Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Families and Community Services) Share this | Link to this | Hansard source

When introducing the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 in the lower house, the Minister for Families, Housing, Community Services and Indigenous Affairs, Ms Macklin, said that it involved $55 billion worth of support for families. We agree with that figure. But I would like to echo the sentiments of Mr Abbott, in the other place, who said that that $55 billion simply would not have been available without the strong financial and economic management of the former Howard government. In fact, this package would have been much bigger than $55 billion under a coalition government because the coalition would not have imposed a means test on payments like the baby bonus and family tax benefit part B. The Howard government knew how to take care of Australian families. It erased the burden of $96 billion worth of debt left by the Keating government. It provided hope, prosperity and optimism for the families of Australia. It built Australia’s economy and Australia had the lowest unemployment rate in over 30 years. It provided an environment of economic prosperity that allowed Australians to reap the benefits. The Labor Party are reinventing history, claiming credit for all that is right in the economy and denying any responsibility for that which is not right. Whereas the former government created an era of prosperity and optimism, Australian families are being let down by the government because they are facing bleak times.

This bill is very important because it does support families. In this age of increasing fragmentation and breakdown of social relationships, it is important that families do receive support and, in this particular instance, financial support. However, it is important to point out that the government did not inform the Australian people before the election that they intended to means test these payments. This is a critical issue. Thousands of families will be less well-off than they expected because of these means tests and because of a sneaky ploy by a desperate opposition to claim the government treasury bench.

This is not what Australians need, quite frankly, especially during this time of increased costs of living and soaring petrol and grocery prices, all of which the Rudd Labor government promised to bring down and all of which they have failed to do. But they have not stopped there. The government intend to continue to pursue means tests as a way of limiting support. How do we know that? The Sydney Morning Herald reported on 15 May that the Treasurer had said there were more plans in the pipeline to means-test other benefits. In fact, I stumbled upon this myself during Senate estimates hearings. I asked a departmental official what considerations had been taken with regard to the autism early intervention package. This departmental official said that they had considered means-testing autism programs but this had been scrapped because it would not have excluded enough families. What sort of heartless government would even consider means-testing a desperately needed early intervention autism package or program? The government are bent on means-testing as many programs as possible, taking money out of the pockets of Australian families and putting it into the Treasury coffers.

Let us turn to the substance of this bill. For the first time the income of primary income earners in partnered families will be tested and will need to be $150,000 or less for them to get access to family tax benefit part B. It maintains the current requirement that the income of the lowest income earner needs to be below $22,302 per annum for the person to qualify for some payment. The current accessibility is not altered in the bill. The income limit, though, of $150,000 will also be applied to sole parent families for the very first time. Minister Macklin has said that this means test will affect about 40,000 families—so 40,000 Australian families will be less well-off than they expected; so 40,000 families will lose some benefit that would have helped them to meet the high and rising costs of living, costs of living that Mr Rudd and the Labor Party had promised to address. Out of these 40,000 families, 12,700 are set to lose access to family tax benefit parts A and B. How do we know this? Not because the Rudd government have volunteered it, but because at the Senate Standing Committee on Finance and Public Administration inquiry into this bill the government were forced to provide the information after the questioning of Senator Boswell.

If we go back a little bit, the Australian Labor Party, before it was in government, originally suggested that family tax benefit part B be subject to a means test set at $250,000, up to where it said ordinary Australians could be struggling. So how does this coincide with a means test at $150,000? Clearly, this government is changing its mind at every turn. Someone in the Prime Minister’s office wakes up and says, ‘Let’s just change the rules of the game.’ It is playing with people’s finances as if it is playing a game of Monopoly. Australians simply deserve better. It is the same story with the baby bonus. If you earn over $150,000 a year, you are no longer eligible for it. As my colleague Mr Abbott said:

Mothers do not get the baby bonus because they need it; mothers get the baby bonus because they deserve it.

Minister Macklin has said that 16,000 families will no longer receive the baby bonus due to this means test. Again, thousands of families will be less well-off than they expected, all because the Labor government was not honest with the Australian people before the election.

There are many problems with this particular measure. First among these is that the baby bonus means test lacks what has been described as a taper, which means that a single extra dollar of income can be the difference between receiving a needed baby bonus and receiving absolutely nothing. Evidence presented to the Senate Standing Committee on Finance and Public Administration shows that the government did not commission any modelling on tapering this particular means test. They did not look at the potential benefits for families. They just said, ‘No, let’s whack it in—$150,000—and be done with it.’ Mr Lachlan Harris probably woke up in a bad mood that day, and Australian families are much worse off.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

He might wake up tomorrow in a good mood.

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary for Families and Community Services) Share this | Link to this | Hansard source

Perhaps tomorrow he may wake up in a good mood and Australian families may receive something more, but it is unlikely. What we have also learned is that people may get around this threshold by organising their benefits or their salary to be paid after the six-month deadline so that they can receive the baby bonus and still earn in excess of the cap.

Minister Macklin has stated that, if the income estimate is incorrect and the household actually earns over $75,000 in the six months subsequent to having a baby, then families do not have to worry that a debt will be raised against them because their income changes. However, if they provide false or misleading information then the usual welfare sanctions will apply. I think Minister Macklin is having a bob each way. It demonstrates that the new baby bonus measure will be very difficult to administer and almost impossible to police, yet the new criteria are going to cost a further $22.6 million to administer.

Importantly, this measure was not mentioned by the ALP prior to the election. In fact just before the election, the Labor Party stated in an email from the ALP campaign unit that they ‘have no plans to make any other changes to the way that the baby bonus is structured either in terms of eligibility or payment methods’. What has the government done? It has altered the terms of eligibility and payment methods. It is a case of Mr Garrett being proved right: ‘Don’t worry about what we say before the election; we’ll change it all when we get into government.’ It is simply not good enough. The families of Australia deserve better. They deserve a government that does not go back on its word, a government that tells the truth.

But it does not stop there. This bill also makes changes to voluntary family income management. This measure will allow individuals to volunteer to have their welfare payments placed under an income management regime payment arrangement. This is an important initiative, because it is one that was pioneered by the Howard government during the Northern Territory intervention last year. It has worked pretty well. This is another case of Labor saying ‘me too’—something that occurred many times in last year’s election—and so this measure is in principle a good thing. But I believe—and the coalition believes—that we need to be provided with more detail as to who this will affect and what the scope of the measure will be. In the other place, Mr Abbott suggested that this voluntary income management will only apply to the Kimberley region in northern Western Australia and the Cannington region of outer metropolitan Perth.

This bill will also make it a requirement for claimants of the Commonwealth seniors health card to provide a tax file number when they claim the Commonwealth seniors card. The main aim of this provision is to identify those with income from a superannuation income stream from a taxed source. The opposition is concerned that this measure may adversely affect many older Australians. We are told that about 27,000 people will lose the Commonwealth seniors health card between 1 July 2008 and 30 June 2010. It is also worth noting that the tax file number requirements could be seen as a de facto means test. But 27,000 older Australians are going to be disadvantaged by this requirement.

