Senate debates

Thursday, 23 June 2011


Family Assistance and Other Legislation Amendment Bill 2011; Second Reading

Debate resumed on the motion:

That this bill be now read a second time.

4:12 pm

Photo of Mitch FifieldMitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | | Hansard source

Madam Acting Deputy President, I also acknowledge your last time in the chair.

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

Thank you.

Photo of Mitch FifieldMitch Fifield (Victoria, Liberal Party, Manager of Opposition Business in the Senate) Share this | | Hansard source

I rise to speak on the Family Assistance and Other Legislation Amendment Bill 2011. This bill encompasses 2011-12 budget measures including provisions to freeze the indexation of family assistance income thresholds and family tax benefit part A and B supplements. The bill also makes changes to the way people are assessed for the disability support pension, creating a two-speed, two-track process for DSP applicants. It also brings forward the implementation date for some measures from 1 January 2012 to 3 September 2011. The bill also lowers the maximum age of eligibility for family tax benefit part A, extends the Cape York welfare reform trial and makes technical amendments to the Aboriginal Land Rights (Northern Territory) Act 1976. Schedule 1 of the bill amends the A New Tax System (Family Assistance) Act 1999 to lower the maximum age of eligibility for family tax benefit part A from 24 to 21 on 1 January 2012. This will bring it into alignment with the age a person becomes independent for youth allowance purposes.

The bill will also freeze indexation until 1 July 2013 for the higher income free area—that is, the adjusted taxable income someone may have before their rate of family tax benefit is affected by the income test for FTB part A. This freeze includes both the basic amount of family income of $94,316 and the additional amount for each FTB child after the first $3,796. What this means is that families in which both partners work and earn average incomes of $50,000 to $60,000 each will be affected by the government's measures. Many of the families that will be affected by the FTB freeze in this bill are struggling to make ends meet on a mere $45,000 a year. The rate of indexation for the family tax benefit part B income limit, the baby bonus income limit and the FTB A and B supplements will also be frozen for three years from 1 July 2011.

One disturbing detail about the substance of this bill was uncovered by Samantha Maiden in the News Limited Sunday papers. She disclosed that confidential government emails showed that the Labor government had been planning to freeze indexation well before the last election. Not only had the government been planning to slug Australian families with a carbon tax despite vowing not to; they had been planning to slug ordinary Australian families through this freeze since before the last election.

At the most recent Senate estimates I pursued the issues raised by Ms Maiden. What I discovered was that Minister Macklin's office had sought and received advice on freezing the family benefits in this bill as early as January 2010 and had updated advice as late as one minute before the caretaker provisions commenced. The email that was sent to Minister Macklin's office advised that the department had completed 'a new version of the spreadsheet with updated numbers for the pause supplements option'. As I mentioned, this email advice was received one minute prior to the caretaker period coming into effect.

What this means is that the Australian Labor Party had been planning this hit on Australian families from the first official day of the election campaign, from the first formal day of the caretaker period. The government did not give the Australian people the opportunity to cast a ballot, to give their verdict, on the merits of the particular proposal. This again represents the government being less than straightforward with the Australian public, as was the case with the carbon tax.

We also discovered during Senate estimates that the department is in the process of costing policies from the Greens. I cannot help but wonder whether Senator-elect Rhiannon, before she takes her seat in this place, will, for example, submit her boycott, divestment and sanctions policy for costing and consideration—or, for that matter, whether the Greens policies currently being costed by the government include their policy on reintroducing death duties. I guess time will tell.

Many of the families that will be affected by this freeze are struggling to make ends meet. They will be hit by these changes. Unfortunately, the government is seeking to give the impression that these families are rich families when many, many, many of them are anything but rich. Indeed, over 2.1 million families will lose some support as a result of the real value of the FTB supplement being cut. That is the 'pause supplements option' that appeared in the email that the government received a minute before the caretaker period started before the last election.

Even without the government's proposed carbon tax, electricity prices are already rising. They have risen by an average of 51 per cent across Australia since December 2007. The overall cost of food has increased by 13 per cent and education costs such as school fees have increased by an average of 24 per cent across Australia.

The FTB, parts A and B, the baby bonus, paid parental leave and other measures such as these are designed to support families. Labor should not be using these sorts of measures to search for savings to accommodate what has been an incredibly reckless period of fiscal management by this government.

