, but I urge and encourage the government to go further and assist us in funding our research model because this can be a benefit for not only all the current carers and families of disabled people but also those in the future. I have said in this House time and time again that our technology is such that we can save our babies at 22 weeks and 23 weeks, and so we should, but then many of those children require a lifetime of intense care. We have the technology in place to save our babies and to save people involved in car accidents and from a whole host of things, such as brain acquired injury or cancer. People are living very long lives due to technology but, unfortunately, our level of care and support structures have not kept up with our technological advances. We are now finding families being left out, not knowing where to turn. We have lots of assistance available but not the amount of assistance required and not the ability for families to plan for themselves, be in control of their planning and know that where they are going is in the best interests of their children or siblings. To die without peace of mind, to know that your ageing disabled child has nowhere to go other than an old people’s home that is absolutely not acceptable, must be the worst of all possible deaths. I ask the House to consider that any single person may be in this predicament at any time. Nobody wishes this on anyone, but the fact of the matter is it can happen.

We have an increasing incidence of cerebral palsy. Why do we have that? I have this fantastic DVD from the spastic council that shows the beautiful little faces of disabled children who are just starting to walk. Their little faces bring tears to your eyes. They are trying to overcome and combat it and develop ways in which they can manage their disability. We sit there and ooh and aah and say, ‘Aren’t they beautiful?’ I could show you a DVD of that child when it is 30 and it no longer looks as cute as it did when it was a child or a little baby and we wanted to pick it up and cuddle it. I could show you a DVD of those same children in their adult years. Would we say that we wanted to hug and cuddle them? It is a difficult feeling. It is confronting, but these beautiful little children with many disabilities that we wanted to nurture and protect grow into adults. It is our role and obligation to plan for these children. It is our obligation to investigate and put in place pathways that can assist the planning for these children. We all recognise there will be a reduced workforce in all of Australia in the future. Who is going to be there to give these children the care they need as they age unless we put in place a model or proposal to achieve this?

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I would like to direct my initial comments to the comments that have just been made by the member for Riverina. I think that she painted a very clear picture of the way the community and people in general react to people with disabilities. People empathise with the family of a young child or a baby with a disability. They look at the little baby and say that it is beautiful, just as the member for Riverina said. When that child reaches adulthood you will find people walking along the street and, rather than even making eye contact with that young adult, or an even older adult, they turn the other way so that they do not have to confront the issue that there are people with severe disabilities. I think there is a little guilt that maybe we do not look after them in the way that we should. I will make some more comments on that later in my speech, but I would just like to endorse those comments made by the member for Riverina. We do need to remember that that cute little baby becomes an adult and that, as an adult, those disabilities still exist and they still require the support and assistance not only of their parents and the community but also of government at all levels. I do not think government can abrogate its responsibilities.

I support the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006. This bill implements a number of the 2006 budget measures. They are to begin on 1 July and in December this year. Probably the most significant measures are those that increase income thresholds for families—the family tax benefit part A, which is supposed to be $93 million over four years—and the extension of the large-family supplement to families with three children. The threshold for family tax benefit part A has been increased to $40,000—it is currently $33,361—with benefits reduced by 20c in every dollar earned over that amount. The 2005 budget included increases to the threshold from $33,361 to $37,500. That measure would have come into effect on 1 July this year but will be superseded by that which was introduced in the 2006 budget. The combined effect of these measures will mean that, from 1 July 2006, half a million families will receive an average of an additional $37 a fortnight through the family tax benefits. As a result of the increase in the threshold, more than 40,000 families will also become eligible for low-income health cards.

No-one could disagree with these measures. They are long overdue. Every member of this House would recognise just how hard it is for families at the moment. This government has sat on its heels and done very little. It promised the Australian people at the last election that there would be no interest rate rises under its watch, but since the last election we have had two interest rate increases, which have had a significant impact on family income. Families have also been confronted with rising petrol prices. The money that is being delivered to families in this budget will be eaten up by just those two factors.

