Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

The government recognises that there are fundamental issues with the current design of the family tax benefits system which need to be addressed to ensure that the system can be sustainable into the future. That is why we have announced a number of reforms in the 2014-15 budget to better target those benefits. Reforms like those we announced in the budget are a necessary and important part of bringing the budget back under control and helping to rein in the fiscal gap between revenue and expenditure growth.

In 2014-15, the government will provide around $19 billion in family tax benefits. Family tax benefits should provide assistance to families who need it most while encouraging everyone who can work to do so. In the budget, we announced that we want to tighten eligibility for family payments to ensure they support those most in need of assistance. For example, families will continue to receive family tax benefit part B until one parent earns $100,000 per annum, families will receive family tax benefit B until their youngest child turns six and existing recipients would continue to receive payment for a further two years—the thinking here being that once the youngest child turns six the opportunity is there, when the child goes to school, for both parents to rejoin the workforce. Of course, if the choice is for that not to happen then it is not the taxpayers who should be asked to subsidise that choice. Low-income single parents will receive a new supplement of $750 per annum for each child aged between six and 12.

I applaud the work of senators like Senator Leyonhjelm who have serious and positive ideas on how to contribute to the budget repair challenge and how to help rectify Labor's debt and deficit disaster. Senator Leyonhjelm and Senator Day deserve strong credit for laying out a number of savings proposals of their own that are wide-ranging and serious contributions to our debate about the budget. Senators do share a general responsibility to all Australian taxpayers to help with budget repair, and we welcome the kind of debate that we are having today.

There are some very commendable objectives in this bill, including the objective to improve the sustainability of social security; the objective of reducing the long-term taxation burden; and the objective of reducing the level of welfare churn, where cohorts of families are in a situation where they are both paying tax and getting some of it back in welfare payments. We believe that there are already good and viable reforms in the budget and that these should be considered and supported by the Senate in the first instance. There are approximately $11 billion worth of savings in the Social Services portfolio currently before the Senate. Approximately $4.8 billion of those savings relate to the family payments area within the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill. The government believes that the Senate should first deal with the reforms in the budget bills—in particular, those reforms in budget bill No. 4—before pursuing any further reform proposals. To help ensure the long-term sustainability of supports for families, the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill makes changes to the way in which family payments are made by continuing to support those most in need.

The cost of changes to payment systems can be significant due to IT complexities and the need for significant customer interactions. The Department of Human Services is already working on a large number of significant ICT projects with similar scheduled start dates to those envisaged in this bill. These measures will ensure that the social security system in Australia is sustainable into the future. The long-term savings from these measures will help pay down the massive debt left by the previous Labor-Green government and ensure that the next generation is not left to pay off the Labor-Green debt. The government will continue to work constructively with senators across party lines to design solutions that have broad support, but, for the reasons that I have just outlined, the government will not be in a position to support this bill.