Schedule 2 of the bill amends the Paid Parental Leave Act 2010 such that a person can only be eligible for parental leave pay if they meet the requirements of section 31, which include satisfying the income test. The PPL income limit before I July 2012 is $150,000 and it is then subject to indexation. This measure will extend the commencement date for indexation of the paid parental leave income limit to 1 July 2014. As I understand it, the aim of this schedule is to maintain some consistency with the pause in indexation for the baby bonus income limit under the Family Assistance Act.

Of particular interest to many in the chamber is schedule 3, which makes some quite significant changes to the way disability support pension applicants are assessed. I should point out firstly that the elements found in this schedule first appeared in the 2010-11 budget under the heading 'Job capacity assessment: more efficient and accurate assessments for disability support pension and employment services.' Under that measure, DSP claimants without sufficient evidence of future work capacity of less than 15 hours per week could be referred to an alternative income support payment. Others may be offered employment assistance through Job Services Australia or Disability Employment Services. That measure was due to come into effect from 1 January 2012.

At the time, the government pointed out that this measure was going to be in alignment with the introduction of the revised impairment tables. They were to come into effect on the same day. Presum­ably, the government believed that there was a legitimate need for alignment between these two reform measures. I doubt that the alignment between the two measures was part of a government commitment to a policy-making aesthetic; I am sure that there was a reason for having them in alignment. The 2011-12 budget measure Building Australia's Future Workforce, the imple­mentation of more efficient and accurate assessments for disability support pension, brings forward the implementation of the 2010-11 measure from 1 January 2012 to 3 September 2011. This measure was originally in alignment with the new impair­ment tables, and I would be interested to hear the government's rationale now for the decoupling of those measures.

Schedule 3 introduces a new requirement that if someone has not been assessed as having an impairment of 20 or more points on a single impairment table they must satisfy the secretary that they have actively participated in a program of support. What this will do, as I touched on briefly before, is create a two-track, two-speed assessment process which will have some similarities to reforms in the United Kingdom. One group will go through a more thorough testing of their capacity to work, as a result of these changes, and if they still satisfy the relevant criteria they will go on to the DSP; if not, they will be offered an alternative income support payment like Newstart.

Schedule 4 amends the Social Security (Administration) Act 1999 to enable a proposed 12-month extension of the welfare reform trial in the Cape York area. The Cape York Welfare Reform trial is a partnership between a number of communities on Cape York, the Australian and Queensland governments and the Cape York Institute for Policy and Leadership, which has done so much good work in this area. The intention is to restore local Indigenous authority, to support the local community, to increase individual engagement in the real economy and to reinforce and restore positive social norms.

A key element of the Cape York trial is the Family Responsibilities Commission, established under Queensland government legislation, and the role of local family responsibility commissioners. These com­missioners will hold conferences with com­munity members, refer people to support services and, when necessary, arrange income management for people who need it. They will help provide a better social fabric for these communities in need. At present, a person can only be subject to income management under the trial after a decision by the Family Responsibilities Commission made before 1 January 2012. This schedule pushes the date out to 1 January 2013, to enable income management to continue in Cape York for a further 12 months.

Schedule 5 amends the Aboriginal Land Rights (Northern Territory) Act 1976 in order to clarify that the Public Works Committee Act 1969 does not apply to Aboriginal land trusts. Schedule 5 makes some changes that clarify that Aboriginal land trusts are not authorities of the Commonwealth for the purposes of the PWC Act.

I have raised a number of issues relating to this bill, with particular reference to changes to the family tax benefit. This is a matter that the government was clearly examining, anticipating and intending to introduce before the last federal election. Key changes to public policy, such as the freeze and such as the intention to introduce a carbon tax despite telling the Australian people the opposite, go to the democratic deficit in the current government. This government is really starting to put serious pressure on the compact of trust that there should be between an elected government and the voting public. This is yet another deeply disappointing example of that growing trend in this government to say one thing and do another—or to say nothing to hide an intention and then to reveal it after an election.

There are also some significant changes to the disability support pension. I know that I and a number of colleagues on this side, including Senator Boyce, will be very carefully monitoring how these play out in the lives of the Australians who rely on these benefits and who need to go through these processes. Obviously, we all want to do whatever we can to encourage people and support them in moving from payments back into the workforce. The government has spoken of that as well—there has been plenty of rhetoric around that—but we will have to wait and see and examine what the real effect of these particular measures are. I indicate that the coalition will not be opposing this bill.