Families are struggling. I have had constituents in my electorate come and talk to me about both these issues. They say to me that because of the increased petrol costs they have had to make decisions about whether their children can continue to play sport. The Shortland electorate is spread out. It takes in Lake Macquarie and the Central Coast. If a family has young children who are playing soccer at the weekend, they have to be taken not only to soccer training but also to their soccer game. Whilst the western side of Lake Macquarie may only be a short distance, parents may have to do a round trip of about 150 kilometres. For families who have three children playing soccer, the government’s extended large-family supplement of $248 per year will be eaten up with a click of the fingers because it costs so much in petrol to take children from one place to another.

Whilst this budget delivers long overdue extra money to families in the form of family tax benefit A, it does not take into account the increasing costs for families. Families with private medical insurance face medical insurance rates which have increased well and truly above the CPI. This is another area where the government has sat on its hands. On the one hand the government encourages families to take out private health insurance, but on the other hand it fails to do anything to keep private health insurance affordable. The government has not addressed the issue of the gaps in private health insurance. These are all increased costs for families. Accompanying the increasing price of petrol has been an increase in the price of food. Fresh fruit and vegetables have become very expensive because transporting that food from the farm to the supermarket requires the use of petrol.

Whilst some very welcome benefits are being delivered to families in this budget, they do not go anywhere near to making up for the rising cost of petrol, interest rates and medical insurance. I put it on the record that I believe there will be a further increase in interest rates, which will be another impost on families. The government has also failed to address the issue of the unaffordability of child care for families. This issue needs to be taken into account. I mentioned the extended large-family supplement, which is now being extended to families with three children and is worth $248 a year. If I had a young family and I was considering whether to have another child, I do not think that $248 would convince me that it was affordable. Australia has a declining birth rate. We had a little blip, and it went up marginally, but overall the birth rate is going down. We need a measure that is more proactive than providing families with a supplement of $248 a year.

The government needs to address the issue of job security. Unfortunately, under the Howard government, families have become less secure in their lifestyle. From one day to the next they do not know whether they will be able to sustain their job. We have had an increased casualisation of the workforce and the introduction of the Work Choices legislation, which attacks wages and conditions of workers. This flows through to families and impacts on their income. The increase to family tax benefit part A really has to be looked at in the context of lower wages for families and the fact they are doing it hard.

The bill allows for the creation of a special disability trust to assist families to make private financial provision for people with severe disabilities. It will allow families to set up trusts to the value of $500,000 a year to provide for current and future care of a severely disabled family member. The income and assets of the trust up to $500,000 will not impact on a person’s pension entitlement. That is quite welcome, but I have news for the government: most people who have severely disabled children find that they are not in a position to set up trusts to the value of $500,000. One of the parents will have to remain at home. There will not be the option of becoming a two-income family. Rather, that family will have to have one person stay at home, their income level will be severely reduced, there will be increased medical costs and care costs, increased costs associated with goods and services that that disabled person will need and there will be out-of-pocket expenses all the way along the line.

The $500,000 trust will obviously benefit some people, but I do not think it addresses the real issue that surrounds the care of disabled family members. Each and every member of this House will have had constituents with a disabled child talk to them about their concern for what will happen to their child when they die—their child whom they love, their child whom they have protected, their child whom they have fought for and their child who has been the focal point of their life. This is not the answer. The answer is that governments at all levels—federal, state and, to an extent, local governments—have to make a commitment to the care of disabled adults.

A constituent spoke to me about her friend who had a disabled daughter she had cared for from the time she was six weeks old. She was a normal child, but she caught a virus and became very severely disabled. The mother contracted Parkinson’s disease and cancer and she died. Her husband died a few months before her, and the one thing she worried about was the care of her daughter. Because there had been a need for her to provide such a high level of care during her daughter’s life, she could not work. Her husband had been a miner and he retired early because he had a severe heart condition. As she became sicker, she became totally focused on what would happen to her beautiful daughter—the jewel of her life—once she died. Luckily, accommodation was found for her daughter just days before she died and she died knowing that her daughter was being cared for. But that is not the way it should happen.

