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

I table a revised explanatory memorandum relating to the bill and I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This Bill contains measures totalling approximately $6 billion in savings as part of a suite of budget improvement measures.

As a Government we inherited $240 billion in accumulated deficits and a debt of $317 billion projected to increase to $667 billion within the next ten years.

Our gross debt is increasing by $6 billion a month or $1.4 billion per week in 2016/17, that's $72 billion for a year.

Since MYEFO 2013–14, we have implemented measures to improve the budget bottom line which has reduced projected debt by $55 billion, however our debt still stands at $430 billion.

The interest payments on our debt total $16 billion this year, it is one of the largest line items in the budget and it is still growing.

To arrest our debt we must restore the budget to balance.

It is clear that a stronger budget not only supports jobs and growth, but also instils confidence as the economy transitions.

Working towards balancing the budget will help restore the buffers that protect Australia against economic shocks and uncertainties, as well as safeguard against events that could threaten our future success.

Repairing the budget means we can begin to pay down debt and reduce the fiscal burden on future generations.

As we make crucial repairs to fix the budget, we will create headroom to further ease the tax burden and invest in new priorities.

In order to repair the budget and arrest growth in public debt, you must get expenditure under control.

Ratings agencies have all warned that they want to see budget measures passed or this will increase the risk of a rating downgrade. They have expressed serious doubt about whether this Parliament will be up to the task.

This Bill is part of a concerted strategy to make immediate and tangible headway towards balancing the budget.

Let me go through each of the measures contained in this Bill.

Higher education

On higher education, we are introducing a new minimum repayment threshold for all HELP debts from 1 July 2018.

We are replacing the Higher Education Grants Index (HEGI) with the Consumer Price Index (CPI) in order to streamline and simplify indexation rates for Government programs.

And we will remove the HECS-HELP benefit from 1 July next year.

Health

Health is also an area of rapidly growing expenditure.

In order to restrain this spending growth we are extending the pause on indexing the income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate for a further three years — from 1 July 2018 to 30 June 2021.

We are abolishing the National Health Performance Authority.

A measure to improve compliance in aged care providers will amend the Aged Care Act 1997 to strengthen compliance powers and implement deregulation measures.

The Government will continue to provide record levels of investment in Medicare and hospitals, whilst targeting health expenditure to where it is needed and most effective.

Welfare

One of the most difficult challenges facing the Budget is reining in growth in welfare expenditure. Welfare makes up a third of outlays in the Budget. So the largest share of these savings measures is in welfare spending.

We are removing the grandfathering arrangements for student payment recipients of the Student Start-up Scholarship, from 1 July 2017.

We are removing the family member exemption to the Newly Arrived Residents Waiting Period for access to social security payments and concession cards. It is important to note that the Special Benefit will still be available to all newly arrived residents in financial hardship who have suffered a substantial change of circumstances beyond their control after they have first entered Australia.

The financial implications of this measure include a contingency to reflect higher payments of Special Benefit. It is estimated that 20 per cent of those who will no longer be exempt from the newly arrived residents waiting period will be granted a Special Benefit during the waiting period.

We will cease the Job Commitment Bonus for long-term unemployed youth.

We are introducing an interest charge on the debts of former recipients of social welfare payments who are unwilling to enter repayment arrangements.

We are bringing in Departure Prohibition Orders for people who are not in repayment arrangements for their social welfare debts, and removing the six-year limitation on debt recovery for all social welfare debt.

We will include income from Parental Leave Pay and Dad and Partner Pay when calculating income support payments for children born or adopted from 1 October this year.

We are changing the way fringe benefits are treated under income tests for family assistance and youth income support payments.

These measures will help ensure that the Welfare system is fair and people in similar financial circumstances receive similar welfare benefits.

From January next year, new claims for Carer Allowance will not be backdated up to 12 weeks.

We are maintaining the Higher Income Free Threshold of Family Tax Benefit Part A for a further two years to make sure family payments are targeted and sustainable.

We will align the pension means testing arrangements with residential aged care arrangements. This measure removes poorly targeted exemptions that are associated with the pensioner's former home, and are only available to pensioners who pay their aged care accommodation costs in periodic payments.

We will remove current income test exemptions for parents in employment nil-rate periods. This makes the payments system fairer and more sustainable.

We have abolished the Carbon Tax and as a result we are closing Carbon Tax compensation to new Family Tax Benefit A and B and Commonwealth Seniors Health Card holders. We also remain committed to closing Carbon Tax compensation for all new welfare payment recipients and will continue to negotiate its passage through Parliament in order to pay for the National Disability Insurance Scheme.

The Family Tax Benefit (FTB) supplement from families with income greater than $80,000 are being removed from the 2016-17 financial year and we will continue to pursue the phasing out of the FTB Part A and Part B supplements for all recipients in order to fund our Childcare Reforms.

Further savings will also be created through an agreement to no longer proceed with the 2015-16 MYEFO measure that provided an additional payment of Family Tax Benefit B to families of children under one year of age.

This Government is committed to ensuring the welfare system continues to provide a safety net for Australia's most vulnerable people and families.

Other measures

Finally, other measures include savings from the Australian Renewable Energy Agency which restores funding of $800 million over the next five years to 2021-22 relative to the government's earlier announcement; and reducing the rates of tax offsets — refundable and non-refundable — for research and development, intended to incentivise research in Australia that would not otherwise be conducted.

The Single Touch Payroll reporting measure creates a new modern regime for reporting payroll and superannuation information to the ATO. Employers will automatically report PAYG Withholding and superannuation guarantee contributions at the time these amounts are paid through SBR-enabled software.

Under the Military Rehabilitation and Compensation Act 2004 we are creating a single appeal path that will simplify and streamline the appeal process.

Concluding remarks

Of course, there is much more work to do. The Bill is just the first step for the Parliament, to demonstrate our collective resolve to arrest the debt.

That's why the Government is continuing to implement the measures that improve the budget bottom line that it took to the election.

Full details of the measures are contained in the explanatory memorandum.

I commend the Bill to the Senate.

Debate adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.