Mitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I rise to speak on the Family Assistance and Other Legislation Amendment Bill 2013. This bill seeks to bring in to effect the government's changes to the baby bonus announced in the Mid-Year Economic and Fiscal Outlook 2012-13. The bill also makes a number of other amendments to family assistance and social security payments. I intend to focus my remarks on the baby bonus.

The baby bonus is something that has been under attack by this government for some time. The government has repeatedly slashed the baby bonus in an attempt to find savings. In the 2009-10 federal budget, Labor paused the indexation of the upper income limit of the baby bonus at $75,000. In the Mid-Year Economic and Fiscal Outlook of 2011-12, the government paused the indexation of the baby bonus payment until 2014-15 and reduced the rate of payment from $5,437 to $5,000. In the 2012-13 Mid-Year Economic and Fiscal Outlook, the government announced its intention to reduce the baby bonus from $5,000 to $3,000 effective from 1 July 2013. However, as we all know, since then government has been engulfed by yet another budget emergency of its own making and has decided to abolish the baby bonus to save $1.1 billion over the forward estimates. In its place from 1 March 2014, families who are eligible for family tax benefit part A and who are not accessing parental leave will receive an additional loading on their payment. The extra family tax benefit part A payment will provide $2,000 for a family's first child and for each child in a multiple birth and $1,000 for second and subsequent children.

It is pretty clear that Australian families are losing out because of this government's complete and utter incapacity to manage the budget of the Commonwealth. The government is ripping money away from Australian families, in effect, to attempt to cover part of the cost of this reckless spending. The baby bonus was introduced for very important public policy reasons. That is pretty straightforward. Australia needs to maintain a high fertility rate. That is critical to our long-term prosperity.

The reality was reflected in the Intergenerational report, which was such an important, seminal document when it was first released. That report identified that there were three things that Australia needed to do to ensure its future prosperity. It needed to ensure the population continued to grow, that participation in the Australian economy was there for as many people as possible, and that productivity was increased in Australia. Those were what are often referred to as the three p's: population, participation and productivity. That really was at the heart of the motivation behind the baby bonus. The baby bonus had quite a significant effect in lifting the fertility rate of Australia. That is important, because once a nation's fertility rate declines it is very hard to elevate it again. So the baby bonus was quite successful.

If the coalition were in government we would have a different starting point today, compared to where the current government is, because we would have taken different decisions over the course of that period in government. The abolition of the baby bonus is not a decision that we would have taken if we were in government because, as I said, we would have managed the budget differently and had a different starting point. We recognise that the government has completely and utterly trashed the Commonwealth's budget, and for that reason the coalition—although in government we would not be making this decision—will not be opposing this bill.

John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

I wish to speak against this bill in order to record my opposition to yet further erosion of assistance to families. The cuts to the baby bonus are uncalled for. Also, the payment of the baby bonus at a lower level for second and subsequent babies perpetuates the myth that children are cheaper by the dozen. The reality is that the birth of the second and subsequent children brings about additional financial pressure on families. They face increased costs in child care, housing and transport.

For over 30 years, governments of both persuasions have departed from the concept of horizontal equity for families and they have reduced families to welfare recipients. I still believe that families are the basic units of society. They make a huge contribution, not just in raising their own children but in forming the citizens of tomorrow. Unfortunately, this is no longer seen as an important social function. Having children is viewed as a private decision. If it is a private decision then you are entirely responsible for funding it.

The reduction of the baby bonus in this bill demonstrates that the government no longer believes that children are an investment in the nation's future. Children have been reduced to a commodity for which the user pays. 'If you cannot afford them do not have them; we don't care.' That is the message that this bill gives to families.

All families ought to receive some financial recognition for their contribution to society in raising tomorrow's citizens. And low-income families ought to receive additional financial assistance because no child ought to be raised in poverty. Investment in children is an investment in the future, and all parents deserve tax recognition for this important role. Wage earners are now treated as independent individuals with no dependants—a triumph of rampant individualism. Having children makes you an economic basket case.

Until the 1970s the tax system took into account the number of dependants that the wage earner provided for before taxing them. The government recognised that supporting families was an investment in the future—not any more. Families are no longer seen as productive social units but as drains on the public purse and as recipients of welfare. The fact that assistance to families is subject to strict income tests means that only low-income families receive financial assistance. It is demeaning for some families to be singled out—by being reduced to welfare recipients—as unable to support their dependants. I believe our economy is best served by looking after families and communities first. Unfortunately, this is not the message that this bill gives families. As such, I will be voting against the bill.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

This legislation is, yet again, one of those efforts this government have made to desperately try to come up with a surplus, which they had promised over and over and never delivered. They finally had to admit, under former Treasurer Swan, in November last year, that they were incapable of doing that.

I think we only need to look at the reports that were produced by the Senate Standing Committees on Community Affairs when this bill was given to them to assess, to understand how poorly this government has gone about its job. We have a report from the government and a dissenting report from the coalition on this subject. The government report says that NATSEM researcher 'Bob Phillips' had been reported as considering that the baby bonus was significantly higher than the up-front costs of having a baby and was therefore not well targeted.