Governments at any level should not remove themselves from the responsibility of providing care for younger disabled people when their parents die. To put them into nursing homes with elderly people is not the answer. I welcome the announcement by the government earlier this year that places and funds would be made available for specific care for younger people with disabilities. That is a move in the right direction, but there needs to be a lot more. It should have happened a lot sooner. I do not want the government to abrogate its responsibility for people with disabilities. I am so concerned about it that I am holding a disability forum in my electorate on 29 June. At that disability forum we will be discussing issues that relate to families which have children with severe disabilities. We will also be discussing the implications of the government’s Welfare to Work legislation.

A young woman with a severe disability spoke to me after she received a letter from Centrelink. She was terrified that her disability support pension would be cut off. This young woman cannot work and live alone. The information that she was given was confusing. There is absolutely no way her disability support pension will be terminated, but I think when letters are sent out the government need to be aware which people they are targeting. So there are a number of issues surrounding disability, particularly severe disability.

I support the government’s payment of $1,000 to adults and $400 to children. The setting up of a permanent disaster recovery payment to people affected by disasters is a good move. It puts in place certainty and removes the need to react on an ad hoc basis to these issues. The extension of the utilities allowance to mature age, widow and partner allowance recipients is also a positive step, but $102 per pension family is definitely inadequate. I have raised before in the parliament the extension of the carers payment to carers with children under 16 with severe disabilities. There are a number of issues that surround this, and I think that the government has handled it very poorly in the past. I think there needs to be a little more sensitivity in the way that it is being implemented through Centrelink.

Overall, I support this legislation, but the government needs to do a lot more for families than that which is involved in this legislation. Families are doing it hard. They are fighting to survive. They are fighting to put bread on the table. They are fighting to pay for their Medicare bills. They are fighting to find the money to put petrol in their cars to ensure that their kids can go to sport. Sport is a very important part of young people’s lives.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

The core of the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006 increases the income test-free area for family tax benefit part A quite substantially. The government, in the previous year’s budget, had already decided to increase the free area from $33,361 to $37,500 and that was to take effect from 1 July 2006, but the budget brought down just a few weeks ago in May further increases that threshold to $40,000. Therefore, the effect is to push the operation of what are called effective marginal tax rates out further along the income scale. I would suggest that that has some merit because it means that over a fairly substantial range of income—in this case, $40,000—there is no withdrawal of the family tax benefit and, therefore, no contribution to effective marginal tax rates from that withdrawal over the income range of up to $40,000. When we are so concerned with encouraging workforce participation by women, this is a step in the right direction. It certainly, however, gives me an opportunity to make some observations about the family payment system.

Labor introduced a needs based family payment system to recognise the higher costs of having and bringing up children. Labor not only introduced that system through what was then called the family allowance supplement but today strongly supports the family payment system for lower and middle income earners. I strongly support the family payment system for lower and middle income earners, but there are some design features that have adverse consequences for workforce participation by women who have left the workforce to have a baby and are considering coming back into the workforce.

These sorts of problems have been articulated quite eloquently by John Head from Monash University and also by Patricia Apps. Effectively, they have demonstrated that the impediments to returning to work for second income earners, who are most typically women, can be very high in Australia and that the operation of the tax system in tandem with the family payments system means that there are very high effective marginal tax rates over relevant income ranges. What we mean by effective marginal tax rates is the amount of money that is lost per extra dollar of income earned as a result of the tax paid and the loss of benefits—in this case, the family tax benefits. It is probably worth me quoting from John Head’s article, which I think is a very good one. He says:

By strongly favouring single-earner families and disfavouring two-earner families, it should be reasonably obvious that we will end up with fewer second earners and many of these will work fewer hours.

