Wednesday, 16 March 2016
Social Services Legislation Amendment (Enhanced Welfare Payment Integrity) Bill 2016; Second Reading
As I was saying earlier today, Australian taxpayers are not in a position—and are not willing—to gift 270,000 former welfare recipients a further $3,220. The government considers it entirely reasonable for people who owe debts to Australian taxpayers to make the necessary arrangements to repay that debt in full and within a reasonable amount of time. We have a responsibility to protect the financial interests of our employer, financier and major shareholder: Australian residences and businesses.
This bill also introduces the legislative amendments required to remove the six-year statute of limitations on the recovery of social welfare payment debt, which will allow Centrelink to recover the social welfare payment debt regardless of the age of the debt. It is worth noting that as at the end of 2014-15 there were 36,834 debts worth $131.2 million that will reach their expiry date before this legislation is passed. That is right—more than $130 million can no longer be recovered because of the statute of limitations. There are also 54,200 debts worth $166.81 million that have already reached their expiry date and cannot be recovered by compulsory means—for example, by withholdings, tax garnishee, garnishee of salary or civil action. So that is more than $165 million that we cannot recover either. There were also a further 4,595 debts worth $12.96 million that were permanently written off over the 2014-15 financial year because they were past the statute date.
The write-off process is not automatic. The Department of Human Services periodically checks the statute of limitations date for an outstanding debt and writes off debts that have passed the six-year limit in which no recovery action has been taken. This bill will make the social welfare debt system consistent with those that currently operate in the tax and child support systems. The government encourages people with debts to talk to staff at Centrelink about their ability to pay off their debt over time. In cases of severe financial hardship, a thorough review of their capacity to repay will be undertaken and debtors will be given a fair amount of time to repay their debt.
However, we also know that some debtors deliberately avoid their obligation to repay their debts to the Commonwealth by not entering into acceptable repayment arrangements and, in extreme cases, heading overseas beyond Australia's jurisdiction. The bill before us will allow the secretary to issue a departure prohibition order to prevent targeted social welfare debtors from leaving the country, as currently applies to child support and taxation debtors. We know that this operating principle works, because 4,551 new departure prohibition orders were issued between 2005 and 2015, resulting in the collection of $52 million in outstanding child support payments.
If a local resident in my area lent a neighbour $3,220 because they are going through tough financial times, but then that neighbour went on an overseas holiday, that resident who lent them the money in the first place would obviously ask for their money back. Again, as the old adage goes, 'Fool me once, shame on you; fool me twice, shame on me.' Why should Australian taxpayers by default be forced to delay public services and infrastructure delivery so that someone who has a debt with Australian taxpayers can go on an overseas holiday? The government considers it is not appropriate for an individual to travel overseas when they have the means to fund that travel but have not set up an appropriate arrangement to repay their outstanding debt to the taxpayer.
However, the government is mindful of reasons people may be required to travel overseas, and procedures will be put in place to allow people, subject to departure prohibition orders, to travel in specified circumstances. Obvious humanitarian reasons include to attend to an ill relative, to attend the funeral or cultural ceremony of a deceased relative or where international travel is a condition of employment.
Unrecovered social welfare debt is taxpayers' money that could have been better used to provide other public services or better targeted services for those who need more help to help themselves—for the vulnerable in our community. Those who can work should work. There should be no excuses. Those who have accumulated a welfare debt to the taxpayer by claiming and then spending welfare money to which they were not entitled should be forced to repay this debt. This bill will enable the Department of Human Services to recover debts from current and ex-recipients of social security and family assistance payments. I commend the bill to the House.
I too rise to speak on the Social Services Legislation Amendment (Enhanced Welfare Payment Integrity) Bill 2016, and it is my great pleasure to do so. As we have just heard from the very fine contribution from the member for Ryan, this bill contains two measures which strengthen our capacity to recover social welfare and family payment debts. There are amendments to allow for the use of departure prohibition orders to prevent targeted social welfare debtors from leaving the country, as currently applies to child support debtors. The bill also contains amendments to remove the current six-year limitation on the recovery of social welfare debt that would otherwise be non-recoverable, aligning the treatment of social welfare debt with the recovery arrangements in place for other Commonwealth agencies. While the average value of social welfare debt is some $2,350 and the average length of debt is just over three years, the oldest outstanding debt that the Commonwealth is currently facing is over 30 years old and the greatest amount of debt is in excess of $300,000.
The situation is this: at the end of June 2015 there were over one million debts owed to the Commonwealth, with a value of $3.04 billion. It is with great pride that I stand here and say that is not good enough. Why didn't Labor tackle this question? Why didn't Labor pass these amendments when it was in power? This is a monumental amount of money. It is taxpayers' money. It is owed to the taxpayers. Consider what this amount of money could do—the schools and hospitals it could build, the passenger rail that it could develop, the roads, the contribution it could make to our economy in many different respects. Led by the Minister for Social Services, Minister Porter, this demonstrates that our government has a very strong commitment to making sure that every single dollar that we raise by way of revenue is properly spent and making sure that we deliver the money into the Commonwealth with great responsibility. Where there are these very significant debts, we will make sure that we do everything we can to recover them.
