Chris Evans (WA, Australian Labor Party, Leader of the Opposition in the Senate) Share this | Hansard source

by leave—I move opposition amendments (1), (2) and (3) on sheet 4887:

(1)    Schedule 3, page 23 (after line 10), after item 2, insert:

2A Clause 32 of Schedule 1

Omit the clause, substitute:

32 Income test

This is how to work out an individual’s reduction for adjusted taxable income:

(2)   Schedule 3, page 23 (after line 10), after item 2, insert:

2B After clause 33 of Schedule 1

Insert:

33A Combined income free area

The combined income free area is $250,000.

(3)   Schedule 3, item 3, page 23 (lines 11 to 13), omit the item, substitute:

3 Application of amendments

(1)

The amendments made by items 1 and 2 apply in relation to the 2005-2006 income year and later income years.

(2)

The amendments made by items 2A and 2B apply in relation to family tax benefit for the 2006-2007 income year and later income years.

(3)

The amount referred to in item 2B will not be subject to indexation on 1 July 2006, but will be subject to indexation in accordance with the Act for the 2007-2008 income year and later income years.

These three matters all relate to the question of income testing and the income-free area. As I indicated in my contribution to the second reading debate, Labor is moving these amendments to try to deal with our concern about the current arrangements in relation to family tax benefit part B. We supported the legislation and the movement in the thresholds for Australian families but we are most concerned that this particular payment is not means tested. So these amendments seek to put an income cap for payment of FTB part B on those families who earn more than $250,000 a year—that is, the payment would not be paid to families with incomes over $250,000 a year if Labor’s amendments are successful. On our estimates that would create savings of about $7½ million a year and would affect 2½ thousand to 3,000 families. They would be excluded from the payments of FTB part B.

The key point I want to make is that the FTB is not means tested. Traditionally in Australia over the last period, I think since Billy McMahon was caught out claiming the age pension, Australians have taken the view that welfare dollars, support provided by the government in the form pensions or allowances, ought to go to those in need. It ought to be on the basis that people receiving those benefits are those who need them. That is a principle that has been accepted by both sides of politics: welfare, social security, ought to be directed to those who are most in need and it ought to be means tested.

What we have with the FTB part B payment is, in my view, quite an obscene outcome. The situation is that, under this payment, millionaires and families on very high incomes can still be entitled to what is effectively a social welfare payment. It is just obscene. What these amendments seek to do is limit those payments to families in need. I picked the threshold of $250,000 purely to make a point, but it would probably be better assessed by a more rigorous appraisal. The point I want to make is that there is no defence for the Commonwealth, for Australian taxpayers, to be paying social security support to people of high wealth.

This has come about because the FTB part B is not means tested. Provided the secondary income earner—that is, the partner of someone on a high income—earns less than $20,000 if their children are under the age of five, or less than $16,000 if their children are over the age of five, they get some payment of family tax benefit part B. So we now know that in this country there are 70 families in which the major income earner is earning more than $1 million per annum, but some of them are receiving $3,300 in taxpayers’ funds in welfare. It is ludicrous and it is obscene—millionaires on welfare! Millionaires are being subsidised by working taxpayers in this country to the tune of $3,300 a year.

You have to ask yourself: how could we get to that situation? How on earth can we defend such a system? Why is this measure not means tested when we so carefully target a means test on all the other social security payments? We means test every dollar that a pensioner gets. Every time a pensioner, a single mum or an unemployed person earns a dollar over the threshold, we take some of that money back from them. We reduce their pension, and these are people on very low incomes. Age pensioners are on $13,000 a year but we pay the partner of a millionaire $3,300 in welfare payments. I would argue that that money would be better directed to the pensioners of Australia, who are living on very little income trying to make ends meet. It is just not acceptable that we have such disparity in our system.

The Prime Minister’s only defence for this proposition is that it is the same as providing a second tax-free threshold to the family for the effectively non-working partner, or to a partner who earns very little. That is actually not right. A second income earner in a family that earns more than a million dollars a year can still earn up to $6,000 a year without being taxed—that is, they have a totally tax-free area—and continue to receive a large proportion of family tax benefit B payment. So the Prime Minister’s defence is not right. There is no defence for paying welfare to high-income families.

We hear a lot from the government about mutual obligation and the scourge of passive welfare but in this case we pay partners of millionaires $127 a fortnight provided they do not look for work; their mutual obligation is not to work. So while the government talk about mutual obligation, getting people back into the workforce and encouraging workforce participation, they pay high-income families—people with a family income of over a million dollars a year—$127 a fortnight as long as they do not look for work; that is their mutual obligation. Their mutual obligation is to stay in Toorak sipping lattes and to ensure they are not actually out there in the job market. Provided they are comfortable in the coffee shops of Toorak or Vaucluse, they will continue to receive $127 a fortnight of taxpayers’ money, because they are meeting their mutual obligation, which is not to look for work. That is ludicrous.

Look at what the government is doing to single parents as of 1 July. Contrast that treatment of single parents with the treatment of high-income families. It is obscene, it is indefensible and it ought to be stopped. Single parents who come into the system from 1 July will actually have their entitlements to an allowance to support them and their families reduced by $55 per fortnight. So single parents on very low incomes supporting kids—having to feed, clothe and send their kids on school excursions—are going to get $55 less per fortnight under the government’s Welfare to Work package but the government will continue to insist that high-income families receive their welfare at the rate of $127 a fortnight. This is inexcusable.

I know from my own school primary school that a lot of families have trouble meeting the costs of excursions—people trying to raise kids and to give them an equal opportunity in life who cannot afford to pay the costs of excursions. At my school we have set up, through the P&C, a special fund to allow the headmaster to try to deal with this issue so that those kids do not miss out—and that school is in a relatively well to do area. These are families who cannot afford to provide their kids with what we would consider to be basic opportunities. It is obscene to see these people being paid $55 less per fortnight under the government’s changes to welfare while the government will not lift a finger to do something about the obscenity of paying high-income earners welfare.

We have been pressuring the government for a year or more on this issue and the government has refused to deal with it in any serious way. What message does this send to Australians when they hear that the government’s idea of equity is to permit this sort of situation to continue? It is completely indefensible. When you think of all the needs of people with disabilities, people who are unemployed, people on pensions and young disabled people who cannot get out of nursing homes because of the lack of public funding available, providing public funds as obligation-free payments to high-income earners, people who do not need the money, is sending completely the wrong message. It is indefensible and unfair, and it should not be tolerated in a society where we try to promote fairness. It certainly brings the whole welfare and income support system into total disrepute.

When you think of the way Indigenous people in this country are disparaged and referred to as receiving sit-down money and of the way the government goes on about disparaging those people, what I want to know is why the partners of millionaires are paid sit-down money. They are not sitting down in the dirt of outback Australia in communities without water, power and adequate housing. They are sitting down in coffee shops in Toorak and Vaucluse, collecting their taxpayer funds in the form of an obligation-free welfare payment. It is not good enough, and I urge the government to reconsider. The amendments are designed to encourage the government to end this practice, and I urge it to really reconsider its position.

The only two defences I have heard is it would cost too much to means-test this group of people and the argument that the Prime Minister uses about a second tax-free threshold, which, as I say, is completely wrong. If we can go to great lengths to ensure that families pay back debts as small as $50 to $100 in overpayments of family tax benefits and if we can go to great lengths to check what an old age pensioner might have earned in a part-time job and to make sure that they do not receive the full pension because of that income, surely we can ensure that people on high incomes do not receive scarce income support measures at the expense of those paying their taxes. So I urge the Senate to support the amendments.