What he is really saying is that the expansion of the family tax system has shifted the tax unit progressively away from the individual and onto the family. We can see some arguments for that, but there are real adverse consequences as well, as everyone in this parliament should appreciate. It means that, when a mother who has had a baby is considering coming back into the workforce, because of the family taxation unit rather than the individual taxation unit, she is adversely affected by the fact that her partner, her husband, is already earning income. If the husband is earning sufficient income to take the family above the income-free threshold, the benefits are withdrawn—in this case, at a rate of 20c in the dollar. To obtain the effective marginal tax rate, you add that 20c in the dollar to the relevant marginal income tax rate to get the total figure. That can be quite high. It gets even higher a little bit further along the income scale because, with the continuing of the phasing-out of the family tax benefit, you then hit a base rate of family tax benefit which applies, again, over quite an income range, but after a while that too is phased out. It is phased out not at 20c in the dollar but at 30c in the dollar. For many families, the taxable income will be such that the marginal tax rate will be 40c in the dollar.

If you are over an income range where you are losing 40c in the dollar through tax for every extra dollar earned plus 30c in the dollar through the operation of the final phasing-out of the family tax benefit, then the effective marginal tax rate will be those two figures combined, which is 70c in the dollar. Indeed, Mr Head goes on to say:

… Apps shows that EMTRs—

effective marginal tax rates—

rise to almost 70% at average income levels—

for women who seek to return to the workforce. He continues:

As a consequence … second-earners in low- and average-wage families pay up to 50% of their total incomes in tax, the highest average tax rates in the economy.

So Professor Apps and Mr Head are pointing out that mothers really get whacked when they seek to return to work as a result of the withdrawal of family tax benefit and the relevant marginal income tax rate. Mr Head makes some very interesting observations. He says:

While the workforce participation rate of women has risen over time to the current 75% of the corresponding male rate, hours worked by women have remained stuck at a mere 50% of male hours for the under-65s—one of the lowest rates in the developed countries of the OECD group.

He goes on to say:

If we are to meet the challenge of demographic change, it is obvious that we must somehow draw heavily on this reserve army of well educated, able-bodied but underemployed women.

I want to spend a little bit of time exploring the problem of relatively low participation of women in terms of hours worked per woman in the workforce. We have, as articulated in the Intergenerational report and in the Productivity Commission report on the economic implications of an ageing population, a real issue on our hands of population ageing, and that issue has been created by decisions that couples have made over the last 40 years. Fertility has been falling over that period after peaking in around 1961, at the height of the baby boom, when the fertility rate was around 3½ babies per woman. It is now down to about 1.8, so there has been a very substantial decline.

That slide in fertility is combined with the consequences of marvellous new medical technologies allowing people to live longer—and that is a great thing in a civilised society. Certainly one of the most important measures of prosperity in a developed country is the longevity of its people. That is all very good, but it does mean that we are going to experience having more than four million extra Australians over the age of 65 by around 2042 and a much smaller number of extra working age Australians. That means that we will have fewer working age Australians earning the incomes and paying the taxes to support those who are too old or too young to work.

Given that, as the Treasurer said, demography is destiny, there is not an awful lot that we can do about those realities. The die is cast. As a consequence of decisions made over the last 40 years, we need to get the greatest participation and the greatest productivity that we reasonably can out of those who are of working age. So that is why we are so interested in lifting the workforce participation, in particular of women who have had a baby and are contemplating whether or not to come back into the workforce. No-one on this side of the parliament—and, I suspect, no-one on the government side of the parliament—believes in trying to force women back into the workforce, but certainly we on the Labor side do not believe in putting obstacles in their way. It is the interaction of the family payment system in particular with the income tax system that has led to these obstacles being put in the way of women coming back into the workforce.

The other major obstacle, which is very topical today, is the high cost of child care. OECD research shows that Australia lags very badly behind in the provision or availability of affordable child care. Again, OECD research indicates that the best response that you can get in lowering the cost of child care is from lower and middle income earners. We do not do enough to remove that obstacle of the high cost of child care to women re-entering the workforce.