Whilst the changes to an adjustable taxable income test are not specifically dealt with in this bill, it is worth noting for the Senate that a further 22,000 people will no longer be eligible for the Commonwealth seniors health card under the provisions of a different bill. These people will miss out on much-needed benefits like pharmaceutical benefits, bulk-billing and other allowances because doctors quite often require a Commonwealth seniors health card before they will bulk-bill. It is also likely that more people will be affected by this legislation in the future, given that the department has not modelled—I repeat, it has not modelled—how many people will not be eligible beyond the forward estimates. This is another case of the ALP not showing its hand before the election. The question will always remain how many marginal seat members of the Labor Party and how many other candidates went out there and said, ‘We’re going to start means testing or implementing measures that will further restrict access to Commonwealth seniors health card’? My suggestion is none. The ALP failed to tell the Australian people, especially senior Australians, that this change would take place if they won government. I am happy to be proved wrong on that but I suspect I will not be.

There is another change in this legislation, and that is to the partner service pension. This measure seeks a reduction in access to the partner service pension for partners from the current age of 50, raising the access to the age service pension qualifying age, which is just over 58 years of age for men. The coalition is of the view that veterans and their wives should be treated under the veteran system and not under the social security system. We are concerned that about 930 partners of veterans will be affected by the proposed changes. Nine hundred and thirty people will have their planning and their financial future placed in peril by a heartless Labor government. The savings from this measure are minuscule, but the savings will affect enormously the lifestyle and viability of so many people—930 partners and their families. The government is targeting a very small section of the population. They are altering the benefits to save a few dollars and all the while they are pork-barrelling in their marginal seat electorates, which we have all heard about so much in this chamber. It is simply unreasonable to increase the age limit of this pension so dramatically.

When the Howard government, responsible economic managers, implemented changes to the age pension to lift the age from 60 to 65 it did so gradually. That way people could factor this into their forward planning themselves rather than having their payments, which they rely on, removed quickly and with very little warning. Evidence from the Senate Standing Committee on Finance and Public Administration states that the government did not consult ex-service organisations about these changes. Once again, this was a measure that was not mentioned by the ALP before the election.

This bill also contains the government amendment to repeal the 2006 legislation that allowed for gross fringe benefits amounts to be counted as income for family payments. This legislation was to come into effect on 1 July 2008. When this was introduced into and passed by parliament in November the ALP supported the package of changes that included this measure. In 2006, FaCSIA, the department, was only aware of the general impact of the changes rather than the impact on particular groups. It must be noted that the government’s current proposed changes to family payments in this 2008 bill actually complement the 2006 changes, because this bill also seeks to increase income that is used to calculate payments and benefits. The coalition will support the government’s intention to introduce amendments to repeal elements of the 2006 legislation to ensure that workers in charitable organisations are not adversely affected by the changes to the treatment of fringe benefits for the purpose of calculating assistance payments.

This legislation will affect thousands of Australians and thousands of Australian families. The recent Senate committee on finance and public administration inquiry discovered that 22,000 Australian families will lose eligibility for the Commonwealth seniors health card, 2,100 will lose access to other pensions or allowances, 12,700 will lose access to family tax benefit A and B, and 18,800 will lose some childcare benefit. The Australian people deserve better than a government that claims to provide them with better benefits and then, once their vote has been cast, seeks to reduce these benefits. Whilst the coalition believe that support for Australian families is of paramount importance, we believe that this government has been dishonest and this will result in fewer benefits for the people who most need them. Accordingly, I move the second reading amendment standing in my name:

At the end of the motion, add:

“but the Senate:

(a)

condemns the Rudd Government for its failure to provide a taper rate with the introduction of the means test on the baby bonus; and

(b)

records its concern at the government’s decision to impose a means test on the family tax benefit Part B”.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to incorporate Senator Polley’s second reading speech.

Leave granted.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

Mr President I rise to speak on the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008, and more specifically to the Amendments to this bill introduced by the Government.

I should firstly thank the various charitable organisations such as Catholic Social Services Australia, Uniting Care Australia, the Salvation Army as well as the Australian Services Union, the Charities Tax Advisory Service and the Australian Council of Social Services who came forward to speak to the Finance Committee last week at short notice, when matters in this bill were referred to the Committee.

Thanks must also go to the Department of Families, Housing, Community Services and Indigenous Affairs and the Department of Veterans Affairs for being available also at short notice for the hearing on matters pertaining to this bill last Friday. I would like to think that the priority that all these organisations placed on appearing before us at the Committee perfectly illustrates how important this issue is to those working in the not for profit industry.

The purpose of the Amendments that I referred to earlier has been to rectify the situation created by the previous Howard Government which resulted in people in public benevolent institutions losing out as a result of changes to the assessment of adjusted taxable income for Fringe Benefits Tax.

It should be noted how quickly the Rudd Government acted once this problem had been discovered. The Treasurer, Wayne Swan and the relevant Minister Jenny Macklin were able to present a solution to the public within a very short period and that is something for which they should be commended.

The Treasurer and the Ministers acted swiftly and decisively to ensure that the old system, which used the net value of fringe benefits, would remain in operation if these amendments are passed. This is strong, decisive governance.

It is a measure of how serious the issue is considered that Minister Macklin and Minister Ludwig were also able to quickly develop a thorough communication and notification strategy through Centrelink for those who would have been affected.

As I understand it, Centrelink will be able to implement a change in their computer system as soon as these amendments are passed to help workers who are affected. As well, they will endeavour to contact those who had already received notification of the proposed changes to the fringe benefits system to assure them that they will not be worse off under the Governments amendments.

The Government has also realised that these are complex changes that is why I am pleased to see that the Henry review on taxation has been asked to examine the existing fringe benefits tax system and to recommend long term changes that will provide a more equitable system for all.

I call on the Opposition to support this bill and these amendments. It is now in their hands whether these workers are able to keep the status quo with regard to their entitlements.

I hope they are not as obstructionist as they were last week.

The solution that was announced by the Treasurer and the Families Minister last Thursday will change the system back to the 2006 implementation, and help protect those working in public benevolent institutions. It is these people who faced financially losing out under the changes to the law, and indeed the terms of reference of our inquiry reflected this.

Over the course of my work in my state of Tasmania, I come across a number of people who work in the non profit or charitable sector. For the most part these people are the kind of selfless individuals who are willing to put themselves forward in order to help the less fortunate members of the public.

They will often forego the higher salaries that they could receive in other jobs in order to make a difference for the destitute and the struggling. It would be unconscionable for us not to act to help these people, and ensure that they don’t lose what little monetary rewards they do receive.

