Monday, 18 October 2010
Private Members’ Business
Special Disability Trusts
Debate resumed, on motion by Mrs Moylan:
That this House:
- acknowledges the work of carers, and in particular ageing parents caring for profoundly disabled dependents;
- recognises that ageing parent carers remain deeply concerned about the diminishing capacity to care for their dependent children;
- appreciates the special challenges faced by families, and in particular ageing parents, who wish to make provision for the needs of their disabled dependents;
- notes that:
- disability trusts were established in September 2006 by the Coalition Government to assist families make provision for the future housing and care needs of dependents with severe disabilities;
- despite the Department of Families, Housing, Community Services and Indigenous Affairs estimating that over four years, 5000 people with severe disability would benefit from Special Disability Trusts, as at 31 March 2010, 423 people have been assessed as eligible, and only 91 trusts have been established; and
- since establishing Special Disability Trusts, it has become apparent that the conditions governing eligibility and management, as well as direct and wider taxation implications, have limited the workability and uptake of the trusts;
- acknowledges that conditions diminishing the attractiveness of the trusts include the:
- complex application of taxation rules;
- inflexibility in what trust funds may be used for;
- inability for beneficiaries, through Special Disability Trusts, to claim the first home owners grant and other home saving initiatives;
- high initial eligibility threshold requiring a beneficiary to be eligible for at least a Carer Allowance, the regulations of which state, inter alia, that care for a ‘significant period’ must be given, defined as at least 20 hours a week of care;
- eligibility requirements disfavouring mental impairment disabilities; and
- attribution of Capital Gains Tax to transferors where, in particular, houses are placed into Special Disability Trusts;
- condemns the Government for not taking seriously the recommendations outlined in the October 2008 Senate Standing Committee on Community Affairs report entitled: Building Trust, Supporting Families through Disability Trusts; and
- calls on the Government to fully examine the viability of implementing the Senate Committee’s recommendations with a view to assisting ageing parents to adequately address the future needs of their profoundly disabled dependents.
At the outset I would just like to acknowledge the members for Stirling and Gilmore and thank them for their support for this motion, and I thank all who participate in this debate today.
A few years ago I took a phone call from someone in one of the country towns in my electorate. The call haunts me to this day because that person was calling to say they were desperate, that a 90-year-old woman had been admitted to the local hospital with a serious illness and sadly subsequently passed away. She was admitted to hospital with her 60-year-old profoundly disabled son for whom she was the sole carer. Two weeks after the death of this woman, her disabled son was still living in the hospital and staying in a hospital bed. He had nowhere else to go. Along with the then mayor of this town we were eventually able to find accommodation and suitable help for him, but the thought of that situation happening to other families is deeply concerning, especially as more than 15,000 people over the age of 65 care for severely or profoundly disabled individuals according to the latest ABS data, from 2003.
Special disability trusts were established in 2006 under the Howard government to assist families to make provision for the future care and accommodation needs of their profoundly disabled dependants. Concessions were built in so as not to adversely impact Centrelink payments, such as the disability support pension, or the pensions of family members contributing to the trust. In a later written submission to the Senate Standing Committee on Community Affairs, Wendy Verhagen, President of Winaccom, a disability housing organisation, recalled her initial joy when she said:
I remember talking to a group of parents at Ashwood Special School about this proposed legislation, and mentioning that they could start such a Trust and put savings into it, together with perhaps grandparent’s bequests, so that when the youngster was in his or her 30’s, there could be sufficient funds in the Trust so that they would not be dependent on the Government for accommodation or support. One parent actually described such legislation as “life-changing.”
Initially it was estimated by the Department of Families, Housing, Community Services and Indigenous Affairs that over four years 5,000 people with severe disability would benefit. But that is far from the reality because, as at 31 March 2010, only 423 people had been assessed as eligible to enter into one of these trusts and only 91 of those 423 people had actually established a trust. Clearly something is wrong.
In 2008 the Senate Standing Committee on Community Affairs investigated special disability trusts, producing a report entitled Building trust: supporting families through disability trusts. That report clearly sets out the impediments to greater uptake of the trusts. How these drawbacks have come about was illuminated by Ian Spicer, who acted as chair of the original advisory group on the establishment of the trust. In evidence to the committee he noted:
… the rules proposed for establishing a trust were drafted cautiously, being a first step only, with the hope that they could be revised and extended in the light of further evidence and experience.