For a start, I would point out to the government and Greens members of that committee that the NATSEM researcher involved was not Bob Phillips but Ben Phillips. His research, which is not quoted directly but was quoted second-hand from a story in the Australian newspaper in February this year, demonstrates again how little time the secretariats, the government, the opposition—anybody here—has to assess this government's legislation and performance. But the main problem with this government's attempt to reduce the baby bonus for second and subsequent children from $5,000 to $3,000 is that the government does not understand the purpose of the baby bonus.

A baby bonus assists families in paying for the costs of a child. But it was instigated by Treasurer Peter Costello in the Howard government to boost population, to boost replacement levels in Australia of young people. We still face the situation that Treasurer Costello was the first to identify of a massive number of baby boomers and an ever-decreasing number of taxpayers to support those baby boomers. The superannuation system will assist here but it will not fix it. We need to continue to develop taxpayers. While we can and do import taxpayers, we need also to grow taxpayers. The baby bonus was very successful initially at encouraging the birth rate to rise. But, given that the government has fiddled with this again and again, we anticipate that that is not going to happen any longer.

To suggest that somehow because a second or subsequent child might—and I emphasise the word 'might'—be cheaper than the first child is irrelevant. It is interesting to look at some of the material provided by Family Voice, who made the point that you might have to buy a second cot because, unless the space between your children is fairly large, the oldest will not be ready to move into a bed before the second child is born. And I do not really think that it is up to the government to start social engineering in terms of when you provide the money and when you do not.

But the point is that it is not really about paying for the cost of a baby. I cannot believe any suggestions from literature that the upfront costs of having a baby are not more than $5,000. They are more than $5,000. The only people who would not have to fork out more than $5,000 for their first child and close to $5,000 for their second and third children would be people who are lucky enough to have family to pay for some of the products that you need to buy when you have a child. When you look at the list of things that you need for a child, it does not take long to reach $5,000. But this is not the reason that this is happening.

If you look at the material from Mr Ben Phillips, he makes the point that the cost of having a child overall is massive. He points out that for a lower income family with two children the overall cost of raising those children is $474,000. For middle income families it is $812,000. For higher income families, it is $1,097,000. Here we have the ridiculous situation of this government thinking that whether a child is the first or second or subsequent child is somehow relevant to the cost of raising them. It is not. There is absolutely nothing there to suggest that.

The coalition members of the community affairs committee were very concerned about the potential economic impact of Labor's ongoing cuts to the baby bonus. In their submission to the committee, Family Voice Australia highlighted data from the ABS identifying the percentage of women who were having three or more children as a key driver for our below-replacement-level total fertility rate. The fertility rate in Australia has declined from 54 per cent in 1976 to 32.6 per cent in 2006. We are currently having 1.8 babies per woman, which is well below the replacement fertility rate that we need of 2.1. As I said, migration can assist with building our population. But it cannot do it by itself. If you go back to the first Intergenerational report commissioned by Treasurer Peter Costello in 2000, you will see that we would have to have a migration rate in the millions to build the sort of population that we really need to support elderly Australians as that boom develops. This needs to happen through a balance between migration and local Australian-born children.

The removal of this incentive to have two or more children will have a very detrimental impact on our economic development. The whole point of the baby bonus was to boost fertility rates. Yes, it assisted people with the cost of children. But it was about boosting fertility rates; that is what it was there for. And that is what it succeeded in doing. Labor has tried to rationalise these cuts by arguing that the costs associated with second and subsequent children are less than for firstborn children. This goes against the practical experience, as I said, of many Australian families. By seeking to argue that the costs of second and subsequent children are reduced because items of clothing and equipment can be handed down, Labor demonstrates a fundamental misunderstanding of the financial pressures faced by parents and of the practical realities of raising children. As I said, many families will end up with two cots, not just one. One thing in the report that the coalition did agree with was that most people would like to have more children than they end up raising and that one of the most important considerations when people are planning children is being able to afford to raise the child. Whilst a $2,000 cut in the baby bonus for a child might be something this government can get away with in political terms, it is yet another example of its very poor ability to manage Australia's policies, to manage Australia's future and to understand our future.

I want to continue to make that point about the fertility rate. In the late 1970s the decline in our fertility rate started to slow down, until it reached 1.73 babies per woman in 2001. From 2002, when Treasurer Costello introduced the baby bonus, the total fertility rate increased, reaching 1.96 babies per woman in 2008—the highest recorded since 1977. It has since decreased from 1.96 to 1.89 babies per woman in 2010. I would suggest that much of that is around the fiddling that this government has done in all areas of assisting families. The fiddling with the family assistance material has been appalling. Firstly, in 2008-09 Labor introduced a means test so that families who earned more than $75,000 in the six months after the birth or adoption did not receive the funds. And of course, in typical form, this was introduced less than nine months after it was announced, so people who had actually planned on using the baby bonus were unable to, because it cut out when they got to six months. The government went on to index it, paused the indexation and then cut the rate again for younger children. It is part of an appalling record in terms of supporting those who need it most in Australia, and I think we need to consider this carefully.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

The time for consideration of this bill has expired. The question is that this bill now be read a second time.

Question agreed to.

Bill read a second time.