These debts have increased in value by almost 10 per cent since June 2014. They are skyrocketing. And yet, under the previous Labor government, we did not see appropriate action put in place to recover these debts. I think most Australians would agree that this is a very fair and reasonable measure. This money is owed to the Commonwealth. In many respects it concerns those who were on a welfare payment and who have now exited the system. We assume that they are working, earning an income and making a contribution to their family and, of course, to the broader society, but they are doing this with a black cloud hanging over their head, and this is impacting on the Australian economy very significantly. We are determined to do something about it.
Of this debt base, approximately $870 million is held by around 270,000 former recipients who do not make sufficient or regular payments. Current recipients of social welfare payments who also have a social security or family assistance debt have their welfare payments reduced until their debts are paid, so there is a mechanism in place for the Commonwealth over time to recover those debts. However, there is no similar arrangement in place to recover debts once a person no longer requires social welfare or family assistance payments, because, of course, they are no longer part of the system, including Centrelink. The government considers that it is entirely reasonable for people who owe debts to the Commonwealth—to the taxpayers of Australia—to make the necessary arrangements to repay that debt in full within a reasonable amount of time.
Some debtors deliberately avoid their obligation to repay their debts to the Commonwealth by not entering into acceptable repayment arrangements. In extreme cases, they head overseas, beyond Australia's jurisdiction. This legislation will allow the secretary of the department to issue a departure prohibition order to prevent targeted social welfare debtors from leaving the country as currently applies to child support and taxation debtors. This has been a very effective mechanism. Departure prohibition orders have been very effective in recovering outstanding child support debts. Between 2005 and 2015, 4,551 new departure prohibition orders were issued, resulting in the collection of $52 million in outstanding child support payments. We say that, if it is fair enough to recover child support payments from those who are refusing to meet their obligations—and I think every mother and father would agree that child support must be paid and a parent wo has that obligation leaving the country should not reasonably be able to do so without paying their debts—we should take the same approach for other social welfare debtors.
People who have a departure prohibition order issued may still depart Australia in certain circumstances such as for humanitarian reasons or in Australia's best interests. This might include a visit overseas to attend to an ill relative, a funeral, a cultural ceremony of a deceased relative or where international travel is a condition of employment. Where people do need to depart Australia on humanitarian grounds without paying their debt in full, they can make an application for a departure authorisation certificate. The application must be verified by, for example, provision of a medical report regarding the condition of the relative or a death certificate. But we say we are not going to allow this to continue any longer. We have a good system in place to recover child support debts when parents attempt to leave the country and not meet their proper obligations, and why should other debtors in our social welfare system be treated any differently? This was, frankly, a form of discrimination that prevailed under the previous government. We think this is a very important issue to address and to fix and we are very pleased to be doing that.
The other important aspect of this bill, as I mentioned, is that it introduces the legislative amendments required to remove the six-year statute of limitations on the recovery of social welfare payment debt. This will allow Centrelink to recover the social welfare payment debt regardless of the age of the debt. This is a very important measure. As at the end of 2014-15, there were 36,834 debts, worth $131.2 million, that will reach their expiry date within one year. That is before the legislation has been passed. Centrelink has not touched these debts for six years and will not have the capacity to reach those debtors and recover those debts. There are 54,200 debts worth $166.81 million that have already reached their expiry date and so cannot be recovered by compulsory means, which includes by withholding, garnishing wages, garnishing through taxation means or any sort of civil action.
When you look at the amount of money involved, it absolutely stands to reason that this limitation period of six years should be extended so that at any time the Commonwealth can rightly say, 'This money is owed to us. We want it back.' We want it back because we need to spend it on behalf of the Australian taxpayer for our schools, our hospitals, our roads, our rail, our social services and the many other functions that the Commonwealth performs in looking after the Australian people. What has been happening is that these debts have been written off, and we are literally seeing money going down the drain. This has become, in effect, an interest-free loan from the taxpayers of Australia. Stay out of the radar of the Commonwealth for some six years and then you get off scot free. We say that is not good enough. Those Australians who do owe a debt to the Commonwealth should not be able to get off scot free. As the chair of the Coalition Backbench Policy Committee on Social Services, I am very pleased that Minister Porter, the Minister for Social Services, received very strong support from the committee to implement these measures.
That is not to say that there are not some Australians with these debts who will encounter some hardship and who may need some time to pay these debts off, and we encourage them to talk to staff at Centrelink about their ability to pay off the debt over time. In cases of severe financial hardship, a thorough review of their capacity to repay will be undertaken and debtors will be given a fair amount of time to repay their debt. We are not expecting this debt to be paid overnight and we do not want to put someone through acute financial hardship as a result of the recovery of the debt, but we want something in place to make sure that over time this debt can be recovered.
This is one of the many measures the Turnbull government is undertaking to implement a fairer system that makes sure that the money that the Commonwealth raises is spent on those who most need our help. We have done this in many ways. Another very important way is the government's new multinational tax avoidance laws—unfortunately, opposed by Labor; inexplicably opposed by Labor—which came into effect on 1 January. They will ensure that major international companies operating in Australia but booking profits offshore have to pay tax here.