That opportunity is now upon us. We have the report. Fourteen recommendations were made in the report to improve the uptake of the trust, yet many of these have been ignored or only implemented in part. For instance, recommendation 5.2, which calls for the transfer of property to the trust to be exempt from capital gains tax, was not agreed to by the government. The practical impact is profound.
Brian and Jean O’Hart from Western Australia bought a property in 1988 in their names for their severely disabled daughter to live in. An accountant has calculated that by transferring that property to a special disability trust before their death so that they have the certainty that their daughter will have accommodation they will be liable to pay $126,000 in capital gains tax—just to change a name. It is shocking that the government would want to strip such a vast sum from self-funded retirees looking after a profoundly disabled child. That money would be better directed to the care of their daughter.
General taxation of the trust continues to be a significant barrier. When legislation was brought forward as part of the budget, my office inquired with the department about specific cost examples, including different interpretations sent in by members of the public. The department did not confirm which variation was correct. What confidence does that give the trustees, who are most likely going to be the same people caring for the beneficiary? Parents and siblings struggle enough caring for their severely and profoundly disabled dependants; wading through complex tax administration should not be lumped upon them by the government as well.
The high eligibility threshold is also a problem. One of the few special disability trusts in existence is the Deb Trust established by Brian Broughton for his daughter Debra, who has Down syndrome. In his submission, Brian recalls:
The first problem we encountered was the “Care” test when our daughter failed to reach the required points level, the first time around. … Thankfully we had very supportive members of [the Perth Centrelink] team who advised us to fill in another “new” application and ‘think outside the square’.
It is telling of the difficulty of establishing such trusts when parents looking after a profoundly disabled person—exactly who the trusts were envisaged for—must, for the sake of an application form, creatively reinterpret the care they currently give. Robyn Kleber investigated a special disability trust for her daughter Jessica. She decided against one because, as her daughter’s income cannot be contributed to the trust, Jessica’s savings will accumulate until eventually her pension is reduced according to her bank balance and Centrelink limits. Robyn pointed out:
The use of a trust for all expenses (such as holidays and household items) as well as accommodation would be much more useful. This would also necessitate only one financial return ([which are] time consuming!)
A similar view was espoused in the report with recommendations that the trust be able to cover all day-to-day expenses related to health, wellbeing, recreation and independence of the beneficiary.
Instead, in its new legislation the government has plucked out an arbitrary $10,000 a year discretionary spending figure. Although being an improvement, the government is effectively dictating how much can be spent on a person’s wellbeing, recreation and independence. We know that amongst the profoundly disabled community there are many different needs. Surely this is best determined by the trustees and the family of the individual—that is, the people who constantly care for them.
The government has even rejected the recommendation that it simply review appropriate options to provide additional assistance to families establishing and maintaining a special disability trust. I understand that a trust template was originally envisaged to help minimise the legal cost but has never eventuated. I would ask particularly that the government follow up on this matter. As Wendy Verhagen points out:
The thousands of parents who continue caring for their disabled son or daughter in the family home, often into their 80’s, save the government $30 billion a year.
The thousands of parents who continue caring for their disabled dependant in the family home, often into their eighties, do make a major contribution and everything should be done to try to ease that burden. Yet the government will not even review the options to provide additional assistance that will allow families to look after their dependants. Much more can be done and much more should be done and I urge the new parliamentary secretary, Senator the Hon. Jan McLucas, to take up the cause and to implement the recommendations as outlined in the Building trust report. I ask that she implement those recommendations in full in the interests of showing that we can build trust within the disability community and that we are taking a responsible position in assisting the families of those parents who are ageing to make provision into the future for their profoundly disabled dependants. This parliament should take responsibility and should make sure that these recommendations are fully implemented.
I welcome the opportunity to speak to the motion put to this House by the member for Pearce. I support parts (1) to (5) of the motion but do not support parts (6) and (7) as, in fact, the government does take very seriously the report of the Senate Standing Committee on Community Affairs and has responded quite appropriately. I am sure that the minister will take note of the other matters that have been raised by the member for Pearce today. As someone who has had personal discussions with members of my community about this very matter, I well understand the importance of it to those families. In fact I have relatives who are also in the very situation that this motion is addressing. Again I well understand the importance of both this legislation and the work that carers throughout our community do in whatever role of caring they are in.
