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

I got a start on my summing up before other matters intervened, and I will now continue. The first measure that the Social Services Legislation Amendment (Family Measures) Bill deals with will align the portability rules for family tax benefit part A with those for family tax benefit part B and most income support payments. It is consistent with the principle that the primary purpose of family assistance payments is to assist Australian families with the costs of raising children in Australia. Strengthening family tax benefit residence requirements will better ensure that family assistance payments are targeted to those families who have a stronger residence connection to Australia. At the same time, the government acknowledges that families have business to attend to overseas from time to time, such as going on vacation and visiting family members, and therefore families will still be allowed an appropriate length of time overseas while retaining eligibility for their payments. Family tax benefit recipients who stay overseas for more than six weeks will have their payments stopped. Family tax benefit recipients who return to Australia within 13 weeks of their payment being stopped may have their payment restored without the need for a new claim. However, FTB recipients will not be back paid for any period of overseas travel in excess of the six-week portability period.

Importantly, this change will not affect individuals who are members of the Australian Defence Force or the Australian Federal Police deployed overseas, individuals assisted by the Medical Treatment Overseas Program or those unable to return to Australia for a specified reason, such as a serious accident or natural disaster. The Secretary of the Department of Social Services will retain discretion to increase the six-week time frame up to three years. This ensures that those serving the nation overseas, travelling for medical reasons or delayed for reasons not of their own making are not unfairly impacted by these changes. Equity does remain at the heart of our social security system and we are seeking to provide peace of mind for those most in need. In particular, we are ensuring that the families of people serving our nation overseas will not be worse off while that service is performed.

This measure will have flow-on effects to other payments that rely on family tax benefit eligibility, including the childcare benefit, the childcare rebate, the double orphan pension, the schoolkids bonus and the single income family supplement, if the family is outside the portability period. Family tax benefit recipients who temporarily leave Australia before 1 January 2016 and remain overseas can be paid under the previous 56-week portability rules for that trip.

The second measure in this bill will remove the large family supplement from 1 July 2016. This will help the government achieve savings of $177.3 million over the forward estimates. The large family supplement is a small component of the overall family tax benefit part A, currently around $12.46 per fortnight, or $324.85 per annum, for the fourth and each subsequent family tax benefit child in a family. Evidence from the National Centre for Social and Economic Modelling in 2002, 2007 and 2013 has consistently found that each additional child in a family costs less than a first child. The most recent research found that on average a second child costs 83 per cent of the cost of the first while a third child costs 69 per cent of the cost of the first. The reason for this is that families experience economies of scale in which fixed costs are spread among more children. After the first child many items have already been purchased and can be reused subsequently. This highlights the appropriateness of this modest change to the family tax benefit part A payment structure.

In 2010 the Henry tax review recommend that the large family supplement be abolished as the policy rationale behind the payment was not strong. The National Commission of Audit reiterated this position in 2014 by stating that the basic rates of family tax benefit part A payment were sufficient for the costs of raising children. Ceasing the large family supplement delivers on the recommendations of both of these reviews, and therefore achieves the legitimate objective of better targeting family payments to those most in need of assistance by removing a non-essential component of family tax benefit part A. This reinforces the logical and evidence based approach that we do seek to bear.

Importantly, this change is also in line with the recommendations of the McClure review. As I noted, this change removes a non-essential component of Family Tax Benefit Part A which is at the very heart of what the McClure review stated. The removal of even one supplement helps to simplify what is a complicated system. Families are often left confused about what social security payments they are eligible for. While this is a small start, it highlights the government's commitment to undertaking meaningful welfare reform and simplifying the system. This will ensure those eligible for income support payments, family assistance payments and other forms of social security will be able to better understand this system.

Despite the reduced costs associated with successive children, the government does acknowledge the significant costs incurred in raising children, therefore most families affected by this change will continue to receive per child Family Tax Benefit Part A payments. This will continue to help cover the costs associated with raising children. Family Tax Benefit Part A is currently paid at a maximum rate of $179.76 per fortnight for each family tax benefit child up to 12 years of age, and $233.94 for each child aged 13 and over until the end of the calendar year in which the child turns 19 and is in secondary school. The base rate of Family Tax Benefit Part A is currently $57.68 per fortnight. Those families who will no longer receive Family Tax Benefit Part A as a result of this change would only be entitled a small amount of payment of less than the value of the Large Family Supplement.

These two budget measures, along with the reform package introduced recently through the Social Services Legislation Amendment (Family Payments Structural Reform and Participation Measures) Bill, will improve the sustainability of family payments while providing continued support to those most in need of assistance. In 2015-16 the government will still provide around $19 billion in family tax benefit payments. This is the second biggest item of expenditure within the Social Services portfolio and the fourth biggest in the Commonwealth budget. A modest saving of $177.3 million is a reasonable and prudent measure to help ensure family tax benefit remains affordable, and that the government can continue to assist families in raising their children.

It is useful, I think, for colleagues to listen to the evidence found within the Henry tax review and the audit report, and to look to the recommendations of the McClure review to help ensure sustainability of our system. I will shortly move amendments, or a colleague on my behalf will if I am not here, to change the commencement arrangements for both measures in this bill, notably because the portability of family tax benefit measure has gone past its intended implementation date of 1 January 2016. I note the views and recommendations expressed by the Senate Community Affairs Legislation Committee in its inquiry into the bill and I welcome the recommendation of its majority report that the bill be passed and I accordingly commend it to my colleagues.

Question agreed to.

Bill read a second time.