4:28 pm

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

I say from the outset that the Greens do not support two aspects of this bill, as we articulated in our dissenting report to the inquiry by the Community Affairs Legislation Committee. There are many reasons why we have some concerns with particular aspects of the bill. Not only does it cut costs at the expense of low-income families and people with disabilities but it has been rushed through this place without adequate time for proper consultation or consideration of the detail. I will go into some of those concerns shortly. We are particularly concerned with schedule 2, which is freezing the indexation of the FTB supplements, and schedule 3, on qualification for the disability support pension. On the supplements, freezing of indexation will impact on 629,000 recipients of family tax benefit and income support. It will impact on additional families on low wages and the working poor. But, although I asked for those figures, unfortunately they were not provided. They were provided in terms of those numbers on income support, which was, as I said, 629,000. So it will be impacting on more families that are on a low income.

Although it sounds, in theory, like not indexing the supplement only amounts to a few dollars a week, it becomes particularly important for those families that are living on low incomes—as I said, not just those on income support but also those on low incomes. These families often use the supplements for large-sum expenses, such as appliance repair, bonds, moving house and car registration. ACOSS pointed that during at the limited inquiry that we had.

I am also concerned about the cumulative impact of this particular measure and other budget measures which the Senate is yet to consider—for example, the changes to the parenting payment for those parents that were grandfathered onto parenting payment (single) under the Welfare to Work measures. One of the measures the govern­ment announced in the budget was to change the age of dependants at which parents transfer out of parenting payment (single) and on to Newstart from 16 to 12. That will drop their income $56 a week. If you factor in this measure as well, you start to have an impact on families.

I asked the government on two occasions, first at estimates and then at the inquiry to this bill: what are the calculations for the cumulative impact of all these budget measures on Australian families, in particular low-income families and those on income support? As yet, I have not received that piece of information. In fact, I was quite shocked that the government had not done that calculation. I asked what the overall impact of all the different measures the government wants to implement through the budget measures is, and they could not tell me. So we are extremely concerned about the impact on low-income families of that particular measure. Of course, if you receive FTB A and FTB B you will cop a double impact through these measures. So we do not support that particular measure, and I have several amendments, one of which is to take that particular schedule out of the bill altogether and, if that does not succeed, to try and make sure that the lowest income families are quarantined from this measure. I will talk about that more in committee.

However, our greatest concerns are around schedule 3, which is around changing the process for qualification for the disability support pension. This requires people with disabilities to prove their incapacity to work by participating in training or work related activities, the new definition of that program of support before they are eligible for DIP. We believe this is deeply problematic for a number of reasons. For a start, the method of determining serious disability is an issue. To be determined to have a severe disability is essential for exemption from the lengthy program of support requirement. It is far too narrow. To be judged to have a severe impairment a person must—and I am taking this on my understanding of the ME—be assigned an impairment rating of 20 points or more under a single, and this is very important, impairment table. This means that a person with co-occurring disorders may not be classified—I say 'may' because they may have multiply occurring disorders where one of them is above 20 points on one table. If that is not the circumstance and they have co-occurring disorders they will not be classified as having a severe impairment unless one or both of the disorders rates above 20 under a single table. As Frank Quinlan, the CEO of the Mental Health Council said in his evidence to the committee:

Several Australian and international studies have shown that people with disabilities such as mental disorders and substance abuse disorders will usually have co-occurring disorders, and a person with co-occurring disorders is likely to have greatly exacerbated negative impacts. A person with two or more moderate level disorders occurring across the tables when combined could result in a total equivalent of a severe impairment, when you combine substance, mental and physical disorders. The current amendment does not allow for cumulative totals across the tables and therefore does not take account of co-occurring disorders.

What this means is that people suffering from a co-occurring disorder will most likely be placed on Newstart and could be unable to meet the requirement for participation in a program of support. It is unclear what would happen to people in this situation. The legislation does not give any discretion to assessors when qualifying people to go straight onto DSP other than if they meet the requirement for serious impairment that I just outlined. The legislation does not give any discretion to assessors when qualifying people to go straight onto DSP other than if they meet the requirement for serious impairment that I just outlined.