Special disability trusts were established in September 2006 to assist immediate family members who have the financial means to do so to make private financial provision for the current and future care and accommodation needs of a family member with severe disability. Special disability trusts attract generous social security means-test concessions for the beneficiary and eligible contributors. The principal beneficiary’s immediate family members who are of age-pension age can gift up to $500,000 into the trust without having the social security gifting rules applied. In addition, a special disability trust currently can have assets worth up to $563,250 without these funds impacting on a beneficiary’s social security pension, such as the disability support pension. Special disability trusts are available to all people with severe disability including people with mental health conditions. To be eligible to be a principal beneficiary of a special disability trust, a person must meet the definition of severe disability under section 1209M of the Social Security Act 1991.
While the number of special disability trusts which have been set up is lower than originally anticipated, the number continues to grow. As at 30 September 2010, 119 special disability trusts were in operation. The total value of contributions to special disability trusts was $17.7 million, with $8.9 million of this amount receiving social security means-test considerations. That is effectively since 2006. This is a relatively new law that has come into place and a relatively new opportunity for people who wish to take advantage of it.
The government in fact welcomed the Senate Standing Committee on Community Affairs report Building trust: supporting families through disability trusts. The government tabled its response to the report on 14 May 2009 and it agrees with many of the recommendations. The government has already moved to make changes to encourage more families to establish special disability trusts. As announced in the 2009-10 budget and starting from the 2008-09 financial year, the unexpended income of a special disability trust will be taxed at the beneficiary’s personal income tax rate rather than the highest marginal tax rate. From July 2009, subject to the passage of legislation, the capital gains tax main residence exemption will be extended to include a residence that is owned by a special disability trust and is used by the beneficiary as their main residence.
As announced in the 2010-11 budget, from 1 January 2011—again subject to the passage of legislation—a beneficiary of a special disability trust will be able to work up to seven hours a week at or above the relevant minimum wage. A special disability trust will be able to pay for the beneficiary’s medical expenses including private health fund membership and maintenance of the trust’s assets and properties, and a trust will be able to spend up to $10,000 in a financial year on discretionary items not related to the care and accommodation needs of the beneficiary of the trust. In two years the government will undertake a review of the amount that can be held in a trust on a concessional basis and the amount that can be gifted and who can request audits of special disability trusts. This review will commence in January 2013 and will take into account the impact of the 1 January 2011 changes.
In our first term of government, this government has delivered more financial security for carers. Our achievements include record pension rises. Over the past year the pension has increased by $115 per fortnight for singles and by $97 for couples combined on the maximum rate, including through more generous indexation arrangements. A new annual and ongoing $600 carers supplement has been introduced. New rules to make it easier for carers of children with disability to get income support have been brought in. Recently we made a number of commitments for people with disability which will help to provide relief to carers. Those commitments include the Better Start for Children with Disability Initiative, which will provide more than $122 million over four years for early intervention services for children diagnosed with sight and hearing impairments, cerebral palsy, Down syndrome and fragile-X syndrome. The government will also establish a new capital fund of $60 million to build up to 150 new innovative, community based supported accommodation places for people with disability.
The government are implementing significant reforms across different service delivery systems to improve arrangements for both carers and the people they care for. We have implemented the National Disability Agreement to improve and expand services for people with disability, their families and carers, and we have doubled our funding to state and territory governments by providing more than $6 billion over five years for more and better specialist disability services. We have released a draft National Disability Strategy which outlines a 10-year plan to improve the lives of people with disability, promote participation and create a more inclusive society. And we are developing a National Carer Recognition Framework which includes national carer recognition legislation and a national carer strategy to place carers’ needs at the centre of government policy.