I will take that interjection. It is a shameful reflection on the Labor Party that we joined with the Greens in the Senate to pass this legislation, and this goes to show that we are serious about making sure that dollars do not get thrown down the drain, whether it is debts owed by Australian taxpayers or whether it is multinationals ripping off Australians and ripping off Australian jobs. In not supporting our legislation the Labor Party has said, 'We do not have any interest in combating multinational tax avoidance. We do not care. We are quite happy for this money to keep on going offshore, denying Australians important revenue and denying Australians jobs.' This is not good for Australians. I say very strongly that this is a good example of where the Greens have joined with our government to support this legislation to ensure it gets through to maximise the revenue for Australians and to maximise the revenue for this government. It is a shocking indictment, and we know it is a shocking indictment because whenever this is raised, as happened today in question time, members opposite hang their heads in shame. They know that this is a terrible error. This sends an appalling message to Australians that the Labor Party is not serious about combating multinational tax avoidance, and it really is a disgrace.
In so many ways we are very proud of these important measures that we have taken. There is other legislation to ban excessive credit card surcharges. It is such an important consumer protection measure but the Labor Party never took it on. It is incredibly important that Australians know they are governed by a government which cares with compassion and with a sense of fairness. That is another great example of how we are standing up for Australians and saying we will not cop people being ripped off. Again, we never saw any movement on that issue under Labor.
Whether it is implementing our free trade agreements, signing the Trans-Pacific Partnership or rolling out our $1.1 billion innovation agenda, we are very, very proud of the work we are doing. Locally, so much is happening in my electorate. There is the new ABS Centre of Excellence, the Advanced Manufacturing Growth Centre, $2.6 million for Geelong Region Job Connections, a new TradeStart office and hundreds and hundreds of jobs being created through the Geelong Region Innovation and Investment Fund. Whether it is our peak national policy changes or whether it is locally on the ground in Corangamite, I am very proud of our government's efforts. I commend this bill to the House.
I acknowledge the member for Corangamite, who has just completed her contribution as the chair of the Coalition Backbench Policy Committee on Social Services, and the passion and understanding that she has for this issue and for the Social Services Legislation Amendment (Enhanced Welfare Payment Integrity) Bill 2016, which is before the House today. It is interesting just to reflect on some of the comments, and I do not want to repeat all of those very factual and evidence based comments that the member for Corangamite made. But I just want to put them in context and look at the welfare spend that government makes in terms of the overall budget.
The social service and welfare budget of the country accounts for 35 per cent of every dollar of spend that the Commonwealth government makes. Comparing with the rest of government, if I could show you on this graph, it is very clear that the substantive side of the social services and welfare budget makes the health budget, for example, pale into insignificance. It is a quantum almost three times as much as the payments that Treasury makes to the states, local governments and different things. It is a quantum nearly seven times as much as education and training. The social services budget is responsible for almost eight or nine times as much as regional infrastructure and development.
It is also interesting to reflect on why we are in this situation now and why we are putting in place what I think are very reasonable measures. Most Australians would understand that payments made through the welfare system are based on a concept of mutual obligation between the recipient and the taxpayer who funds it. It is not government that funds it—it is the taxpayers. The taxpayers fund payments that are rightly made to people who are less fortunate, and long may that be the case. But when payments that have been made are greater than they should have been, I think most reasonable Australians would consider, particularly given the circumstances that we have in respect of the budget—and I will go into that a bit further in a minute—that it is reasonable that the government, on behalf of the taxpayers who make those contributions, look to recover payments that have been made over and above what the recipient was entitled to receive.
Similarly, if you look at the budget between 2015-16 and 2018-19 and you look at savings and revenue measures that have either been blocked by those opposite or not supported by the Labor Party, the total is $13.4 billion, of which $7.1 billion in revenue or savings measures are in the social services portfolio. Spending that Labor says we must restore is $30.3 billion in the total budget, of which $3.7 billion is in the social services portfolio. Additional Labor spending proposals are $11.4 billion and $1 billion or thereabouts within the social services portfolio. In total, Labor's budget black hole, when it comes to the overall budget, is $46.9 billion, of which nearly $10 billion resides within the social services budget.
We have inherited a situation, if you will, akin to the bad tenants that trashed the joint. They trashed the rental unit and not only that, they locked the door. So when we came in to try and clean up the mess that the bad tenants left and the repairs that needed to be done, we were unable to get in. Those on the other side created the damage that has left us as a nation spending $1 billion every month in interest on the money that we owe. $700 million of that we owe overseas. We must repay $1 billion every month on our debt thanks to those opposite. Australians should never forget that. When we tried to bring in a range of different measures to clean up the mess that the bad tenants had left us with, they blocked it. They blocked it in the Senate with the support of the Greens and the crossbenchers.