During the course of the hearings we heard from Frank Quinlan from Catholic Social Services Australia who gave us a very informative account of how important these amendments are to those employed in the non profit sector. His comments painted a picture for the Committee of how difficult employees would find it if these amendments did not go through this sitting week. I quote them from the Hansard proof:

“The charitable and not-for-profit sector is currently reliant upon these special taxation arrangements to attract and retain staff and deliver services. In effect, these fringe benefits arrangements, which were originally designed for the top end of town, have been extended to the charitable and not-for-profit sector specifically for this purpose. To explode a particular myth in relation to the charities and not-for-profit sector, when we are talking about fringe benefits tax we are not talking about expensive cars, flash holidays or expense accounts. We are talking about fringe benefits acquired by salary packaging, which is usually contributed in terms of mortgages, rents, household expenses and so on. There is a paucity of data available about the actual impacts, but I can give you figures from at least one of our agencies, our largest metropolitan agency, where recent data suggest that 80 per cent of the staff currently utilising salary packaging arrangements are earning $50,000 or less.”

His comments were backed up by Mr Bicknell from UnitingCare, and again, I quote from proof Hansard:

“UnitingCare Wesley Port Adelaide has 872 staff and we employ staff in a wide range of areas—aged care, mental health, youth work, family work, homeless young people, and a number of other areas such as that throughout South Australia. Of the 872 staff we employ, 820 have a gross pay of less than $50,000, so we are really talking about people who are on the lower income levels. Of those, 390 salary sacrifice. Salary sacrifice is really important for a lot of people who work for us in making up their total package. For example, if we have a worker who has a spouse with no income and two children and earns $35,000 a year, salary sacrifice, as it has been operating now, would typically add $110 per fortnight to their salary package. If the proposed changes had gone ahead, that person would have lost $59 per fortnight, and $59 per fortnight on that sort of income is a very significant cost.

It is to help people who are in this situation that I call on the Opposition to support this bill, and the amendments that have been put forward by the Rudd Labor Government to fix the situation.

As the Treasurer said, it is a great injustice that the changes put forward by the previous Government treat these people in the same way as the executives who are the intended target of the changes.

The other measures present in this bill are all about providing fairer and more targeted family assistance. It is indeed pleasing to see that the Government has honoured all its election promises - the first Government to do so I believe. To look at just one such measure, by increasing the eligibility of the baby bonus to parents who adopt children under the age of 16, adoptive parents will be able to access the full amount of the baby bonus, even if the adopted child has previously received the bonus.

This change recognises that a significant percentage of children are over two years of age when adopted and that adoptive parents will have the same set of set up costs and will also incur additional expenses during the adoption process.

Of course they may also need to spend time out of the workforce to welcome and settle in their child. These changes will help an estimated additional 130 adoptive families each year including over 100 intercountry adoptions.

Our Government believes that the expected increased cost of $3.2 million over four years is a small price to pay to create a fairer system and treat all new parents the same. This is another election promise that the Rudd Labor Government has delivered on.

Before I end though I must point out the sterling work done by Stephen Palethorpe and all the members of the Finance and Public Administration Secretariat in not only setting up the hearings for the inquiry related to this bill at two days notice last week, but helping the Committee present this report with such a quick turnaround.

In addition to their usual workload, this has certainly been a hectic fortnight for them and I want them to know that their efforts are certainly appreciated.

I commend this bill, and the Governments amendments to the Senate.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

I rise tonight to speak on the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 and specifically on issues relating to fringe benefits and employment in the charitable and not-for-profit sector. The issue of fringe benefits tax arose in relation to this bill, due to concerns about the serious impacts on not-for-profit organisations of changes relating to how fringe benefits were to be calculated for the purposes of family tax benefits and childcare benefits. The Australian Greens note that our main concern originally—and, as I understand it, that of charitable organisations and other not-for-profit non-government organisations—related to changes made in 2006 by the previous government. These changes altered the income test for family tax benefits so that fringe benefits were grossed up, where they had previously been calculated on a net basis. The impacts of these proposed changes on the community sector were of such concern that I referred the matter to the Senate Standing Committee on Finance and Public Administration for inquiry. In the course of the inquiry a further issue in relation to fringe benefits tax in the not-for-profit sector was raised—namely, the cap on tax-free benefits. It is this specific issue that I would like to address tonight. The other main issue that came up is the viability of the not-for-profit sector.

The community sector—which is also called the not-for-profit sector or sometimes the third sector—is a vital part of our civil society. It plays a crucial role in that society. I was pleased to note that the Parliamentary Secretary for Social Inclusion and the Voluntary Sector, Senator Ursula Stephens, put out a media release on Friday. On her website she acknowledged:

As part of the Federal Government’s Social Inclusion agenda, we are dedicated to a new era of partnership with the not-for-profit sector.

The Government will continue to find new ways to support and promote the crucial work of the staff and volunteers within the sector in helping disadvantaged Australians.

She went on to explain that the government was in fact moving to reverse the changes that were going to come into effect on 1 July that were causing such concern to the not-for-profit sector. I will go into that in a moment.

The value of the community sector to the Australian economy is conservatively estimated to be in the order of $50 billion per year. I believe that is a highly conservative figure. This figure consists of $20 billion in expenditure, which the not-for-profit sector spends on these issues, and at least another estimated $30 billion in unpaid voluntary work. Again, I think that is a highly conservative estimate. Wages and conditions within the community sector are substantially below those offered in both the public and private sectors. If there was a decision by government to attempt to provide the services that are provided by the not-for-profit sector—which, for a start, I do not think the government could do—the cost of delivering the same level of services would be substantially more than $50 billion a year. And that is even thinking that they could provide the level of service that these organisations provide. However, the fact is the community sector cannot compete with public sector employment or private enterprise on wages and conditions, and this gap, alarmingly, continues to widen. As a result, the community sector relies on employees voluntarily forgoing the possibility of higher wages elsewhere for the opportunity to make a difference and to do some good within the community.

However, with the rising cost of living and other financial pressures, there are limitations on the degree of sacrifice employees are able to sustain and still be able to meet their living and family commitments. A survey of the community sector that the Australian Council of Social Services conduct every year, which was just released this month, found that 68 per cent of agencies which responded had experienced difficulty in attracting staff in the last year, and 43 per cent of them named staffing as one of the three most important issues facing their services. A significant proportion of respondents expressed concern about wage levels and indicated that they had considerable trouble attracting and retaining staff. Skilled occupations which obviously require appropriately qualified staff such as psychologists, social workers and accountants are becoming increasingly difficult to fill as skills shortages in these areas continue to bite and the salary gap with the public and private sectors continues to widen.

Employees within the community sector are in fact predominantly middle-aged women on low incomes. While many have strong personal commitments to their work and their organisations, we are now seeing increasing numbers approaching retiring age. On the whole, younger workers are less inclined to take on these lower paid and relatively stressful roles, and the sector potentially faces a looming crisis, particularly as younger people, even if they are inclined to take on these roles, find it quite difficult to sustain them and there is more churn through the sector. To this extent, both the use of adjusted fringe benefits totals and the capped exemption on fringe benefits taxes for public benevolent institutions, charities and other not-for-profit organisations have played an absolutely pivotal role in the capacity of these types of organisations to recruit and retain staff.

