House debates

Wednesday, 29 March 2017


Social Services Legislation Amendment Bill 2017; Second Reading

11:36 am

Photo of Jenny MacklinJenny Macklin (Jagajaga, Australian Labor Party, Shadow Minister for Families and Payments) Share this | Hansard source

I am speaking today on the Social Services Legislation Amendment Bill 2017. This bill will hurt Australian families. It will cut the household budget of 1.5 million Australian families. Every single member of the Liberal and National parties are about to vote for this cut to Australian families. It will do so by freezing the family tax benefit part A and part B for two years. So every single recipient of family tax benefit part A and part B—that is, 1.5 million Australian families—will be left worse off. $1.4 billion will be taken out of the pockets of Australian families by this government. That is what this bill does. Around 600,000 of these families receive the maximum rate of family tax benefit part A. That means that their household income is less than $52,000 a year. So these are low-income families.

I will give some particular examples of what this will mean for families. A family with a family income of $60,000 with two primary-school-age children will be around $440 worse off in 2018-19. A single-parent family on $50,000 with two high school children will be around $540 worse off. That is what this bill is doing to these families. A single-income couple or a single-parent family with three children under 12 will be around $605 worse off in 2018-19. So every single member of the Liberal and National parties needs to be honest with their constituents that this is the cut that they are imposing on all of the families in their electorates that are on family tax benefit part A and part B.

These cuts were actually first proposed in the 2014 budget. That is right—the horror 2014 budget, the budget when Joe Hockey decided that he would try to divide Australians between 'lifters' and 'leaners'. Labor opposed to these cuts when they were first proposed in the 2014 budget, and the Liberals withdrew them from the parliament and took them out of the budget at the end of 2015. This really goes to show that you cannot trust this government. They say they are not continuing with the cuts and then, out of the blue—literally, in this case—they put them into the Senate, push them through the Senate and now today they are going to try to push them through the House. Labor will oppose these cuts to the family tax benefit again today, just as we did in 2014 and just as we did in the Senate last week. These cuts are unfair. They are unfair because they will hurt vulnerable families right across Australia. They will make life harder for low-income families that are already struggling to keep their heads above water.

We believe that these cuts are particularly unfair because they come at a time of worsening inequality in this country. Inequality is at a 75-year high in Australia. I think Australian families are very well aware that wages growth is at record lows, underemployment is at record highs, penalty rates are under threat and Australians are increasingly being forced into insecure and casual work that does not provide an adequate income. That means that more Australians are reliant on family assistance.

As recent research from the Australia Institute shows, cuts to Sunday penalty rates for low-paid workers could blow a $650 million hole in the federal government's budget bottom line. This is because so many Australians are facing a pay cut from the penalty rates decision, resulting in less tax revenue for the government. Of course, there will also be greater demand for social security payments such as family support as people lose income. So there could not be a worse time to cut family tax benefits for low-income families.

We have a situation under this Turnbull government where the poorest families in this country are being told to accept a cut to their standard of living. At exactly the same time, we have this Liberal government wanting to give the biggest companies in the country a $50 billion tax cut. That is how much this government's company tax cut will cost the Commonwealth budget—$50 billion. In literally the same week that this government are trying to pass this legislation to cut family tax benefits from some of the poorest families in Australia, they are also trying to pass legislation to cut company tax for the biggest and wealthiest companies in the country. That is the context in which we are having this debate today.

On 1 July, the government also intend to abolish the deficit levy, which will mean a tax cut for millionaires of $16,400 a year or $315 a week. What the Turnbull government could have done if they had kept the deficit levy is raise three times as much money from a third as many families rather than have this cut to family tax benefits. If the government had kept the deficit levy, they would have raised $4.4 billion compared to the $1.4 billion worth of cuts that low-income families will suffer as a result of this bill.

If the deficit levy was necessary in 2014 when the deficit was $11 billion it is more than necessary now that this government has done the most extreme thing, which is see the deficit go up to $37 billion. It has gone up to $37 billion from $11 billion in just over three years of this Liberal government. As I said, all of this is happening at a time of worsening inequality. The latest economic data shows a massive 20 per cent surge in company profits while wages for workers have fallen by 0.5 per cent. What we see from this government and all of the Liberals and Nationals who are going to vote for this is that they are prioritising tax cuts for millionaires over support for low-income families. They are prioritising company profits over the household incomes of ordinary Australian families.