That is why this bill is important. We have been unable to make those substantive changes that we proposed to make in respect of payments to people where we needed to reduce our level of spending. Balancing a budget is not only about revenue—it is also about spending. I think most Australians understand very, very clearly that we have had difficulty dealing with the Labor Party in respect of cleaning up the mess that they left us with.
We have before us today a measure to make sure that when payments have been made over and above what was entitled to be received by somebody on child support or other payments made through the social services budget, the government has the capacity to recover those debts. As the member for Corangamite before me highlighted, this will not be done in a way that compromises people's lives and the standard of living that they enjoy. They will be able to enter into repayment plans with the department to make those payments in modest ways. It has happened on many occasions that a recipient who owes the taxpayers of Australia outstanding debts has effectively been stopped from travelling overseas until they have repaid their debt. I do not know that most Australians think that is unreasonable.
There are exceptions based on humanitarian grounds—for example, where somebody wants to visit overseas in the case of a relative who is deceased. Of course there are those exemptions. But it is not reasonable, when the taxpayers of Australia are owed a debt, that somebody is going overseas to lie on a beach in Bali. I think most Australians would understand that.
The second component of this bill before us today looks at the amendments to remove the current six-year statute of limitations to recover social welfare debts that would otherwise be non-recoverable. This aligns the treatment of social welfare debts with other arrangements in other Commonwealth agencies. Just by way of practical example—and I note those people in the gallery there—if you have a debt to the Australian Taxation Office, they will come after you and they will seek you. They have the capacity over—
They know where you live. That is quite right, the member for Braddon. They will come after you. And there is no statute of limitations there for the Australian Taxation Office to—rightly again—recover that taxable income. This is quite simple. Those on the other side seem to forget this: governments do not have money. Government only have money that has been raised in revenue from taxpayers, be that individuals or be that businesses. It is right, and it is proper.
In the measure before us, in respect of debt recovery—and the member for Corangamite touched on this—what has restricted the capacity of the Department of Social Services to recover the outstanding debt has been a six-year statute of limitations on those debts. To put it in perspective, the average social welfare debt is a quantum of only $2,357 per person. The average length of debt is just over three years. But there are outstanding debts which are over 30 years old. The greatest amount of debt is in excess of $300,000. An appropriate repayment plan is something that I think is not unjustified at all and something that I think most Australians would consider reasonable and fair. The proposal here is to remove that current six-year statute of limitations on the ability of the Department of Social Services to recover those outstanding debts, in line with similar agencies, such as the Australian Taxation Office. It is not something that I think most Australians would consider unreasonable.
It is important to understand that those on the other side, in six years of government, in six years of trashing our economy, trashing the budget, leaving this nation with a legacy that we have had to deal with—and deal with it we will, albeit with no help from those opposite—did nothing. They did nothing in any constructive way to try to recover these outstanding debts that are owed to the taxpayers of Australia. So they sit there. But this is the lot that we have. As I described before, we have come in to clean up the mess that the bad tenants left us.
I mentioned that at the end of June 2015 there were over one million individual debts, with a total value of $3 billion. These debts have increased by almost 10 per cent. The issue that I described earlier, in respect of the statute of limitations, is that people effectively go dark. They go underground. I did not realise that this was something that occurred. How on earth do you get away, with your credit cards and different things that we have in this day and age, with that situation? It probably says something about what a great country this is—that you can actually survive and you can live in a cash economy out there. You go dark for six years, and as it stands at the moment—
Indeed. They left this country in a very dark place. But how good it is to see that now small business confidence in this country is returning, particularly in my state of Tasmania.
With the introduction of these amendments that we see before the House today, there is the opportunity for the Commonwealth to recover those debts after a period of six years. There has been a lot of success, particularly in respect of not allowing people without genuine reasons and humanitarian reasons from being able to travel overseas. So the measures that are before the House, in respect of that part of the legislation, have been shown to work. The second component, as I have just mentioned, is removing that six-year statute of limitations on the recovery of debt. On that note, I finish my contribution and I commend this bill to the House.
Thank you to my good friend and colleague from one of the other Tasmanian seats, the seat of Lyons, for warming of the crowd. I would like to thank Mr Hutchinson for that. It is a great opportunity to take the stage after him, because he made some very valid points. This man, who represents the seat of Lyons exceptionally well, fully understands—like every other member on this side of the House—that we have a job in front of us. We have a big job in front of us. We have been trying to do that job for 2½ years. God willing, and with the support of the Australian people, we will continue to do it for another three and a bit years.
The member who just concluded his contribution very clearly articulated the state of the nation's finances, so I do not necessarily need to go over that ground, other than to say that he is spot on. We have, on this side of the House, since our election in September 2013, been trying to do everything we possibly can to get this country's finances under control. 'Under control' is very simple in its methodology. It means that you spend less than you earn. It is a pretty easy principle for every Australian to understand: you spend less than you earn. We have all been brought up that way, I would hope. And we all understand the ramifications, should we enter into a lifestyle that continually leads to spending more than we earn, because we end up with big debts that we cannot pay and that cost interest that is then taken out of our disposable income, which leaves us with less money to spend on food, in a family sense, or less money to spend on health, education or infrastructure, in a governmental sense.