The unintended consequences of the change that would have come into effect on 1 July—that is, to use reportable rather than adjusted fringe benefits totals for family benefits—would act to effectively reduce the disposable income of many families of community sector employees, especially those in the $40,000 to $80,000 income range, where the primary income test for family tax benefit is applied. The reason that this change is such a concern to the Australian Greens is the likely impacts that it would have on the ability of a wide range of community service organisations to attract and retain suitably qualified and motivated staff, on their ability to deliver services efficiently to their disadvantaged clients and on the ongoing viability of the wider community sector. That is why we were particularly pleased when the government announced that they would introduce an amendment to deal with this issue. The Greens had already drafted an amendment, and I am pleased to see that the government are moving exactly the same amendment. However, the issues around the cap on the tax-free exemption and the viability of the community sector that came to light when this issue was raised in the public arena still apply to the community sector. There are many serious issues that the sector still has to deal with.

During the committee hearings, representatives of the community sector raised a number of other issues relating to the funding and ongoing viability of the sector. These include the need to raise the current tax-free ceiling on fringe benefits for public benevolent institutions, charities and not-for-profit hospitals and other relevant not-for-profit organisations. These tax-free fringe benefits allow those organisations I have just mentioned which qualify for this exemption to effectively offer higher salaries than they otherwise would be able to, while at the same time reduce the cost to the purchasers of these services, whether those purchasers are governments, fee-for-service clients or those of us who make donations to these charitable causes. The committee heard that the current tax-free ceiling for public benevolent institutions and other charities of $30,000 is not indexed and has not been increased since it was first introduced in 2000—in other words, for eight years. Our calculations indicate that if the current ceiling had in fact been indexed to the Consumer Price Index it would now be around $38,500 and if it were indexed to average weekly ordinary time earnings it would now be $43,000.

Given the importance of this benefit to the ability of charitable organisations to attract and retain staff and deliver services, the Australian Greens believe that the ceiling should be immediately lifted to $40,000 and indexation introduced into the legislation. A proposed new tax-free ceiling of $40,000 is, for those who are listening to the maths, between the two measures for indexing. We believe that this is a fair figure, given the current cap has not moved in eight years. The public or not-for-profit hospitals or ambulance services currently have a different fringe benefits tax-free ceiling of $17,000, which also is not indexed and has not changed in eight years. Our calculations indicate if the current ceiling had been indexed to CPI it would now be close to $22,000 and if indexed to AWOTE it would now be $24,000. Given the importance of this benefit to the ability of not-for-profit hospitals to attract and retain staff and deliver services, we believe the ceiling should be immediately lifted to $23,000 and indexation introduced into the legislation.

Once the issue of reducing the gap created by eight years without indexing the fringe benefits tax-free threshold has been addressed, it still leaves open the issue of indexation. The Australian Greens support indexation to average weekly ordinary time earnings, AWOTE. This is because the issue at hand is a benefit directly related to employment and wages; hence, AWOTE is, in our opinion, the appropriate indexation reference. Since the issue of the cap was raised in the committee last week, numerous people have contacted my office to indicate that increasing the tax-free threshold from $30,000 to $40,000 would be of huge benefit to their organisations. For example, one aged-care provider indicated the impact on their staff who are earning up to $45,000—and many of course are earning a lot less—would be an extra $883 in their hands per annum. This is a significant amount of money for those families that are not earning a lot of money.

The aged-care sector is having a particularly tough time at the moment. Aged-care service providers are struggling to survive due to a shortage of people to undertake work, rapidly rising cost structures across all essential items and services and an unprecedented demand for services. Any loss of staff due to a sudden decline in a worker’s take-home pay or access to government supports will further increase staff vacancies and reduce levels of service. In the current environment it is unlikely such organisations will be able to recover lost staff.

This situation is being experienced by all community and welfare service organisations and providers across the sector. I have been inundated with comments from people expressing concern around the current situation. Given the immense value of the not-for-profit sector, the Greens believe the impact on the government of increasing the tax-free limit is minimal compared to the benefits of ensuring continued quality service provided by qualified and appropriate personnel.

The capped exemption from fringe benefits tax for public benevolent institutions cost the government $250 million in forgone taxes in 2005-06. Even with the percentage increase in this figure that would occur—I will be positive—when the cap is lifted to $40,000, this is a small amount compared to the billions of dollars the community sector contributes to our economy and our society. Frank Quinlan from Catholic Social Services gave evidence to the inquiry last Friday on this issue. He stated:

... then we also have to do a further analysis about the merits of that cap on its own. I think there would be a strong argument to suggest that an upwards movement of the cap, even beyond indexing, would be welcomed and would provide a further tool available to us again to both deliver more services and deliver some compensation to low-paid workers. I emphasise that a shift in that cap actually has a multiplier effect, not just on the dollars that government gives us but also on the dollars that we raise from other sources. If we raise $100 from other sources, by packaging that in salary we can turn it into more than $100 worth of services. It is important that we are talking not just about government funding either from state or federal government. It is a way in which policy can actually deliver us a benefit that we draw from other sources of funding, whether it be philanthropy, fundraising or others.

Given the value of the sector to the government as discussed above, particularly in the provision of much needed services far cheaper than government could ever hope to provide or source them, we do not believe that the extra cost of this measure is a great impost on government or that that provides any reason for them to reject it. To this end, I will be moving amendments to increase the cap on the exempted level of fringe benefits tax for those two groups and to introduce annual indexation.

The Australian Greens agree with the wider principle put forward in the submission from the Australian Council of Social Services: our tax and social security systems need to be both fair and consistent in the way they confer benefits and attribute costs. We also note that relying on tax exemptions to remedy the poor remuneration offered by the community sector is a poor substitute for a properly costed and resourced welfare system. On that basis, we welcome the proposed Henry review of Australia’s tax system and hope that it will provide fair and consistent remedy to the existing inequities of our tax system and to the wider issue of sustainable funding for the community sector.

However, in the meantime we believe it is imperative to deal with the current viability crisis in the sector, brought on by these potential changes to the assessment of fringe benefits tax—the government is doing this—and also to deal with the ongoing reduction in real terms of the cap on allowable benefits, because that will deliver real outcomes to those working in the community sector now, not in a couple of years time when the Henry committee reports. We urge both the opposition and the government to support the Greens’ amendments that will bring real, meaningful changes to those working in the community sector now.