Denmark is a pacesetter amongst the OECD countries and, again, OECD research shows that, if Australia were to replicate the Danish experience of the availability of low-cost child care, our workforce participation by mothers would be much higher. So we would get very high returns from investing in child care. The member for Lindsay is right in her observations that the government’s child-care system is a shambles. It is chaotic and it is ineffective in achieving the sorts of objectives which are so important to Australia’s future.

The child-care benefit is actually a good policy. It was introduced in the year 2000, and when the coalition introduces a good policy I and others on the Labor side of politics will acknowledge that. It is a policy that continues to provide higher benefits to lower  and middle income earners, and then it phases out at higher levels of income. But during the election campaign in 2004 the government effectively reversed the benefits of that by introducing a child-care rebate which pays through the tax system 30 per cent of the out-of-pocket expenses of people accessing child care from approved providers. There is great inequity and arbitrariness as to what constitutes an approved provider, but that is a matter for another day.

This really means that higher income earners have the higher out-of-pocket expenses because they do not get the child-care benefit, and so the government is providing extra benefits to higher income earners through the child-care rebate. The consequence for workforce participation, compared with what you would get from an increase in the child-care benefit, is one of lost opportunity. You will not get the same responsiveness by increasing the benefits available to higher income women through the child-care rebate as you would through increasing the child-care benefit.

So enough on the child-care dimension of the argument. We now return to the question of high effective marginal tax rates. The truth of the matter is that, if you do have a family payment system that phases out at higher levels of income, then those phase-out rates, whatever they are, will contribute to the problem of high effective marginal tax rates. This legislation pushes the effective marginal tax rates further up the income scale by increasing the income-free area from around $33,000 up to $40,000. That does not mean the problem goes away; that just means that it is shifted. That is why we as policymakers need to think creatively about ways around this problem. It is interesting that Mr Head actually suggests:

The only real solution is ... to reverse the Howard policies in the tax unit area and return the personal income tax to an individual basis.

That is his opinion and he is certainly entitled to it. He then goes on to say:

For this purpose the means tests that currently apply to—

family tax benefit part A and part B—

would need to be removed or greatly eased. Child benefits would ideally become universal payments to all families, single-earner and two-earner alike.

Statistically or arithmetically, he is right, because if you do not phase out family payments then there is no contribution from them to effective marginal tax rates. But the problem is cost. If we are going to have a situation in the future of universality of family payments, that means that it has got to be funded from somewhere, and we know what that ‘somewhere’ is going to be: it is going to be higher rates of income tax on working Australians. So while you remove one source of high effective marginal tax rates—that is, the family payments system—you are then running around the corner and increasing personal income tax rates, which of themselves contribute to high effective marginal tax rates.

I have suggested in a book that I recently released, Vital Signs, Vibrant Society, that we could look at universality of family payments in respect of children under the age of three. Why did I pick the age of three? From discussions with Professor Peter McDonald and others, it appears from their work on demography that this is the critical time during which women are making those decisions on whether to re-enter the workforce. So my thought, and it is a contribution to the debate, is that we could consider a universal family payments system in respect of children under the age of three but thereafter have a means tested family payments system. It is an attempt at a little bit of lateral thinking. It does not go as far as Mr Head suggests, which is to have a completely universal family payments system, because his suggestion has real budgetary consequences. Those extra costs would have to be funded somehow and that ‘somehow’ would be higher rates of personal income tax.

We need to be careful, when redesigning the family payments system, that we do not simply increase marginal rates of income tax while we reduce the withdrawal rates on family payments, and that seems to have been what has been going on. I reiterate that I strongly support the family payments system for low- and middle-income earners but I do question fundamentally why mothers in millionaire families are able to obtain family tax benefit part B as long as they agree not to work. I thought the problem of population ageing and trying to increase workforce participation would suggest that we encourage women to work rather than pay them not to work. That is in fact what the Prime Minister is doing through the operation of family tax benefit part B. He is saying to very wealthy mothers, ‘If you agree with me to stay home and not re-enter the workforce, I will pay you $3,300 a year.’