It is pretty well standard accounting practice that you try very hard to spend less than you earn. But that was not the case with the previous government, and the ramifications were left to us to fix up. As I often say, every morning when the alarm clock goes off we still find ourselves having to spend $100 million more than we earn. That will go on tomorrow and the day after and the day after, until such time as a credible government—a government that is hell-bent on living out that model of lifestyle of spending less than you earn—gets it under control. We have worked exceptionally hard, up against some very strong headwinds by those opposite, to try to find ways to bring about budget constraint and to try to find ways to bring the budget closer and closer to a surplus position.
It may be of interest to those listening to know that the welfare bill in this country now exceeds $150 billion—
Thank you, Member for Cowan—per year. That is what we spend on welfare. That includes the disability pension, the age pension, Newstart, youth allowance and so on and so forth. I think it is fair to say, and I am sure everyone would agree, that Australians are very generally fair-minded. They generally work hard for their income. They pay their tax—all of us with a degree of hesitation—in the full knowledge that part of the hard-earned money we pay tax on will go to provide a safety net for those Australians who, from time to time—or in some cases, in perpetuity—find that they need our help; they need a safety net. We provide welfare provisions to those people.
Every fair-minded Australian has no issue with providing a safety net. Where I think they leave the train on this matter is when they see a safety net for some become a trampoline. They do not like that. They do not like their hard-earned taxes being abused or used or taken for granted. They like to know that their hard-earned taxes are being put to work fairly and in proportion to need. That brings me to the point of this bill.
I congratulate the Minister for Social Services, Mr Porter, and those who have gone before him in this portfolio role for their work. It is a tough gig to be Minister for Social Services, with a welfare bill of over $150 billion every year. Another point that I forgot to mention is that, when you walk down your local main street in your community, of the 10 taxpaying individuals that you come across, the taxes of the first eight that you meet are going to meet the welfare bill of this nation. That is eight out of every 10 payers of personal income tax. That is a fact that should not be missed on anyone. So I do understand the pressures in this portfolio area and I thank the minister for his ongoing tenacity in trying to find ways to maintain the safety net, to maintain the fairness but, at the same time within his budget, to find those areas where we can claw back some of the funds that hardworking taxpayers are paying.
In this case, this one is an absolute monte. To cut to the chase, in this country you can owe money to the government because you have been overpaid—possibly for reasonable reasons or maybe not so reasonable reasons. You have been the beneficiary of the hard-earned money of taxpaying Australians, sometimes in the full knowledge that you did not really deserve it, but you have taken it anyway because you know you have not updated your information with Centrelink or you have not been quite transparent in the declaration of your income. I also accept that there are some people who find themselves to be making genuine mistakes, so let me put that on the record. But hardworking taxpayers across Australia do not expect for one minute people to be recipients of their hard work in the full knowledge that they are receiving money they should not be receiving. Then, to make matters worse, they find out that the government agency that is the mediator of the provision of that money to these people fails to go after that money and, up against the legislation it works with, after six years basically forgets that it ever existed.
The numbers presented to this chamber a few moments ago by my fellow amigo, from the seat of Lyons, are very startling figures. Why is it that we have a situation where someone can do the wrong thing—or not do the wrong thing, but, irrespective, find themselves owing the country, the government, money that no longer has to be collected? It just falls off the end of a cliff somewhere and people wake up one day and say, 'How lucky are we? The government has lost its passion to follow the pursuit of that debt,' and we just say: 'It's all okay, brother and sister. Don't worry about it. We are not fussed.' On behalf the hardworking taxpayers of Australia, that is not what they expect their taxes to do.
This bill provides two measures which strengthen the capacity of the agency and the government to recover social welfare and family payment debts—and I stress the word 'debts'. It amends legislation to allow for the use of departure prohibition orders to prevent targeted social welfare debtors from leaving the country. There are some conditions around that, which I will come to if I have time. These are the same rules, I hasten to add, that already exist for debts in child support. Every man and woman in this place would stand behind the fact that, if someone owes child support, they should pay it. The legislation around child support does allow the capacity to actually chase debt and prevent people from leaving the country if in fact they still owe child support money.
The second amendment to the piece of legislation we are talking about is to remove the current six-year limitation on the recovery of social welfare debt, which, otherwise, would be non-recoverable. It aligns the treatment of social welfare debt with the recovery arrangements in place for other Commonwealth agencies. I am not sure who the goose was who suggested it some time ago. Whether it was on this side of House or the other, I do not really care. It was not a very smart move to suggest that, after six years, people could just fall off the end of the cliff and we would not care anymore. To use the previous speaker's language, you could 'go dark'. Hardworking taxpayers have willingly stepped up to the plate to provide a safety net to the vulnerable, only to have it smacked back in their face.