Mitch Fifield (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008. The bill introduces a means test for family tax benefit part B and the baby bonus. Additionally, the bill makes a number of changes to the administration of the baby bonus. Payment is changed from a lump sum to 13 fortnightly instalments and the baby bonus will be indexed once yearly rather than twice yearly. The age limit at which an adoption gives access to the baby bonus will be increased from the current two years to under 16 years of age. The bill introduces a requirement for claimants of the Commonwealth seniors health card to provide a tax file number and reduces access to the partner service pension for partners, raising the access age from the current age of 50 to the age service pension qualifying age. The bill also contains changes relevant to the issue that arose in the public domain last week in relation to changes to fringe benefits tax and charities.

I will come to the other matters later; first I would like to deal with the issue of the charities. Last Friday, the Senate Standing Committee on Finance and Public Administration conducted a hearing into this bill as part of its inquiry. As deputy chair, I begin by thanking the representatives of the charitable organisations, who generously gave of their time at short notice to present evidence to the committee. It seems giving up their time is something that comes naturally to these individuals, and the committee was very grateful to them for it. At issue was the fact that from 1 July 2008 more fringe benefits would be included in the income that is used to calculate payments to families of family tax benefit A and B and the child care benefit. This would have a significant impact for employees of some charities.

The coalition implemented this change in response to a report in 2006 by experts on the Ministerial Taskforce on Child Support, chaired by Professor Patrick Parkinson. That report recommended that calculations of income for child support should include all fringe benefits to ensure that parents could not avoid their child support obligations by converting normal income into fringe benefits. The report also recommended that the method for calculating child support be extended to the method for calculating family tax benefits, to ensure consistency. It was argued that it would be complex to have different methods for calculating child support and family payments. The coalition accepted both of these recommendations and implemented them in legislation in 2006. At the time, the Labor Party supported the package of legislation that included this change. In its response to this issue, the government has sought to blame the former coalition government. That is dishonest.

The facts are that Labor supported this measure. On 12 October 2006, the relevant shadow minister, Senator Evans, issued a media release that indicated Labor’s support for the package of changes the coalition introduced. The piece of Labor legislation that we are now debating supports the 2006 change. The explanatory memorandum to the Labor bill discusses the change to the calculation of income for family payments, explicitly states that the change will result in higher calculated incomes for some people and gives a worked example of how the change produces a higher income for the calculation of family payments. The Labor legislation allows Centrelink to use this higher income to determine family payments. Without this change by Labor the payments to some families would have been higher. Labor cannot therefore claim that this change was all the former government’s doing. Whilst it is true that the coalition’s 2006 change broadens the income that is used to calculate family payments, Labor’s changes in the 2008 budget do the same thing.

The government is proposing to include salary sacrifice into superannuation and investment losses in the calculation of income for family payments. The government therefore cannot argue that its 2008 changes are completely separate from the coalition’s changes in 2006. In particular, any charity worker who salary sacrifices into superannuation or has losses on investments will be affected by Labor’s changes in the 2008 budget.

Labor’s measures will result in a much larger reduction in family payments than the coalition’s changes from 2006. It is very concerning that Labor is reducing support for families in the 2008 budget, in contrast with the dramatically increased support for families delivered by the coalition in office.

It was also interesting to hear the evidence at the inquiry into this bill that the Minister for Families, Housing, Community Services and Indigenous Affairs, Ms Macklin, cleared the explanatory memorandum for this bill prior to its presentation to the House on 29 May 2008. Apparently the minister’s awareness of the impact of the 2006 legislation was not aroused by her clearance of the memorandum prior to 29 May, which mentions that notification letters to recipients of family tax benefit and childcare benefit were being issued in April.

The committee also heard evidence that no officers of the Department of Families, Housing, Community Services and Indigenous Affairs were aware, prior to May 2008, of the extent of the impact of the legislated, but not yet operative, provisions relating to the treatment of fringe benefits for the purpose of calculating family assistance payments. It was further acknowledged by the department that no analysis was ever conducted to determine whether any particular sectors, such as the charity sector, would be disproportionately affected. Mr Hazlehurst of the department acknowledged that:

… we did not at that time do an analysis sector by sector of how many people would be affected.

And later:

… we did not do any sector-specific analysis. We did not look at how employees in different sectors would be affected.

During the inquiry we also learned that Minister Macklin’s office was provided an oral briefing on the impacts on employees in charitable organisations on 29 May 2008; yet neither the minister nor the Treasurer made any attempt to raise the matter publicly until the publication of an article in the Australian newspaper on 18 June, prompting a joint press conference that day and an announcement on 19 June 2008.

It remains unclear whether, if the issue had not received considerable public interest following the media coverage on 18 June 2008, the minister or the Treasurer intended to act on this issue before 1 July, or at all. All we can conclude is that, through her attempts to deny having supported these changes, the minister does not understand her own legislation. To provide certainty to workers in the charity sector, the coalition will support the government’s announced amendments.

Let me turn now to the rest of the bill. This is a bill of cold hearts and broken promises. It is a bill that seeks to act upon the nasty surprises Australian families found were in Labor’s first budget delivered some six weeks ago. I note that Labor senators are saying that they hope the opposition will not be obstructionist in relation to this bill. What hypocrisy and what contempt for Senate processes! Labor senators well know that when the coalition came to government in 1996 we had been left a $10 billion budget deficit and a $96 billion debt. That was a real crisis, not a false and constructed crisis of the sort that Labor are inventing at the moment. What happened when the coalition set about repairing the damage caused by 13 years of inept Labor government? As we know, Labor opposed every single measure we introduced to balance the budget and pay off their debt.

At the same time, it is very interesting to see Labor now demanding respect for mandate. Unfortunately, this new Labor paradigm has arrived 12 years too late. When we were in government we took numerous policies to the Australian people and were successfully elected on our platforms only to have Labor vote against them time and time again. To come in here now and throw the word ‘obstructionist’ around and lecture this side of the chamber on mandate theory is the height of Labor hypocrisy. But the point about this bill is not that the coalition will not respect Labor’s mandate because they never respected ours. The point here is that there is nothing in this bill for which Labor sought a mandate. Labor never once put to the Australian people that they would set a means test of $150,000 for the baby bonus or the family tax benefit part B. Labor never once flagged their intention to slash entitlements to the Commonwealth seniors health card or the partner service pension. There is no mandate here, only broken promises.

The committee heard evidence that the government’s decision to introduce the requirement for tax file numbers to be provided by claimants of the Commonwealth seniors health card will result in loss of eligibility for at least 27,000 people in the next two years. This is not a compliance measure; this is a de facto means test that will strip older Australians struggling under cost-of-living pressures of their entitlements to assistance such as the seniors concession allowance and the telephone allowance. What is equally concerning is that the department has not modelled how many people will lose their entitlement to the card beyond the forward estimates. It seems that the true number of people to lose entitlement to this important assistance for seniors will be much, much higher.