These cuts to families by the Liberals are not an isolated incident. The Liberals really do have form when it comes to cuts to families. If we look further into the 2014 budget, the Liberals actually tried to cut $8½ billion, and those opposite who were there in 2014 voted for all of those cuts. They wanted to take $8½ billion out of the pockets of families—cuts that would have left an average family on $60,000 around $6,000 a year worse off; cuts that would have seen families lose family tax benefit part B when their youngest child turned six. Given that this cut in the bill before us today was in the 2014 budget, who is to say that the other cuts from the 2014 budget will not also be brought back from the dead, just like this freeze to family tax benefit payment rates has come back today? You would have to say that the Liberals simply cannot be trusted when it comes to support for families. They cannot be trusted not to bring back these harsh cuts from the 2014 budget.

In the 2015 budget, the Liberals tried to cut $4½ billion from family tax benefits. In that same budget, they proposed to crack down on what they called double dipping of paid parental leave. That was another billion dollars they wanted to take out of the pockets of new mothers. The current Treasurer even called new mums 'rorters' for accessing both employer and government paid parental leave schemes. Just last week, this Treasurer recommitted the Liberals to zombie measures contained in the old omnibus bill, which included: cuts to paid parental leave that would have seen 70,000 new mothers lose money; scrapping the energy supplement to pensioners; the five-week wait for Newstart that would have hurt young jobseekers; cutting the pension to pensioners after they spend more than six weeks overseas; and scrapping the pensioner education supplement and the education entry payment. We know the Treasurer wants to double down and keep all of those cuts. It really does demonstrate that you can be in no doubt that the government have not learnt one thing from the reaction of the Australian people to the very harsh and cruel cuts in the 2014 budget. They still do not get fairness. They still want to rewrite the social contract in Australia and, it seems, they want to refashion our country into the image of America, where the market is king and an underclass of working people work in jobs that do not pay a living wage.

This bill was rushed through the Senate last Wednesday. It was introduced into the Senate with just 10 minutes notice. The opposition had not seen the bill and we know, of course, that the government is going to try to ram this through the House today. It has been an extraordinarily chaotic process that has, of course, prevented any serious consideration or scrutiny of the cuts contained in this bill. I am particularly disappointed that the Senate crossbench decided to rubberstamp these cuts. It did so without any scrutiny. The house of review certainly did not do its job. If it did, it would have realised that these cuts will hurt low-income Australian families.

The government likes to say that the cuts contained in this bill are going to be used to pay for the childcare changes. I am very pleased that the member for Adelaide is in the chamber with me today, as she has done so much to draw attention to these issues and to the failings in the government's childcare changes. All along, Labor have said that the government's linking of cuts to family payments and the changes to child care was an artificial link. All along, we have said that it was robbing Peter to pay Paul—taking from one family to pay for another. All along, we have said—and particularly, the member for Adelaide has said—that the proposed childcare reforms were flawed. We were not the only ones to say that. Jo Briskey from The Parenthood said:

Thousands of families had to see their family tax benefit payments frozen and thousands of vulnerable kids had to have their access to early learning cut in half, just to see cheaper child care for other families.

The government decided to reject expert advice to preserve access to a minimum of two days' care and early education for vulnerable Australian families, and particularly the children in those families.

The Turnbull government has jeopardised vulnerable children's access to early education. That is what the vote on child care has done. It has done so to the point where experts in the sector actually called for the childcare bill to be blocked in its entirety if this problem was not fixed. Early Childhood Australia put out a statement last week calling on the Senate to reject the childcare changes because they were unfair to vulnerable children. That really is quite extraordinary. It does underline that the government's cuts to family payments and the childcare changes will not lead to good policy outcomes for many vulnerable Australian families and their children.

I also want to address the claim by the Minister for Social Services that the cuts in this bill are the same as the changes to family tax benefits made by the previous Labor government. You will not be surprised to know that the Minister for Social Services was not telling the truth and was not accurate in his claims. In question time last week, the minister actually read from a press release from myself and the member for Lilley from 2009. Not surprisingly for this minister, he cherrypicked a few quotes from the media release. Of course, that is something that he does regularly to mislead people. But the minister failed to mention that the media release did not say anything about freezing family tax benefit payment rates. On the contrary, it said: Labor was implementing a family tax benefit part B primary earner income threshold, remaining at $150,000; the income threshold for receiving dependency tax offsets would remain at $150,000; the baby bonus eligibility threshold would remain at $75,000 family income; and the high-income free area of family tax benefit part A would remain constant. It was nothing to do with what this bill is about, nothing to do with the freezing of family tax benefit rates, which is what this government is on about.