I think this is a tremendous rearrangement of this legislation. It is a very positive amendment that hardworking taxpayers in Australia would have expected we would have done years ago. A debt to the Commonwealth can occur, as I said a moment ago, under differing circumstances, sometimes intentional and sometimes unintentional, but, irrespective of the motive, the money is owed. I hasten to add that sometimes I unintentionally accrue too much of an electricity bill in my household. Sometimes it is intentional, sometimes it is unintentional, but, at the end of the day, the bill comes. The last time I checked, they still wanted their money and, if I did not pay the bill, I suspect I would end up with a big sticker or, worse still, I would go to turn my lights on one night and they would not work. It is a principle of life that, if you owe money, you pay it back.
The average value of social welfare debt is $2,357. You might say, 'Gee, member for Braddon, that is not a lot of money.' The average length of debt is within the six-year limitation period—it is just over three years. The oldest outstanding debt, according to the records, is over 30 years old, and the greatest amount of debt is in excess of $300,000. At the end of June—this is a really important figure—there were over one million debts with a value of $3.04 billion. That is $3,000 million of hardworking Australian taxpayers' money. I am not, for one moment, going to stand here and justify why we should not go after that money, particularly when these hardworking taxpayers are doing everything they can to support their families.
These prohibition orders are an obvious place to start. Why should those who are providing the hard-earned taxpayers' money to provide for welfare have to save up for years and years to go on a family holiday when someone can leave the country tomorrow to sit on a beach and read a book in Honolulu owing $10,000, for example, to Centrelink and the Australian government? This is common sense. This is absolute common sense. Yes, it is carrot and stick—I accept that—but, at the end of the day, why should someone be able to leave this country when they have sufficient enough funds to go on a holiday but still owe money to the government?
Very quickly, in the one minute I have left, I want to assure people that, where there are hardship issues, the government has not failed them. The government has taken those into consideration within this bill. If there are extreme cases and hardship cases—if someone does not have money and, for example, they are being lent money by other members of the family to go to someone's funeral, and so on and so forth—these prohibition orders can be lifted for that period of time. The Commonwealth also reserves the right to hold onto a bond of some description to make sure that people are not leaving the country and not returning.
I cannot think of a fairer piece of legislation. It takes into account genuine cases of hardship. We are not going to stop someone from attending a family event such as a funeral, even if they do owe money, but we want to ensure that we are very good stewards of the hardworking, taxpaying men and women of Australia who every week see their taxes provide a safety net. Let's make sure that they maintain their faith in that system. This amendment allows for that. (Time expired)
I rise to add my voice to those who, like my good friend from Tasmania, Mr Whiteley, have spoken before me in support of the Social Services Legislation Amendment (Enhanced Welfare Payment Integrity) Bill 2016, which Minister Porter has introduced into the House. I will pick up on something that Mr Whiteley mentioned: the fact that we are talking about taxpayers' dollars here. I have said many times prior to coming to this place that there are a lot of things that my father has always said to me—I spent 23 years working for my father—and they will stay with me for life. When I leave here, I will go back to work for him. One of them is: 'If you watch the pennies, the pounds look after themselves.'
Minister Porter oversees a budget that sits at around $147 billion today and that is forecast over the forward estimates to rise to a tick under $190 billion. We are talking here about $3 billion, but we are talking about taxpayers' money and we are talking about a principle. I have been in this place for 2½ years and the thing that has surprised me more than anything else is the mindset of people in response to spending taxpayers' money. I do not know whether it is—as the minister for agriculture alluded to in question time today—because not a lot of people currently in this place have a background in business. After being elected and coming here, I joined the Joint Committee of Public Accounts and Audit. For 2½ years I have in week after week of sitting weeks listened to reports from the Auditor-General of this country on programs delivered across a wide range of topics, including the Early Years Quality Fund where $300 million went out the door in about three hours to a team that had worked on the compilation of the policy. One of the department officials said that in his 23 years in working for the department he had never seen a 'first in, best dressed' tender system design. The department strongly advised the former government against it, but they went ahead with it and we ended up with a debacle—$300 million out the door.
The problem with this mindset is that it is not just at the politician level. The risk we run when dealing with taxpayers' money is that the mindset will permeate down through departments. One of my favourite examples is that, in inquiring into the management of the disposal of specialist military equipment, we had a situation where we agreed to sell six aircraft refuellers to a foreign company for $10.5 million. There was just one problem, and it was pretty major: no-one did any due diligence on the company's ability to pay the cheque. After the company had agreed to buy them, we then worked out there was a delay in getting the replacement aircraft refuellers. So over the next seven to eight years, in a tale of woe, it ended up that the company at one stage—I underlined this at the time and I will today—offered a contra to paying the money back because of the defence capability gap that had been created. The Department of Defence saw this approach as potentially supplementing their budget by obtaining some $6.2 million in services. That was in lieu of the money they were owed by the purchaser of the aircraft. Cash received would have had to be returned to consolidated revenue rather than retained by Defence.
It is this mindset that has to change. The risk we run in not making the changes that are enshrined in this legislation is not only that we will be allowing this mindset to continue inside government and bureaucracy but also that it will permeate large parts of our community. The risk we run is that people will say, 'We don't need to pay back government.'