All of this is against the backdrop of the complete neglect of pensioners in Labor’s first budget. Even more heartless is the government’s decision to strip away entitlement to the partner service pension from some 930 Australian partners of veterans. These are people who in many cases act as carers for their partners. And these are not just any partners. They are veterans who have served the nation in the defence forces. How insulting for veterans that the Prime Minister, when asked about this matter in the House on 19 June, confessed he had no idea about it. And the Minister for Veterans’ Affairs—what was his description of this proposal? How did he characterise the government’s decision to punish the partners of veterans? He said it was a ‘minor’ change. Labor rip away the entitlements of vulnerable people who are caring for veterans, and the minister says it is only ‘minor’. I wonder which Labor MP or candidate went to their local RSL in the lead-up to the last election and said, ‘By the way, we’re going to slash the partner service pension—just so you know.’ I do not think anyone would have.

I would like now to turn to the baby bonus. Add this to the list of Labor’s broken promises. As Senator Bernardi referred to earlier, when a constituent contacted the ALP via the Kevin07 website to ask whether Labor was going to make any changes to the baby bonus, they were told:

We have no plans to make any other changes to the way the Baby Bonus is structured, either in terms of eligibility or payment methods.

And this year the Australian of 14 March 2008 stated:

… Wayne Swan this week ruled out any change to the baby bonus and said Australia’s middle class did not receive too much welfare.

Well, his tune has sure changed. That was a complete and utter falsehood uttered by Mr Swan. Perhaps that constituent who contacted Kevin07 voted Labor as a result of the response they received. That constituent has now been completely short-changed by Kevin08.

Not only have Labor broken their promise not to fiddle with the baby bonus; they are seeking to apply the ultimate blunt instrument in a means test with no taper. So, if someone has a child on 1 January 2009 and earns $75,000 in the following six months, they will receive the full bonus. But if they earn $75,001 they will get nothing. One dollar extra means sudden death. Tapering was not even considered by Labor. Evidence to the committee revealed that no modelling had been conducted on tapering of the baby bonus means test.

Labor’s means test is an odd beast. Labor are asking people to estimate their income in the six months after the birth of a child and will pay the bonus based on the information provided to them. However, if someone provides information that they will earn income under the means test threshold but then actually earns income that exceeds the threshold, they will not be compelled to pay back the bonus. This means test is therefore completely vulnerable to fraud and dishonesty. Labor’s means test will be almost impossible to police, despite the fact that more than $22 million will be sunk into administrative costs.

Finally there is the family tax benefit part B. Labor promised prior to the election that they would means-test this payment at $250,000. Senator Chris Evans, then the opposition spokesman, announced this policy in a press release of 28 March 2006. Yet, just as Mr Garrett prophesised, once Labor got in, they just changed it all. So now families get hit with a $150,000 means test, again with no taper. The Treasurer has confirmed that around 40,000 families will lose their entitlement to family tax benefit part B as a result of this change.

We have heard much from Mr Rudd over the past 18 months about working families being under financial pressure. So what is Mr Rudd’s remedy in this bill for that? To strip those very same families of entitlements. And, while he is at it, he is hitting pensioners and partners of veterans too. We on this side of the chamber will not be bullied by Labor’s rhetoric on obstructionism and mandate theory. We have shone a spotlight on this bill and its litany of broken promises. This bill targets families, pensioners and veterans. For that, Labor stands condemned.

Natasha Stott Despoja (SA, Australian Democrats) Share this | Link to this | Hansard source

As much as I would like to get into a ‘my mandate is bigger than your mandate’ philosophical discussion with the senators in the chamber, my pleasant task tonight is to talk about one aspect of the legislation before us in the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 which is something that the Democrats have been campaigning for for a long time, and that is the extension of the baby bonus to adoptive parents who happen to adopt a child over the age of two years.

I would like to commend the government on that change. I know that when the baby bonus was first introduced the Democrats made it clear that we were concerned at the then only 26-week period in which adoptive parents were eligible to claim the baby bonus. We campaigned and were successful, thanks to the efforts of the previous government and, I believe, particularly Minister Patterson at the time. We saw that extended in 2005, as I recall, to two years. But, if anyone here is familiar with some of the issues, expenses and rules involved in adoption, particularly intercountry adoption, they will know that the two-year period was not really satisfactory, given the number of adoptions that take place. So I am really glad to see that the government has adopted this particular measure—no pun intended.

I did in fact introduce a private member’s bill to this effect in March this year, and I was getting a little concerned that I had not received any feedback from the office of the Minister for Families, Housing, Community Services and Indigenous Affairs. I had urged them to support the legislation. That was met with stony silence. Now I know why. Again, I commend them.

I think it is worth reminding members of the community and members of this place of some of the issues involved in the adoption process. I was looking at some statistics from the Australian Institute of Health and Welfare which illustrate that the number of children adopted from overseas countries has more than doubled over the last 25 years and, as an overall proportion, accounts for seven of every 10 adoptions. Yet, despite the increase in intercountry adoptions, the overall number of adoptions in Australia has plummeted from almost 10,000 children 35 years ago to 568 children in 2006-07. There were 568 adoptions last financial year—slightly less than the 576 children adopted the previous year. Nationally, three-quarters of the children taken into new homes last financial year were aged under five, with more than 55 per cent being female. These figures which I put on record tonight highlight the relatively small number of parents who adopt. Therefore, the inclusion of this group in the baby bonus legislation is quite inexpensive, relatively speaking, but will provide much-needed financial support.

Some senators may be aware of the fact that in some states—for example, Victoria—there are requirements for those parents who adopt a child to stay home for 12 months following the placement of that child in their new home to ensure that that child settles into family life. Many of us who are biological parents do not face those same policy requirements or that stipulation, and yet we are entitled to the baby bonus. Many of these adoptive parents and their families have been missing out, and, arguably, in many cases, have quite onerous additional financial and other issues with which to deal. So this is a very positive and relatively inexpensive measure.

In relation to the age range, I place on record that in the 2005-06 financial year, 118 children aged over two years were adopted from overseas. That gives you an idea of the statistics—just how many children are actually over that two-year age level and whose parents, therefore, have missed out on the baby bonus previously. As a consequence of their children’s age, these parents have been unable to access any form of financial assistance in that sense.

There is one ‘but’ I might add. As honourable members would be aware, the proposed change in relation to adoptive parents claiming the baby bonus does not come into effect until 1 January 2009, along with the means testing, of course. In that respect, I think it would have been nice to give this additional measure immediate effect—or at least effect from the date of assent. Wouldn’t it have been nice to give that measure and that assistance to these families that little bit earlier?

Tonight I received an email. Madam Acting Deputy President, you find when you are leaving this place that you get a lot of nice and kind emails. This was another one of those. It stated as a reminder:

… the delay in bringing in the change to the baby bonus until 1 January still means that families will miss out. We are in the … position now of almost not being concerned by our ongoing wait (21 months this week) for allocation as we know our child will be over 2 and to miss out twice—

this is from someone who missed out last time because their child was not eligible—

will be a hard pill to swallow. No doubt, as soon as—

it is quite moving—

we see a photo of our new child, not even the frustration of missing out on the payment again will be enough to stop us from wanting to get to—

name of country—

as quickly as possible to bring him/her home.