I do not see why that should be a priority when we have had a debate here about appalling conditions in Aboriginal communities, when we know that so many kids miss out on a good education due to a lack of early childhood intervention and support for reading recovery programs in schools and when there are so many social problems, including the lack of affordable child care for low- and middle-income earners. I do not understand why it is a priority of the Prime Minister of Australia to pay $3,300 to the wealthiest women in this country as long as they agree to stay home. But that is this Prime Minister’s social engineering. It does remind us of the white picket fence and of his view that the place for women is at home rather than in the workforce, which works absolutely against policies designed to deal with the whole problem of population ageing.

We need to come up with policies that encourage greater workforce participation by women. My suggestion of a universal payment for women who have children under the age of three is one contribution to that debate. It would not be all that expensive, because 88 per cent of families already receive a family tax benefit as a consequence of the gradual easing of the means test on family tax benefits and, in effect, the nonapplication of the means test on family tax benefit part B because it is only applied to the income of the mother and if she stays home she gets that benefit. So 88 per cent of families get a family tax benefit and if we extend that to 100 per cent for children under the age of three it would cost roughly $1.4 billion. I think we could find those funds and therefore we would have as a consequence a great increase in workforce participation by mothers helping to combat the problem of population ageing in this country.

Mal Brough (Longman, Liberal Party, Minister Assisting the Prime Minister for Indigenous Affairs) Share this | Link to this | Hansard source

in reply—In wrapping up this debate and commending the Families, Community Services and Indigenous Affairs and Other Legislation (2006 Budget and Other Measures) Bill 2006 to the House, I would like to make some observations on some of the contributions from those opposite who, whilst acknowledging that these are all good measures and are obviously not opposing them, certainly like to revisit history and look at it differently. We had the member for Shortland and the member for Rankin telling us that child care is expensive and out of control.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

That was the member for Lindsay. It’s mistaken identity.

Mal Brough (Longman, Liberal Party, Minister Assisting the Prime Minister for Indigenous Affairs) Share this | Link to this | Hansard source

Let me remind the member for Rankin, if the member for Rankin would listen—

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

It’s mistaken identity. That was the member for Lindsay.

Mal Brough (Longman, Liberal Party, Minister Assisting the Prime Minister for Indigenous Affairs) Share this | Link to this | Hansard source

The member for Rankin does not like to look at the record of his party when it was in government before 1996, because a single-income family receiving average weekly earnings with one child in 20 hours of care was paying 5.8 per cent of its weekly net income in 1995 compared with 3.9 per cent in 2004. However, the situation is even more pronounced for families using family day care. A sole parent receiving parenting payments and studying paid 2.8 per cent of their weekly net income in 1995 under a Labor government, which rails long and hard about child-care costs. In 2004, in the same situation, it was 0.3 per cent—and that is before the government’s child-care tax rebate of up to $4,000 comes into play from 1 July. So when the Labor Party stands up here and preaches to the coalition government about the cost of child care, it should look at the real statistics, the real facts: child care today, even before the child-care tax rebate is introduced, is more affordable than it was under a Labor government. There are also twice as many places as there were then.

The member for Rankin also said that he was strongly supportive of these measures today, and of the family payment system. And well may he be supportive, because he went to the last poll supporting a Labor platform that was going to make many constituents in his electorate worse off with the changes to the family tax benefit system. That is a statement of fact. They were simply going to make some of the hardest done by families on around $35,000 worse off. So I applaud him for changing sides in this argument, for recognising that not one individual family was going to be worse off and that everyone was going to be better off under the coalition. The Labor Party actually sought to make some Australian families doing it the toughest worse off. It beggars belief, but that is a statement of fact. The bill before us today builds on the success of the Howard government’s principal support that we put into the family and ensures that Australian families have real benefits, real cash in their pockets to make the decisions that they need to and that the choices they make are the best for their families.