The national Carer Recognition Bill 2010 is the first element of the National Carer Recognition Framework. The bill was introduced into parliament on 29 September 2010. The legislation recognises and acknowledges the valuable contribution that carers make to Australian society and complements carer recognition, which is in place in some states and territories. The bill establishes a definition of a carer, sets out a statement for Australia’s carers, identifies obligations of Commonwealth Public Service agencies and service providers in respect of the statement, and sets out the reporting and consultation responsibilities of Commonwealth Public Service agencies. The statement for Australia’s carers is the cornerstone of the bill. It sets out the 10 principles about how carers should be considered in the development, implementation, provision and evaluation of policies, programs and services relevant to them and to the persons for whom they care. My understanding is that the bill is to be debated in the spring session of parliament, and I will take the opportunity to speak on that bill when it is debated in the parliament.
The National Carer Strategy, to be delivered in the first half of 2011, is the second element of the National Carer Recognition Framework. The strategy will seek to improve coordination across government so that programs and services for carers of people with disability, medical condition, mental illness and the frail aged are more responsive and targeted.
Minister Macklin has already announced that the strategy will consider the training and skills development needs of carers and the adequacy of case management and care coordination for carers. Addressing the needs of young carers and carers in rural and remote communities will also be priorities of the strategy. The strategy will be developed in consultation with state and territory governments and with input from carers, key peak organisations, advocates and service providers.
Mr Deputy Speaker, as you would probably know, we are also supporting the strategy by putting $102,000 into National Carers Week, which is happening right now. This government has done more for carers since coming to office than the previous coalition government did. We are dealing with new legislation and I have no doubt that the effects of that legislation will be carefully monitored by the minister.
I rise to second and support the motion of my Western Australian colleague the member for Pearce. I acknowledge that she has been a very passionate advocate for people with a disability for a long time and for the whole time that she has been in this parliament. I have been in this parliament for a much shorter time but over that time it has certainly become apparent to me that the provisions the government makes for the most vulnerable members of our community fall short of what the Australian people would expect if they looked into it. We live in an age where the government spends a lot of money on many things. For Australians with a disability there is a fundamental disconnect between their needs and what the government provides for them.
I have been fortunate to be part of a very successful scheme in Western Australia, which is the Adopt-a-Politician Scheme. I understand that it only runs in Western Australia but I would recommend that it run nationally. As part of that scheme politicians who put their hand up to be part of it are paired with a family who cares for a disabled person. In my case I have been adopted by the family of Jodie Quarmby who is cared for by her mother Jenny. Jodie has a very serious brain injury that she acquired as a teenager and has a very serious disability.
I have had discussions with Jenny and it is very easy to understand—and I know this through talking to other families as well—that one of the things that families who are caring for somebody with a disability fear the most is: what is going to happen when they, inevitably, are unable to care for the person that they are caring for? Clearly, if you are a mother or a father caring for a disabled child, the idea of what is going to happen when you are unable to care for them or, of course, even when you inevitably pass away is something that weighs very, very heavily on their minds. Those families would like to create arrangements for the person that they are caring for to have care once they are no longer able to provide it.
That was the whole rationale behind establishing special disability trusts. They were established in 2006 by the Howard government with the hope of ensuring the future wellbeing of people with a disability and also to provide relief and reassurance to carers and their families that, when they were unable to provide that care, it would be provided through another means. The trusts were established to bring benefits, including tax exemptions and concessions, which would make it much easier for parents in particular to plan for their children’s future.
Ageing parents of a person with a disability are, as I have said, rightly concerned about what is going to happen when they cannot provide care. Who will make provisions for that care, who will support the person with the disability, who will provide them with accommodation and who will care for them are tough questions that weigh very heavily on the minds of these families.
The aim behind the special disability trusts was to make the life of a person with a disability and their parents a little bit easier by alleviating those pressures. Sadly, they have not been able to fulfil those objectives because the government refuses to take action on the unnecessary bureaucracy that is stopping these special disability trusts from being effective. A parliamentary Senate committee looked into why the take-up rate on those special disability trusts was so low and came up with some sensible proposals for ways that will make it easier for families to access the trusts.