While I am talking about this minister and his record, the Minister for Social Services was the Treasurer in Western Australia. If ever there was a demonstration of economic mismanagement, his record is it. This is the minister who, as Treasurer of WA during the height of one the greatest resources booms this country has ever seen, actually managed to increase the state debt and the state deficit. The state of Western Australia is now expected to see net debt reach $41.5 billion by 2019-20. They have a deficit in WA of $3.3 billion. That is the Minister for Social Services' legacy to the people of Western Australia—record levels of debt and huge deficits. The voters of Western Australia did not just reject the Barnett Liberal government at the recent WA election; they also rejected the incompetence of the Minister for Social Services during his time as Treasurer of Western Australia.

As Fairfax journalist Peter Martin noted in a recent article, the Minister for Social Services:

…promised spending growth of 7.9 per cent in 2011-12, and achieved 10.2 per cent. And he borrowed more, boosting state government debt from $13.4 billion to $18.2 billion in two years.

So this minister has absolutely no credibility when it comes to fiscal management. He fundamentally mismanaged the West Australian economy during his time as Treasurer and we will certainly not be letting him forget it.

This legislation also contains some other measures that I want to touch on. The bill will freeze for three years the income free areas for all working age and student payments. What that means is that, for three years, the income test applying to payments for single parents, jobseekers and students will not keep pace with the cost of living. This measure would prevent those income free areas for allowances and student payments from keeping pace with the costs of living.

We all know that Newstart is already too low. This bill will make life harder for people on Newstart who have a small amount of work. It will affect 264,500 Australians on the lowest incomes. The thresholds being frozen are already incredibly low. Just to give the House an example: for people on parenting payment, the threshold after which their payment is reduced is $188 per fortnight. I think everyone would agree this is not a high threshold. And there appears to be no policy rationale for this change. For Newstart, the change will mean the threshold will be frozen at $104 before their payment begins to be cut. These thresholds, as a result of this bill, will be frozen for three years. It will impose a further disincentive for people to get more work if their income free areas are frozen at such low thresholds. We on this side do not support this measure.

If this bill passes the House today it will see an extension of the one-week waiting period that currently applies to recipients of Newstart and sickness allowance. That will see the one-week ordinary wait period apply to both Youth Allowance—jobseeker—and parenting payment. The government also wants to make it harder for people who are already in a difficult financial situation to access the financial hardship exemption, by requiring that they also be experiencing a personal financial crisis. This is just another demonstration of who of this Prime Minister really is. He is going to put more and more pressure on those who are doing it the hardest.

I also want to speak briefly about the proposal to automate the process by which the Department of Human Services collects income stream information. This will mean that from 1 January 2018, a six-monthly electronic data collection process will be introduced for income stream information from financial service providers. We do think that having a more regular and efficient means of collecting income stream information will improve the accuracy and timing of the data being collected. So Labor will support this measure as it underpins a more systematic, efficient and accurate reporting system. However, if the government does not pull that measure out, we will not be supporting this bill.

We on this side do not support the proposition that you need to cut family tax benefits to pay for child care changes. And we certainly do not support the proposition that anyone should agree to take food off the tables of Australian households to give big business a $50 billion tax cut. We do not think that vulnerable families should be made more than $400 a year worse off, especially at a time of increasing inequality in Australia. It is bad public policy. It will make struggling families carry the burden of budget cuts. We on this side of the House will stand up for families. We will oppose this bill.

To that end, I move:

That all the words after "That" be omitted with a view to substituting the following words:

"The House:

(1)   declines to give the bill a second reading because it includes cuts to Family Tax Benefit that will leave 1.5 million families worse off, freezes income free areas for 264,500 recipients of income support and student payments, and forces young people and single parents to wait one week to access income support; and

(2)   calls on the government to drop their unfair cuts to families and vulnerable Australians on very low incomes.


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