The member for Rankin made one other comment in the dying stages of his speech. I am not wishing to pick on the member for Rankin; I just happened to be here to hear his contribution. He referred to early childhood learning. I agree with him that it is important that we ensure that children get the best education possible, and those formative years are key. I would ask him to turn to his state Labor colleagues in New South Wales, who are spending just on $100 per child in preschool. There are fewer children in preschool in New South Wales than in any other state. In his and my own state of Queensland it is well into the 90s, and that is a good thing. The state Labor government there are about to bring down their budget and they have trumpeted the fact that they are going to increase the amount of spending in this area, bringing it up to still well below the national average and nothing like best practice. It is a disgrace. It is something that they should fix immediately. They should adopt the coalition’s policy in New South Wales—that is, providing a preschool place for these young children and giving those families the best opportunity in life. If they were to do that, and bring it up to a decent benchmark, it would actually free up child-care places for those who need it and put young children into a formal learning environment where we all agree they will get the best chance in life. Unfortunately, the state Labor government in New South Wales has continued to abrogate its responsibilities.

The member for Banks wandered widely from the debate and got into Indigenous affairs. He referred to me as a ‘boy’. I will take that as a compliment. I must look younger than I am! But he also said that he has sat in the sand with Aboriginal people. I applaud him for actually taking the time, when he was shadow minister, to listen to Indigenous people. But can I say that, if he has not seen the pain and the suffering that the failed policies of self-determination, of believing land rights were somehow going to fix all the problems, then he did not sit in the sand; he has had his head stuck in the sand. He needs to pull his head out of the sand. He needs to have a look at the pain and suffering that these people are telling me and others about. He should look at the reports that he refers to and admit that what has gone before has not worked: ATSIC did not work, self-determination did not work. Let us go to a new system, which is old—the oldest system of all—and that is saying that the rights of every child and every woman should be upheld, that a criminal justice system should work for all and not some and that law and order is a fundamental right of every civilised society and every individual in Australia. You do not get that by denying the mistakes of the past and the consequences of them.

This is a very positive bill before the House. I remind all members that, under the Howard government, when we talk today about reducing the marginal tax rate that people are paying, we should keep in mind that a family with two children aged three and eight, on average weekly earnings of around $53,500 today, will have a net tax threshold of $48,000. Out of a total income coming into the house of $53,534, that family will actually have $52,024 to spend on the things that are important to them—a net tax bill of just over $1,500. That is real reform. You cannot lower that tax much further. In fact, you can only lower it effectively by $1,510. The reality is that the Howard government has delivered for families in spades and will continue to do so because we recognise they are genuinely the foundation that builds a strong society. Giving them the resources to be able to buy their own homes, to be able to school their children, to do all the things that are important to a functioning society is based on their capacity to do so, including their financial capacity as delivered through jobs and a tax system. We should never forget that 1.7 million more Australians are in jobs today than they were under Labor. They actually have choices that they did not have, they are paying less tax and they have higher real wages. That is a wonderful combination, which has given them far greater confidence in their futures than they had in the bleak years between 1983 and 1995.

These measures build on the successes of the last 10 years by giving real choice to families. Families on incomes up to $40,000—up from $33,361—will receive family tax benefit part A. This effectively means an additional $9.80 a week in the pay packets of around half a million Australian families to spend as they feel necessary. This equates to around $993 million in additional assistance over four years. It includes $86 million for increased eligibility for health care cards for another 35,000 families, giving them security and confidence that the health system is working for them.

Families with three children will also receive an additional boost. Governments have always recognised that large families need additional resources, and families with four children have been eligible for the large-family supplement. We have reduced that to three children, ensuring that families with three or more children receive an additional $248 per child annually. This is another benefit that recognises the additional costs and extra responsibilities of families.