This has been an ongoing campaign. It has been one that the Democrat senators have been particularly committed to. We have been glad to have had a couple of wins along the way. Might I say it is really nice when leaving this place to be speaking to this bill—I hope this is my final bill; I think four bills today is possibly enough—and having a win for the party. I think this is indicative of the kind of work that we have successfully done over many years. It does not always happen immediately, but it can happen. If I may implore the government ministers and parliamentary secretaries on duty, wouldn’t it be nice to bring this measure up a little sooner?

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

The Senate is debating the Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008. My interest in this bill relates to the government proposed amendments which repeal aspects of their treatment of fringe benefits. Following questions I raised in estimates and complaints from the community sector, the government was alerted to the severe impact the changes would have on the community sector. It is strange that no-one, from the department to the minister, even thought to be across the details of the impact on so many Australians who stood to lose some $50 a week in family payments because of the fringe benefits changes. I note for the record that these changes to reportability are actually made properly workable by the bill before us in its original state.

The need for new amendments reflects an unforgivable oversight in the Minister for Families, Housing, Community Services and Indigenous Affairs’ ability to handle her portfolio. At best, it is an oversight of huge proportions. It reflects little interest from the current administration in monitoring and evaluating the system they are entrusted to deliver. Once the election bells ring, it is the new government who is responsible. That responsibility certainly extends to letters that have gone out in the Rudd government name advising working families that they are about to lose a heap of family benefits. I do not know whether anyone in the department was aware that thousands of letters were going out advising mums and dads that their family benefits were about to be gutted. I do not know why that did not ring a bell with anyone. Was anyone there looking after the interests of Australian working families, or was it just a posture? Consequently, the Treasurer and the families minister fronted up to a press conference last week to say they would fix the problem, and so we come to today’s bill and amendments.

The questions raised by this sequence of events are very disturbing and go to the heart of the style of operation of this government. Here we have a budget bill that originally included changes to the fringe benefits tax treatment. It is therefore the Rudd government’s bill and they are fully complicit with the impact of the grossing up salary sacrifice of contributions on not-for-profit-sector workers’ access to family benefits.

The government now bring in more amendments to fix up the mess they have voted for and presided over. Most importantly, they were the ones that sent out the letters. They were in charge when the letters were sent out. The Rudd government own this chaos. At 10 seconds to midnight, Labor are rushing in amendments to stop thousands of families from being deprived of their well-deserved family benefits. This chaotic way of running the country begs the question: what else has gone unnoticed or been overlooked?

I turn to the closely related issue of the government’s proposal to make other changes to the definition of ‘taxable income’ as announced in the budget. The Australian Services Union estimated that the bill we are now dealing with, with complications arising from the government’s misunderstanding of how a change of the definition of income would affect thousands of working families from July 2008, would hurt 200,000 charity workers. I am very worried about what has been overlooked in the expanded definition of income for 2009. I have been pursuing the minister and the department in estimates and in this chamber, and I am still waiting on a promised briefing from the minister representing the families minister in the Senate, Senator Evans.

We know from this work so far that there are a whole range of government support programs and assistance delivered through the tax system that are to be affected by the expanded definition of income. From July 2009, income will be grossed up with items that previously were not considered, such as salary sacrifice and net investment losses. This adds to the paper income of working Australians so they have reduced access to benefits. They lose money which they are currently entitled to under the existing system. That is why there are no little cameo moments in the budget papers telling families what they will get from July 2009—because the goodies are only for this year. Those are our tax cuts. Next year the rules are going to change, and the average Australian working family will not be able to claim the same rate of benefits as now. Their eligibility will be reduced because their income for the purpose of claiming the benefits will have gone up. I am sincerely worried that the government has another fringe benefits crisis on their hands, except magnified many times.

In the Treasurer’s press conference, where he confessed to the huge problems for community sector workers, he also said that the 2009 changes would be all right because there was still plenty of time to work them through. But that is what a Treasurer does. The Treasurer works all the sums through before he puts them in the budget; otherwise, what use is the budget? He could just make up anything and put it in there. If you have a budget in black and white and you deliver it to the parliament, you are accountable for everything in it. You cannot just wait around and hope that everything works out in the end.

We have seen over the last week a government that does not understand what it has done. Fancy putting 200,000 charity workers up for a pay cut! I believe I found out before the government because people started to ring me when they received the letters to ask what it was all about. That is when I started to inquire. That led to discovering the salary sacrificing which was going to affect about another 100,000 people—I do not know how many it will affect; I cannot find out. The Treasurer said that he was not aware of how many, but I think he was disingenuous because Treasury has done the modelling on these changes. Senator Bernardi and I were told this last Friday at the committee hearings. If the Treasury has done the modelling, why can’t the Treasurer and his ministers tell us what the impact of these expanded definitions of income are going to be? What is he holding back? Why is he holding back? If he is going to take income away from people in 2009, then surely they are entitled to know what they are going to lose. Why can’t I get an answer to questions I have asked half-a-dozen times at least? How many Australians will lose some or all of their benefits or assistance through the tax system as a result of the expanded definition of income? How much are they going to lose? How many of them are going to lose?

I will go through the programs that we have discovered, after much pulling of teeth, are going to be affected. They include—there could well be more but I cannot find out—family tax benefit part A plus family help income support payments; the childcare benefit; the baby bonus; the senior Australian tax offset, the Medicare levy surcharge; exceptional circumstance relief payments and exceptional circumstances interim income support; dependency tax offsets; income support payments under the Social Security Act; the parental income test on Youth Allowance; Abstudy; the Assistance for Isolated Children Scheme; Veterans’ Affairs support; the Commonwealth seniors health card; and dental benefits. That is going to amount to a lot of people. I can see the parliamentary secretary sitting there with a very worried look on her face, saying, ‘What am I getting myself into?’ I can assure you, Senator Stephens, that you have been handed the biggest hospital pass of your life.

Of these 16 or so affected measures, we also know, after last Friday’s hearing into this bill, that 22,000 Australians will lose eligibility for the seniors health card. I think Senator Bernadi enunciated that. And 18,800 will lose some childcare benefits as a result of the expanded definition of income. These figures are only two of the 16 areas but should cause significant concern. There are 22,000 senior citizens of this country who are going to get a letter in the mail in the next 12 months telling them that they will no longer get the seniors health care card from July 09. That means no $500 concession allowance, no discounts on pharmaceuticals, no telephone allowance and reduced access to bulk-billed Medicare services. I do not believe the government has done its homework on this. It certainly has not come clean with the elders in our community about the fate that awaits them just around the budget corner. Has the Rudd government come clean about the 18,800 who are going to lose childcare benefits? That is on top of the higher petrol costs, food costs and housing costs. Families are going to be slugged in their childcare benefits—unless they are older Australians, and then they are going to be slugged in their health care cards. They get it either way.