But, sadly, the government has not taken those recommendations seriously and it has not acknowledged the serious challenges that are facing families with someone who has a disability. The defining characteristic of a special disability trust is that it is proactive in nature. It is the family making provision for things that are going to happen in the future when family circumstances change and, of course, as the family ages. The framework of the trust reflects these values and that is how they were designed—to help these families assist over time. They were introduced to achieve what parents and families had been unable to secure under the then arrangements, and that was to create a secure future for the person they were caring for. It is my firm hope that this parliament can do a lot better than previous parliaments have done to provide for the needs of families and Australians with a disability. (Time expired)
I will begin my contribution by first congratulating the member for Pearce. She is a good person and somebody who gets on well with everybody in this place and in the parliament and I have a lot of respect for her. I acknowledge the good work she has done in a range of areas including this motion, which has many good parts, which I think we can all agree on. Acknowledging the work of carers is, I think, very important because carers are really the unsung heroes in our community. They are the people who not only because of a family link but also because of a friendship link or other reason have become a carer and have chosen to do something. This is an extraordinary task for someone to carry out. It is a very special job, which requires people to give completely of themselves for somebody else. People who do that work are typically parents of children with a disability. Of course, we ought to recognise them and do everything we can in this place to make their lives a little bit easier and a little bit more comfortable in any way we can.
I think it is also important to recognise ageing parents. I have spoken to many parents, and I am sure that other members of the House have as well, who care for their disabled child and sometimes that child is 40 or 50 years of age. It has cost the parents a lot, physically, emotionally and financially. It is something they obviously willingly do and will continue to do. I believe it is our job in parliament to make sure that our regulations, our systems and the structures we put in place actually assist them in whatever way possible. So I do congratulate the member for Pearce for putting this motion forward. However, I have got to say that although there are many good parts, I just simply cannot agree with the last two parts in which she condemns the government for not taking seriously the recommendations that are outlined in the October 2008 Senate standing committee report Building trust: supporting families through disability trusts. I cannot agree for the simple reason that it is not the case that this government is not taking seriously either that report or the work of carers or the special disability trusts themselves, because we do take them seriously. We care very deeply about the mechanisms and systems to assist carers regardless of their age.
In fact, the government have a good record of doing that. We have got a good record in a range of areas, particularly in the last parliament, with the then Parliamentary Secretary for Disabilities and Children’s Services looking at specific ways we can make the job of carers easier, looking at the financial security of carers very specifically and other people who are on pensions, by having record pension rises and increases—real increases—that matched the cost of living and expectations that people have. We have increased the annual and ongoing carer supplement—a permanent increase. We have ensured there are new rules to make it easier for carers of children with a disability to get income support.
I congratulate the former government which, back in 2006, introduced the Special Disability Trust, because its intent was good, it was right and we support that. But like a lot of things, we do not always get it right straightaway. More work needs to be done to make sure that these disability trusts match what happens in the real world and match what happens when it comes to actually caring for people and that the intent is right. That is what we want to do while we are in government. These are the things we want to make sure we get right. There are 2.6 million carers in this country. That is a lot of people who actually rely on government assistance. Very few people would be in a position to fully fund or provide support out of their own income. Often they give up the opportunity to have an income in order to care for a disabled family member, a child or other relative. So I think it is important that we acknowledge the work of carers, that that they are ageing and that it is difficult. But I think it is important that we also do not play politics with this particular issue. It is important that we also acknowledge that all governments work towards these same objectives and goals, and certainly this government does. Our National Carer Strategy has worked to improve coordination across the states and territories and to provide better services to make sure that government is not a burden or a barrier but that it is there to assist. We have done that particularly by considering special training and skills needs of carers, ensuring that they have got the right skills and the adequate knowledge to do their job properly. Carers Week this year, coming up between 17 and 23 October, is a real opportunity for everyone to—(Time expired)
I rise to speak to the motion put forward by the Hon. Judi Moylan, the member for Pearce, and seconded by Michael Keenan, the member for Stirling. I thank the member for Oxley for his comments on carers. I could not agree more. This motion seeks to remove some of the barriers to entry which parents of children with a disability currently face if they consider establishing a disability trust. At the moment there is unnecessary red tape that has led to a relatively low uptake of these special trusts, which is disappointing because they were introduced by the coalition government in 2006 to help families who have one or more dependants with a severe disability to plan for the future. I also thank Senator Kay Paterson, the then health minister.