The quantum is, to be brutally honest, staggering. As at the end of 2014-15 there were 36,834 debts worth $131.2 million that were due that year to reach their expiry date. So there is another $131.2 million that would have been written off. The total as of June 2015 of loans in this category was $3.04 billion. You are talking about big bickies. 54,200 debts worth $166.81 million have already reached their expiry dates, so they cannot be recovered. They are out the door. A further 4,595 debts worth $12.96 million were permanently written off over the 2014-15 financial year due to the statute of limitations, which is the six years that my friend from Tasmania so eloquently mentioned.
What are we doing here? We are doing what is right. We always default to 'the government', but it is not that the people involved in this owe the government this money. They owe the taxpayer this money. This money was given to them in a time of need. That is the social compact. I get that. But if you incur debt then you should pay it back. If it is good enough to receive from the taxpayer, it should be good enough to give back what you owe.
This bill contains two measures which will strengthen our capacity to recover social welfare and family payment debt. The amendments allow for the use of the partial prohibition orders to prevent targeted social welfare debtors from leaving the country. But there is a safety net in that. There is the ability for those people to make an application for reasons such as family ill health. It will be viewed empathetically and sympathetically at the time if so needed. That is fair. If you owe money to the Australian taxpayer—I want to keep saying that: it is not the government; it is the Australian taxpayer—and you have the funds to head off on an overseas trip for no good reason I think it only fair that you use those funds to pay back your debt to the taxpayer who funded your life in your time of need. The second amendment is to remove the current six-year limitation mentioned in the figures before.
Year by year we have more money falling off the cliff into that $3 billion abyss that we are talking about. A debt to the Commonwealth is obviously incurred when a welfare recipient receives an overpayment. That does happen. While the average value of that debt is $2,357 and the average length of time taken to pay that debt is just over three years, we have instances where the oldest debt is 30 years old and the amount is in excess of $300,000. These are situations that quite clearly need to be fixed. Of the debt base that we are talking about, approximately $870 million is held by around 270,000 former recipients who do not make sufficient or regular payments.
What the minister is doing here—and I note that he has joined us in the chamber—is bringing this system in line with how other parts of government operate, most notably the taxation system. As the member for Lyons so eloquently put it, try avoiding paying money that you owe the Australian Taxation Office. In his traditional Taswegian way he explained, all so subtly, that, 'They know where you live.' I can tell you, firsthand, from employing people whose wages were subject to garnishing that they are the first to line up for their money. I think it only fair that the Minister for Social Services has the exact same ability but, more importantly, defaulting to the position that the Minister for Social Services is recouping the money that the taxpayer has paid. Some debtors deliberately avoid their obligation to repay their debts to the Commonwealth by not entering into acceptable repayment arrangements and in extreme cases they head overseas, beyond our reach. This is why the changes made to the travel order are just so important, with the exception of the compassionate clause that if application is made for reasons that are deemed appropriate then that travel will still be allowed.
As I said at the start of this contribution, if it is good enough for the welfare recipient to receive welfare in a time of need—as it should be and as is our social compact—then it is good enough for that welfare recipient, who is off welfare at the time, if owning money to the Australian taxpayer, to pay it back. I said at the start, my father has always said to me, 'If you watch the pennies, the pounds will look after themselves.' We are talking about $3 billion in a budget that comprises almost half of the Minister for Social Services $147 billion this year on its way to a tick under $190 billion at the end of the forward estimates. Is it a big amount in the grand scheme of the minister's overall budget? No, but it is the right thing to do because, not only does it bring it into line with the way other parts of the government function, but it also sends a strong message to the taxpayers of Australia that this government will always be responsible with the way that, not only it spends its money, but also, if money is owed, the way that is goes about recouping it on behalf of the taxpayer so that it can be spent in ways that we deem completely appropriate.
I commend the minister for, as he has done in his time in this portfolio, introducing sensible, common-sense legislation that, not only looks after the taxpayers of Australia, but also allows us, if recouped, to either use the money to decrease our existing deficits or to use it in a more suitable fashion. I commend this bill to the House.
I thank all of the members for their contribution, including members opposite. I might just make one brief comment before giving the more technical summary of the bill before us, which is the Social Services Legislation Amendment (Enhanced Welfare Payment Integrity) Bill 2016. The brief comment is in respect to a contribution from one of the members opposite, the member for Kingston, who said—I think this is a direct quote—that the Turnbull government 'demonises' people who rely on social security to get by. I must say that in general terms I think that is an inaccurate and most unfair criticism, particularly with respect to this bill. It cannot possibly be an accurate or fair depiction of the measures in this bill, or the way in which the measures in this bill have been advocated, or any possible or reasonable inference that could be drawn from this bill because this bill applies to former recipients of social security and family payments. The very point of this bill is that it seeks to recoup monies that were once paid to people who were once in the welfare system but who have, laudably, come out of the welfare system and become self-sufficient through pay as you earn employment or some other form of endeavour, but who have come out of the system with a debt.