Is there more? Yes, there is more. I was told in estimates that these changes to income definitions will cost 74,400 Australians some of their family tax benefits A and B and 12,700 Australians all of their family tax benefits A and B. So there are cuts to childcare benefits, health care cards and family tax benefits A and B. But could there be more? Yes, there is more. There are a dozen or so other categories—we are still waiting for information on how many and how much, but the government will not tell us. I hope the parliamentary secretary will tell us tonight. She has always been someone who is prepared to tell the truth. They cannot say they do not know, because we have heard evidence from the families department that the Treasury has done modelling.

I call on the government, the minister and the parliamentary secretary again to produce the figures. Tell us how many more tens of thousands—or could it be hundreds of thousands?—of working families are going to be slugged due to the expanded definition of income to apply from July 2009. Are the envelopes being printed in massive forward orders to tell all those affected that they are going to lose some or all of their family tax benefit A, family tax benefit B, childcare benefits, seniors health care card, baby bonus, exceptional circumstances funding for drought, isolated children funding, teen dental services and so on? When are you going to tell the people how many of them are going to be affected and what the effect will be on them? They are going to have to tighten their belts, make allowances in their budgets or do something to offset the loss of income. If they do not, we will be returning to this place again and again to try, like today, to fix up the chaotic mess presided over by the Rudd government.

The Rudd government are good at watching. They have a FuelWatch, a ‘grocery watch’, a ‘strike watch’, an ‘Iguana watch’ and a ‘state debt watch’, and now there is a ‘budget watch’—that is, watch the budget roll out and watch the casualties line up. The Rudd government like to watch. They like to watch working families lose their benefits, their assistance measures and their tax offsets. Even their Veterans’ Affairs entitlements will be affected by these expanded definitions of income. The Rudd government are making it harder to access all these programs. I say in closing: you have been a great friend to the hardworking families of Australia!

Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Link to this | Hansard source

In summing up the second reading debate can I thank members for their contributions. I know that we are going to move into the committee stage in a moment and deal with some of the amendments that are before the Senate, but if I can reiterate what this legislation is about. The Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (2008 Budget and Other Measures) Bill 2008 amends a series of Commonwealth acts to give effect to some of the government’s 2008 budget measures. This year’s budget, the first delivered by the Rudd government, gave more than $55 billion in support for working families, seniors, carers and people with disability.

This bill in particular delivers several critical measures in the government’s program of responsible economic management for Australia. In these challenging economic times it is vital that government payments are properly targeted so that assistance is directed to those who need it most. This bill is an important step towards this targeting, with new income levels for the baby bonus and family tax benefit part B and the complementary dependency tax offsets. The $150,000 limit will be indexed each year in line with movements in the consumer price index. Other changes will also be made to the baby bonus, including indexation annually on 1 July and payment by 13 instalments. And, as Senator Stott Despoja so rightly noted, adoptive parents will receive fairer treatment through this bill, with the age limit in relation to adoption being increased.

The bill also allows for the collection of tax file numbers for Commonwealth seniors health card holders to ensure that they remain eligible for the card after it is issued. Although Senator Fifield was feisty in his commentary about the Commonwealth seniors health card, there is currently no mechanism in place to determine ongoing eligibility for the card, unlike with other concessions and benefits in the social security system. I think it is important for us to note that in 2006 the previous government conducted a clean-up of the Commonwealth seniors health card, checking incomes against eligibility—the same effect as the tax file number collection in this bill. And in 2006, under the previous government, 28,000 cardholders had incomes over the limit and had their cards withdrawn. Under this measure we anticipate around 13,000 card holders will have their cards withdrawn because they are in ineligible. There is no link to the change to the Commonwealth seniors health card income test. This is a compliance measure only and it will impact on those people who are receiving the Commonwealth seniors health card inappropriately.

The bill also makes changes to the income management arrangements in the social security law so a person will be able to enter voluntarily into an agreement to be subject to income management. There are many circumstances where individuals would opt to be voluntarily part of the income management regime.

The bill will align the minimum eligible age for partner service pension paid under the Veterans’ Entitlements Act with the veterans service pension age. This measure will increase the eligible age for partner service pensions for men from 50 to 60 years of age and for women from 50 to 58½ years of age as currently set under the age equalisation rules. I know Senator Bernardi was keen that there should be a gradual introduction of this but, in fact, the age increase for the partner service pension has not been introduced on a gradual basis as with the age pension, age service pension and age equalisation measure because the age pension and the age service pension are retirement pensions and, frankly, we do not believe that 50 is a retirement age in this enlightened environment. As someone who has touched that threshold, I would certainly like to think that I would not be needing to retire at that age. However, the measure will as I say increase the eligible age for partner service pensions.

The bill also makes some minor policy and technical amendments to portfolio legislation. Most importantly, as announced last week, the government will be moving amendments to this bill relating to the treatment of reportable fringe benefits in determining the adjusted taxable income for the purposes of family assistance law. Senator Siewert was quite vocal in both her support for this amendment and also understanding just how complex this whole issue is. It comes about because there is an intersection of the social security legislation and taxation legislation introduced by the previous government which now comes into effect. I think it is a pretty poor show that opposition senators are now trying to distance themselves from the previous government’s decisions which are now coming into effect.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

You are the government.

Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Link to this | Hansard source

This is absolutely true, Senator Boswell. The previous government at the time that it introduced these measures did not understand the impacts because, as we heard at the Senate inquiry last week, there was no sectoral analysis of the previous measure either. So this is an unintended consequence of something that we have inherited and which we are now looking to address and we will address. I am very pleased to hear that the opposition is supporting those amendments.

The government’s amendments to the bill will now ensure employees in the charitable and not-for-profit sector are not affected by the previous government’s 2006 budget measure related to the third stage of the child support reforms that are due to come into effect on 1 July 2008. The government’s amendments will restore the use of the net value of reportable fringe benefits in the definition of adjusted taxable income of family assistance. This will ensure that staffing not-for-profit organisations will not suffer a loss of family tax or childcare benefits after 1 July 2008 if the circumstances have not otherwise changed.

We all acknowledge that these are very complex issues with flow on effects to employees far beyond the not-for-profit sector receiving family assistance. Therefore, we think that the most appropriate way of getting a very clear, precise, thorough and appropriate assessment of the impacts used to refer this issue to the Henry commission to examine the complexity of existing fringe benefits arrangements and to make recommendations to improve equity and simplicity in the longer term.

As a result of the government’s amendment concerning the treatment of fringe benefits in determining adjusted taxable income, the government will be opposing two minor technical amendments originally included with this bill. These technical amendments were designed to help families avoid debts by taking into account the previous government’s changes to the treatment of fringe benefits and obviously these amendments will no longer be needed.

Question agreed to.

Original question, as amended, agreed to.

Bill read a second time.