The fact is that point 1 of this motion recognises that there are far too many ageing parents in our community who are caring for their child with a disability and are worried about what will happen to their child when they are gone. I also recognise there are many younger families facing this predicament and are concerned about how to access what we proposed in 2006. We have a large number of these families in Gilmore and the numbers are growing each year as our special needs schools will testify. These parents have enough to worry about without spending their last days being anxious about the future needs of their dependants. It is almost a case of deja vu for me, as I have been advocating for the needs of people with disabilities and their families and carers since I came into parliament in 1996. Several of my first speeches were on the subject and I concur, again, with the member for Oxley that we should not play politics with these motions.
This motion is about governments helping parents to help their children, making their lives easier. That is the No. 1 concern here. A Senate report released in 2008 by the Senate Standing Committee on Community Affairs titled Building trust: supporting families through disability trusts dealt with just this. It made 14 recommendations to improve the current model, which the government has failed for the most part to pick up. By introducing this motion, we are seeking to put this issue back on the agenda and make some relatively small changes which will make a huge difference to many families. These changes include but are not limited to examining the complex tax laws surrounding disability trusts and their wider implications. As points (4) and (5) of this motion highlight, the complexity of the current system is thought to be responsible for the very low uptake. Anyone who has tried to work out the rules and conditions of a trust will know what I am talking about.
Families should not need to spend thousands of dollars on legal fees to take advantage of a trust. They should not need a law degree to work out whether or not it would benefit their family. There are also serious discriminatory issues which should be addressed. For example, beneficiaries of disability trusts cannot claim the first home owners grant or other incentives, as stated in the motion. There are financial barriers in some cases which make trusts not only unattractive but also unaffordable. It makes sense that some parents would like to transfer their home into a trust for the future benefit of their child. Parents who want to transfer their property into a trust are shocked to learn that they will be up for thousands of dollars in capital gains tax.
The last point I would like to touch on relates to the eligibility criteria for special disability trusts which require a beneficiary to first be eligible for a carers allowance. There is no doubt that this approach disfavours those with a mental disability who might still benefit from family members helping them plan for the future but who currently do not meet the restrictive criteria.
To sum up, the hard work has already been done. The Senate committee has looked long and hard at this and the recommendations need to be taken more seriously. I wholeheartedly support this motion, as do the families in Gilmore affected by this issue. I certainly commend it to the House and thank all members for participating in the debate on this motion. I thank particularly the member for Pearce for putting forward the motion.
I commence my contribution to this debate by acknowledging previous speakers and the work of the member for Pearce in putting this motion before the House. The member for Pearce is committed to carers. I also acknowledge that the member for Gilmore has made many contributions in this area and in the wider area of disability.
This is a very important motion. It deals with the work of carers and acknowledges the enormous contribution they have made to our community. It also highlights the fact that ageing parents who have profoundly disabled children constantly worry about their future and have great concern for what will happen to their children once they themselves are no longer here. It goes on to recognise how deeply concerned they are about their capacity as they age to look after their children. I believe most members of this parliament would have had parents visit them to express their deep concern for their children when they are no longer here.
Families with children who have disabilities face special challenges. One of those challenges is how children will be cared for when the parents are no longer here. The 2006 legislation which makes it possible to set up disability trusts is one way of addressing this issue. With all legislation we do not get it right first time and that is the case with the disability trust legislation. I have been dealing with a constituent who has been having enormous difficulty putting a trust in place, to a large extent related to red tape. They were having difficulty with conflict between legislation of different jurisdictions and how this impacted on the disability trust for their son, who has Asperger’s syndrome and an intellectual disability and has been deemed suitable to be a beneficiary of a trust.
Like my colleagues on this side of the House, I agree with points (1) to (5). I think there needs to be more work done to make trusts workable. It is a work in progress. The government is very mindful of issues that impact on the lives of carers who have children with disabilities. It is very wrong to say that we did not take the recommendations seriously. We take very seriously any report which looks at issues that impact on the lives of people with a disability and those caring for them. It is because of that that the Carer Recognition Bill 2010 will be introduced into this parliament during this session. I can absolutely be certain that the member for Gilmore will speak on this legislation. It sets out the definitions of ‘disability’ and ‘carer’ and 10 principles which will come into play in this area. It looks at the relationship between different levels of government and is a very important step forward. (Time expired)