Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

My question is to the Leader of the Government in the Senate and Minister representing the Minister for Families, Housing, Community Services and Indigenous Affairs, Senator Evans. In the recent budget, the government announced expanded definitions of income that will reduce many Australians’ eligibility for a range of government support programs and assistance delivered through the tax system. What government support programs and assistance delivered through the tax system will be affected by the expanded definition of income? As a result, how many people will have their support or assistance reduced in each of these programs or assistance measures? What is the value of the government’s clawback of assistance and support from Australian working families?

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

I thank Senator Boswell for the question. I just want to be clear, because yesterday he asked me a different question relating to a different budget measure.

Opposition Senator:

Opposition senator interjecting—

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

It is important, Senator. This is quite complex. Senator Boswell, if you are referring to the changes contained in the budget brought about by this government in terms of changing the definition of income to include salary sacrifice into super, I can help you with that. If you are referring to the measure which is at the centre of a public debate about which the Treasurer and the Minister for Families, Housing, Community Services and Indigenous Affairs, Ms Macklin, held a press conference today, that is a 2006-07 budget measure, which is the one that is impacting on people working in the not-for-profit sector.

In terms of this government’s measure this year, it is a change to the definition of income, which will now include any salary sacrifice into super. It closes what we regard as a loophole. Our budget measure affects only income salary sacrificed into superannuation. In relation to income salary sacrificed into superannuation, if individuals have income sufficient that they can afford to sacrifice some of their salary into a super fund and lock it away until their retirement, then it seems to us only fair that they not receive additional welfare benefits as well. As the Australian newspaper’s editorial put it this morning:

There is a strong argument that this is exactly as it should be. A decision on whether someone has the capacity to properly provide for children should include all income.

This measure was also reported by the Daily Telegraph last month, on 30 May. The column said, ‘These changes will result in a fairer welfare system.’ Our budget is designed to make income tests for various tax and transfer programs fairer and better targeted to those in need of government assistance. Around 2.2 million families with 4.3 million children receive family tax benefits. Therefore, approximately 3½ per cent of families receiving family tax benefit payments will be affected by the changes to salary sacrifice into superannuation. This also brings the treatment of salary sacrifice into superannuation into line with the rules that already exist for pensioners and the rules that already exist for the self-employed. The self-employed are already under this regime. This brings the rest of the population into that same system. It also ensures that parents cannot reduce or avoid their child support obligations by voluntarily salary sacrificing part of their remuneration into superannuation. It is making sure we test their real income. It is not the purpose of the social security system to provide further incentives, over and above those provided by the tax system, to make voluntary contributions to superannuation.

Those are the changes that are contained in this budget. I think they affect about 3½ per cent of the families who are on family tax benefits. It is part of an overhaul of the welfare system to make it fairer and brings it into line with the arrangements that currently apply for pensioners and the self-employed. These measures were announced in the Rudd Labor government’s budget some six weeks ago, and all the details are in the budget papers.

As I said, this is different from the issue that is at the heart of a public debate at the moment, which relates to the previous Howard government’s 2006-07 budget changes, which will come into effect on 1 July this year. (Time expired)

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. I thank the minister for the information, but I asked specifically: what support programs are going to be affected, how many people are going to be affected and what is the value of the government clawback? I asked you these questions in a Senate estimates committee hearing when you were at the table. I have asked it about three times, in various estimates committees, and I cannot get a specific answer to my question as to how many people, what the programs are and what the clawback is.

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

I thank Senator Boswell for the supplementary question and I am trying to assist him. This initiative is expected, with the others, to deliver savings in the FaHCSIA portfolio of about $250 million over four years. The number of families affected is about 3½ per cent of the 2.2 million families who are in receipt of the family tax benefit. So it does affect a small but significant number of people. We regard it as closing a loophole, bringing this cohort into line with the rules that the previous government applied to the self-employed and to pensioners. I also want to stress that this starts on 1 July 2009. The changes that are going to affect people from 1 July this year are the changes delivered in the Howard budget brought down for 2006-07.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Evans. Can the minister update the Senate on the implications for the surplus of decisions that were taken in the Senate today to delay the important passing of the budget initiatives?

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

I thank Senator Crossin for that important question. It was very disappointing today that the Senate, led by the Liberal opposition, sought and successfully deferred key budget measures. Quite frankly, this does provide a serious threat to the government’s budget strategy. As you know, during the election campaign we made commitments to the Australian public to deliver on programs such as tax cuts, childcare assistance and education tax rebates—measures designed to assist working families. The other commitment we made was to be fiscally conservative—to run an economy that allowed us to maintain downward pressure on interest rates and downward pressure on inflation. We were left a very serious inflationary problem. We have sought to tackle that in the budget by running a large surplus. As the Reserve Bank noted yesterday when its minutes were released, it will be a larger surplus than expected, and one that is successfully trying to put downward pressure on interest rates and inflation to try to assist Australian families to ensure that their income is not eaten away by inflation and to ensure that they get real benefit from the tax cuts we are going to deliver on 1 July. Those economic settings are very important to the families of Australia and they are very important to the government’s attempt to deal with the economic issues confronting us.

This morning, the coalition again abused their Senate majority. One would have thought that after the last election they would have learnt their lesson. It did cost them government. Their abuse of their Senate majority cost them government, and I think they should have learnt their lesson. In abusing their Senate majority, they committed economic vandalism. Vandalism is described as ‘wilful—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Mr President, I rise on a point of order. I would invite you to carefully reflect on the words spoken by the Leader of the Government. If he has not got there yet, he is dangerously close to reflecting on a vote of the Senate.

Alan Ferguson (President) Share this | Link to this | Hansard source

I will listen very carefully to his answer but at this point I think the minister is quite in order.

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

It is clear to me that Senator Abetz cannot take it because he cannot defend their position. This is economic vandalism by the coalition. Vandalism is described as ‘wilful, wanton and malicious destruction’, and that is what occurred today—wilful, wanton and malicious destruction of the government’s budget. They hide behind process. They try and say, ‘Oh, it’s all about us having a look at these bills.’ Let us examine what it means. What it means is that if they do not pass these bills until September, it will cost in the order of $284 million. It will cost taxpayers $284 million. So the deferral for them to have a look, at their leisure, is going to cost almost $300 million of taxpayers’ money. That is interesting because, when we raised this with them yesterday, they said, ‘We’re not necessarily opposing these measures.’ They have not got the courage of their convictions. They are not sure they are opposing the luxury car tax, although I do not know why they would. They are not sure they are opposing the condensate. They are just going to waste $300 million of taxpayers’ money because they cannot make up their mind, because they do not have the political courage to come to a conclusion.

This decision by the coalition rips $300 million or thereabouts off Australian taxpayers. It is going to cost every man, woman and child in this country about $13 each. That is $13 each that the government will not have to spend on schools and hospitals because the coalition will not front up to their responsibilities. This is wilful, wanton and malicious destruction. If they said they were going to defeat them, then they could defeat them now. But no; they are going to defer, they are going to hide behind process and, as a result, they are going to cost the Australian taxpayer dearly. (Time expired)