Jenny Macklin (Jagajaga, Australian Labor Party, Shadow Minister for Families and Payments) Share this | Link to this | Hansard source

Labor will support the Social Services Legislation Amendment (Low Income Supplement) Bill 2015 today, despite recognising, I have to say, that this is yet another broken promise from the Abbott-Turnbull government. Before the last election, the Liberal-National party promised to keep all of the payments associated with the clean energy future package; yet today the Liberals are abolishing one of the payments that formed part of the compensation that came with Labor's reforms to move Australia to a low-carbon economy. This supplement is paid to around 7,000 low-income Australians who do not receive the same level of assistance as other families through tax cuts or social security payments that were introduced to offset the average cost of the carbon price. It is also worth acknowledging that welfare organisations like the Australian Council of Social Service have arrived at a similar position on this measure. In a media release earlier this year, ACOSS stated that 'it is appropriate that this supplement is abolished'. ACOSS noted that the supplement had not been widely taken up since its introduction in 2012.

As we have always said, we will support sensible savings when the government puts them forward. We do understand the task of fiscal repair and we will take decisions that improve our nation's finances when appropriate. But I add that we will only do so when the savings do not offend our fundamental sense of fairness. Labor will support the bill.

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

This is a 2015 budget measure that was previously introduced in the Social Services Legislation Amendment (Youth Employment and Other Measures) Bill 2015. It is being reintroduced in this bill, the Social Services Legislation Amendment (Low Income Supplement) Bill 2015. The Social Services Legislation Amendment (Youth Employment and Other Measures) Bill 2015 was, sadly, negatived in the Senate on 9 September 2015. I thank the member for Jagajaga for her contribution. No doubt it spells the beginning of a very convivial and constructive relationship between us on savings measures which invariably will have to be found inside the portfolio over which I now have stewardship.

I think that this is a very good example of a savings measure where there is excellent reason for bipartisan support for the removal of a supplement. The low-income supplement was to cease from 1 July 2017 and there were very few claims for the low-income supplement, as has been noted by the member for Jagajaga. Very few claims have been received and it was administratively a complex claim to administer. Upon interrogation upon assuming government, it was fairly clear to us on this side of the House that the service delivery costs based on the estimated take-up for administering this payment themselves exceeded the financial benefit gained by eligible individuals. So, with the abolition of the carbon tax, the assistance, in the view of the government, was no longer appropriate or required, particularly given that the administration costs actually exceeded the amount of money that was to be applied to eligible individuals. Ceasing the low-income supplement is part of an important suite of budget measures to support the sustainability of the social security system and the nation's budget.

If I might offer the House some slightly more detailed explanation as to the administrative waste that was being occasioned had this supplement been continued, the measure itself that we have before the House in this bill will deliver savings of $42.9 million over the forward estimates. As has been noted, the program had a very low take-up rate and was administratively a complex payment. Around 6,000 people are likely to no longer receive the payment from 1 July 2017. Around 70 per cent of those 6,000 people who qualify for the payment will continue to receive the energy supplement with their FTB payments.

Based on the original estimates of what were expected to be higher take-up rates, the Department of Human Services receives around $19 million per annum to deliver the program. If the program were to continue with $19 million per annum appropriated to deliver the program, recipients were only set, on our estimates, to be provided with around $2.5 million in payments a year. Had this payment been allowed to continue and were it not to be removed—and I acknowledge the bipartisan support of members opposite—we would have been putting the taxpayer to the expense of $19 million per annum to administer a program that handed out $2.5 million per annum, and that is a situation which is absurd. So it is quite proper that this be removed. Service delivery costs and administering the payment far exceeded the financial benefit gained collectively by the individuals who were eligible.

The supplement, which was originally included in the household assistance package, we might add, is excluded from any commitment to keep current pension and fortnightly rates while scrapping the carbon tax, as it was always an annual claimable payment of $300. It was never a regular fortnightly payment; it was an annual, lump-sum payment. With the abolition of the carbon tax, as has been noted in this House many times, households are, on average, $550 better off and the assistance that is to be removed in this bill is no longer required, and it is, of course, to the enduring benefit of the Australian taxpayer that they not provide $19 million a year in administration to pay out $2.5 million a year in payments. I certainly recommend this bill to the House.

Question agreed to, Mr Wilkie dissenting.

Bill read a second time.