In this bill we have also looked after a group of people who do it very tough—the resident parent whose former partner has not made the appropriate child support payments but makes those payments in a subsequent tax year. This is an unfortunate circumstance which happens all too often. In the past, we would have looked at the resident parent’s income and said: ‘Sorry, you are now over the threshold. Even though you were owed that money, at a time when you were eligible for it because your income was low, you will not receive it.’ There is an amendment in this bill to ensure that, even though their income has now increased, they will receive the income support that the non-resident parent was due to provide to them at the time when they had a lower household income and were eligible for it. This will be welcomed by many families. It gives greater credibility to the child support system and it will increase the family tax benefit entitlements of these people.

A further measure in this bill, as announced by the government in the 2006 budget, is a one-off payment for certain older Australians equal to the annual utilities allowance of $102.80. I heard the member for Shortland say, ‘It is only $102.80.’ To all those Australians who are going to be receiving this—including those receiving mature age allowance, widow allowance and partner allowance who in the past have not received the utilities allowance but will now be beneficiaries—it is $102.80 over and above anything they received from the Labor Party when they were in government. There simply was no utilities payment at that time.

We introduced that payment for self-funded retirees because we could not come to an agreement with the states. The states would not give self-funded retirees the same benefits they bestow on pensioners in the form of some of the concessions. After my predecessors unsuccessfully negotiated long and hard for many years to ensure that self-funded retirees would receive the same benefits as pensioners, the government made an election commitment that we would make this payment directly to self-funded retirees and that they too would benefit from this additional one-off payment. We have now implemented that.

We are all too well aware that, unfortunately, we are beset by both natural and unnatural disasters. We have had the Bali bombings, the Asian tsunami, the London bombings, the Eyre Peninsula fires and Cyclone Larry—to mention just a few. In these times the great Australian spirit shines through and many Australians donate money to these causes recognising the hardship of fellow Australians and even people overseas, as they did with the tsunami. The government flies into action to try to provide support in a very practical sense. As part of that, we have provided for a disaster recovery payment in this bill. This will formalise ex gratia payments to assist Australians in these disasters, whether they be onshore or offshore. Initially, people affected by a disaster will be able to claim $1,000 for themselves and $400 for each child in their care. Not only is this a positive measure but it also ensures that we put into law what has in the past been done in an ad hoc fashion. I am sure it will be supported by all sides.

This bill ensures that for the first time the carer payment will be available to parents of children with severe intellectual, psychiatric or behavioural disabilities. This will simplify the system and ensure that some people will now be able to access the carer payment under the expanded eligibility criteria. I do not think there would be a person in this House who does not understand the role that carers play, the compassion they show and their commitment to their loved ones. It is recognised by everyone in this place, and I am sure that everyone will appreciate this improvement in the bill and its practical implications for those individuals.

Families are often concerned about what is going to happen to their disabled loved ones when the carers pass away. We are introducing in this bill a new provision which will allow immediate family members to establish a special disability trust for the current and future care of severely disabled persons. Severely disabled persons social security payment such as the disability support pension will now not be affected by any trust income or trust assets up to the value of $500,000. Also, gifts to the trust to a total of $500,000 from immediate family members of age pension age will not affect the donor’s social security payments. This is a relaxation of the Social Security Act and Veterans’ Entitlements Act provisions which limit the assets a person can hold or give away without affecting their entitlement to payments. In a very practical way this will give comfort to a number of older Australians who are very fearful of the life that their loved one—in most cases, their child—is going to have when they are no longer in a position to look after them. This will give them the comfort of knowing they can purchase for them the style of care they deserve and that they would wish for them. I am sure that many Australians will take up and recognise the benefits that this practical measure will bestow upon them.

There are many positive measures in this bill, and it also contains some consequential provisions. I will complete my address by reminding those opposite that all of these positive measures for assisting families, carers, older Australians and people trying to provide for their disabled children once their parents have passed away are only possible because we have a strong economy. We have been able to run budget surpluses and more Australians are in work. Therefore these measures are the dividend that we can provide back to the Australian public. It can only go on if we continue to work hard to ensure that the economy grows strongly and job creation is maintained, and that is what the Howard government is committed to. This bill really is the result of 10 years of hard work, and the dividends go back to the Australians who deserve them most. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.