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

I will just talk you through three quick cameos. That will give you a flavour as to why this is not entirely straightforward.

First, we have a family of two parents, with one working full time on $83,000 per annum and the other working part time on $20,000 per annum—so a household income of $103,000 per annum—with two kids aged 10 and 15. Under current arrangements they would obviously receive family tax benefit payments at the lower level of $28.80 in 2016-17, which would increase to $40.31, $59.28 and then $79.78 under current arrangements. Under the revised arrangements with the pause in place, these payments would still increase per fortnight, from $28.80 to $34.42, $42.28 to $61.39. The reason for that is the rate of family tax benefit A continues to increase despite indexation pauses to payment, although by less. This is because the threshold for the income test, which reduces the maximum rate of family tax benefit A, still gets indexed and continues to increase year on year, therefore reducing the amount that is lost to the taper rate.

I will give you a second cameo, this one at the lower end. There are two parents, with one working full time on $41,000 per annum and the other working part time on $9,000 per annum, so the household income is $50,000 per annum. There is an assumption that income does not increase, with the $50,000 household income being below the level at which maximum rates of family payments are reduced under the taper rate. There are two kids, aged 10 and 15 years old. Again, I will run you through the numbers: at present, under current arrangements that family would get $503.68 this financial year, $511.68 the next financial year, $523.47 the following year and $535.55 in 2019-20. Once the pause is in place, the payments will still increase, though by less—from $503.68 to $504.24 to $505.36 to $517.16. This is because, as this family is receiving the maximum rate of family tax benefit A, their family tax benefit A remains fixed at the same nominal level, but the rate of family tax benefit B continues to increase as the threshold for the income test on the lower income, which reduces the maximum rate of family tax benefit B, continues to be indexed, therefore reducing the amount that is lost to the taper rate. You can see this on page 5 of A guide to Australian government payments, which I am sure you are familiar with.

Finally, there is a third cameo. It involves two parents, one working full time on $56,000 per annum and the other working part time on $9,000 per annum. The story is pretty similar. Household income is $65,000. There is an assumption that income does not increase, which, of course, would have other implications. They have two kids who are 10 and 15 years old. Under the current arrangements the payments would be $402.93 this year, followed by $416.55 next year, $436.20 the following year and $456.70 in 2019-20. That is under the current indexation arrangements. With the pause, these payments will still increase—from $402.93 to $409.11 to $418 09 to $438.31.

These are typical cameos, but there are many moving parts in these things. Every family is different, every family has its individual circumstances, so every family will be impacted in a slightly different way. But what I can say to you is that no single family will be receiving less in family tax benefit payments as a result of this pause in indexation than they are receiving this year. No family will be receiving less as a result of this legislation. We are only pausing the indexation of payment rates. That is something that Labor has done in the past for various payments over much longer periods, and for higher savings in today's dollars.