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

I thank the senator for the question, although I did discuss this with him in estimates. It seems that the senator may still not have grasped the issue. The first thing to say is: this is not a result of this year’s budget. This impact on not-for-profit organisations and their workers is not a result of this government’s budget. It is actually a result of action taken by the former government, of which you were a senior member, Senator Boswell. It was contained in measures in the 2006-07 budget. So this was not a dorothy dixer, I hasten to add.

It was legislated by the previous government. I accept it may have an adverse impact on employees in the not-for-profit sector who salary sacrifice. I have friends in that situation and I know how much salary sacrificing has been going on—and quite frankly my personal view is that it has gone too far. That is a personal view, but we did have the debates in this parliament over recent years arising out of the Productivity Commission’s original report. The Democrats were active on the issue. Nevertheless, we have a large number of workers who have salary sacrificed to a huge degree. As I indicated, this was a decision of the previous government and it is now coming into effect. We are increasingly aware of the particular effects it is having on people who work in the not-for-profit sector. We are very concerned that it is going to impact on them, because these are people helping the most vulnerable in our community. For a lot of them, salary sacrifice is what gives them the capacity to work for what are traditionally quite low wages, and they have been poorly paid in the past.

The tax benefits that people are currently receiving from their salary sacrifice arrangements are not affected by the changes; however, some employees, depending on the circumstances, may have a net loss of family benefits. The change is to use the gross value rather than the net value of reportable fringe benefits in determining a person’s income to determine what level of family assistance they are eligible to receive. As I have said, this is not part of this year’s budget; it was a decision taken by the previous government that is to be implemented now. We are aware of the concerns. The minister has undertaken to investigate those concerns. Clearly, it is likely to have more impact than perhaps was first thought, but I do stress that these are measures that have been expected for some time—they are a result of the 2006-07 budget. We want to try and treat people equally, not give advantage to people who salary sacrifice in order to gain access to government benefits. But there is no doubt that there are some consequences of this measure appearing that are going to hurt people quite seriously, and the minister has undertaken to discuss this with various groups to try and work through the issues.