The notion that somehow this is in the bill or that the Turnbull government in any way demonises people who are on social security or who find social security necessary from time to time to get by is inaccurate. As far as such a criticism relates to this bill, it is far off the mark because the very point of this bill is to look at proper and appropriate processes to apply to debts held by former recipients of social security and family payments. Indeed, part of the purpose of doing that is to ensure that the future payments inside the social security and family payment system are sustainable.
People who have accrued a social security or a family payment debt and are currently in receipt of payment have a portion of their payment withheld until their debt is repaid. That is the rule of thumb for those people who are inside the welfare system. However, there is no such option available, naturally enough, to the government to recover debts once the person has left the payment system. The whole point of this legislation is to ensure that the same rules apply to debtors who are outside the payment system, that is outside the welfare system,—and they are arguably in a better position to repay their debt in any event—as to those who are inside the system, who regularly have their payments reduced until their debt has been repaid.
I might also make the point that, had the previous Labor government, when in office, acted during their time in government to recover these debts and do more to exact more stringency and more robustness in the process to recover these debts, then we would not be in the unenviable situation that we find ourselves in today with over one million debts totalling $3.04 billion. Of that debt base, approximately $870 million is held by around 270,000 former recipients who do not make sufficient or regular repayments.
This bill introduces the legislative amendments to allow the use of departure prohibition orders to prevent targeted social welfare debtors from leaving the country, as the system currently applies to child support and taxation debtors. The bill also removes the current 6-year limitation on the recovery of social welfare debt that would otherwise be non-recoverable, aligning the treatment of social welfare debt with the recovery arrangements in place for other Commonwealth agencies. With specific respect to departure prohibition orders, the government firmly considers, as was noted by the member for Reid, that it is not appropriate for an individual to travel overseas when they have the means to fund that travel but have not yet set up any arrangement to repay their outstanding debt to the Commonwealth. The new legislation proposes that the secretary may make a departure prohibition order, prohibiting a person from departing Australia for a foreign country, if the person has one or more debts to the Commonwealth and there are no arrangements satisfactory to the secretary for one or more of the debts to be wholly repaid. That is consistent with the treatment of people with child support and tax debts.
The government is of course mindful of the multiple reasons why people may be required to travel overseas from time to time, and so procedures were put in place to allow for people subject to a departure prohibition order to travel overseas in certain circumstances. So there is a discretionary safety valve here. Departure authorisation certificates might also be granted on humanitarian grounds or where the person's travel may be in Australia's best interests. It is further important to note that people who owe a debt or debts to the Commonwealth and are honouring their repayment arrangements will not be issued with a departure prohibition order.
With respect to the second measure—that is, the limitation of the debt recovery period—the government considers that, where there are debts owed to the Commonwealth, these debts should be recovered wherever possible and they should not be time limited and thereby bound by arbitrary time lines. The government is therefore introducing an amendment to allow for the pursuit and recovery of debts, similar to arrangements for the recovery of taxation debts. This will increase the Department of Human Services' capacity to recover outstanding debts. The measure requires the government to remove the current limitation on the recovery of debt where recovery action has not been undertaken in the preceding six years.
Social welfare debtors generally have more than one debt. Given the resources that social welfare recipients have to repay debts, debts are generally paid off one at a time over an extended period. It is possible in such circumstances for some of an individual's debts to reach the six-year limitation before recovery can be actioned. Individual debts to the Commonwealth form an increasing asset base that continues to impose very significant financial costs on the community, and these are critical financial resources that the government could use to support other priorities for the Australian community. Indeed, one of those priorities is to sustain, and make sustainable, the entire welfare system.
The enhanced welfare payment integrity expanded debt-recovery measures will also better enable the Department of Human Services to recover debts from current and ex-recipients of social security and family assistance payments. The measures provide additional funds to expand Centrelink's debt recovery operations and capacity to utilise the full extent of powers contained within existing legislation for pursuing the recovery of debts. These include pursuing an additional 1,500 high-value debt cases relating to ex-recipients who have been identified as having the capacity to repay the debt; increasing negotiated repayment arrangements with ex-recipients by 8,000 per month; negotiating higher repayments from ex-recipients currently making debt repayments but identified as having the capacity to pay more; and targeting current recipients who are on a partial rate of payment due to employment income so that they are in repayment arrangements suitable to their circumstances.
The government will also, of course, continue to focus on protecting the integrity of the welfare system. The enhanced welfare payment integrity expanding debt-recovery measure is estimated to achieve net underlying cash savings of $157.8 million over the forward estimates.
I consider that these sensible measures will resonate with the taxpayers of Australia, who know that in everyday life the need to manage a household budget often includes managing the repayment of debts.
This bill, in conjunction with the Social Services Legislation Amendment (Interest Charge) Bill 2016, provides a suite of measures that strengthen the government's ability to recover debts from former social welfare and family payment recipients. The government is of the view that people who owe money to the Commonwealth should be required to pay that money back before heading overseas on holiday or departing Australia permanently. The government also considers that the law as it stands, which allows people to repay their debts over time, is fair, but that it is not fair or equitable for other debts to remain unrecovered because they fall outside an arbitrary time limit. On that basis, I commend the bill to the House.
Question agreed to.
Bill read a second time.