We are also concerned about the fact that the legislation does not take into account or give adequate consideration to the episodic nature of some disabilities, such as mental illness and substance abuse disorders. Episodic symptoms can often be misinter­preted as noncompliance. If a person is assessed when they are functioning at a healthy or high level, they will not be deemed to be severely impaired. It is unclear what will happen if they later down the line become unwell and are not able to participate in a program of support. According to the evidence given at the hearing, there was no information provided about the right to appeal or to be reassessed.

During the hearing, FaHCSIA appeared to misunderstand my concerns and simply repeated that not all new DSP applicants will have to achieve 20 points under one table, but rather that the 20-points clause ensures that people with a severe disability are not referred to services where it is unlikely that there will be any benefit. I must say that I knew that already, and that is the problem. It is clear that if the only qualifying factor for severe disabilities is 20 points under one table and there is no discretion to assess this, many people could be placed on a program who would not be able to derive any benefit from it. In fact, it will have even greater negative impact on those people.

The department, in the inquiry, went on to outline other ways individuals might be exempt from the program of support, including participation in employment services or an inability to work for more than 15 hours a week. It is encouraging that the department considers these factors, but they do not provide much reassurance without this being in the legislation. Finally, it has been very difficult to fully evaluate concerns relating to severe impairment when not only are there are revised impairment tables not completed yet, but the process of current review has not been made public. The speed with which this bill is being pushed through indicates the bringing forward of the start date is clearly only a cost-saving measure designed to cut $49 million out of the budget and makes little sense when the very tables designed to be used in implementing the measure have not yet been completed.

We are also concerned that there is a great deal of ambiguity in this legislation around what the maximum amount of time is that a person could wait before being reassessed for disability support. At the inquiry, DEEWR gave evidence that the longest programs could probably go for 18 months. Considering the impact of these measures on people with disabilities, 'probably' is not acceptable. There is no time limit in the legislation, and the length of participation would appear to be at the discretion of the government. It is also unclear what exactly the program of support contains. Some information was provided by FaCHSIA at the inquiry, but no detailed information is in the legislation. Such measures, which have such massive potential impact on vulnerable people, need to be subject to parliamentary review and public scrutiny. They should not be at ministerial discretion.

Essentially, this bill unnecessarily subjects people with disabilities to financial hardship for an extended, undefined period of time. At the inquiry I tried to get some concrete numbers on how many people this measure would impact and then, specifically, on how many would eventually end up on DSP after initially being rejected—because, basically, everybody is going to be rejected when they apply, other than those who meet the criteria that I have already outlined about a severe impairment and 20 points on one table. During the hearing the department stated that 3,000 of the 6,000 people rejected between September 2011 and January 2012 would eventually end up on DSP. This equates to over half the applicants who should be on DSP ending up on Newstart.

I am sorry, but I cannot work out how that helps those people. It will not help; it will actually probably make them feel even worse, because for 18 months or whatever period of time they will have failed in a participation program—but the government will have managed to save 128 bucks a week for 18 months for 3,400 people. That is what it is about: people who should be on DSP from the beginning who will just sit on Newstart with worse taper rates—and I will come back to the taper rates. The government have acknowledged that taper rates are a barrier to people getting work on DSP. They have made moves to fix that and I congratulate them on that, but they have not fixed it for people with disabilities who are on Newstart.

Figures provided later by the department differed and, despite my trying to find out some more detail, it still was not clear. I could not find where the 6,000 or the 3,400 comes from, because the subsequent figures that we were given in answer to a question on notice was, I think, around 2,900 people who would then go onto DSP in 2011-12. But at the hearings they said there would be 3,400 just in the first period. So I found that a little bit confusing and it has not been cleared up. Perhaps it could be cleared up during the committee process. However, even those figures that we were given subsequently showed that by 2014 over a third of the yearly applicants would eventually end up on DSP. Again, this is a savings measure.

These findings are not surprising, considering the impact of other punitive measures. Six months after the first DSP applicants were put onto Newstart as part of the Welfare to Work reforms, less than one-fifth of them were off income support and in paid employment. We believe it is unacceptable for the government to continue down this punitive path when its effectiveness has not been proven. You are setting people up to fail, and it is not the way you encourage people into work. We believe that these figures indicate that this is essentially a cost saving exercise at the expense of those people with a disability.

Considering that at least one-third of the applicants will eventually be placed on DSP, it seems as if the legislation is setting people up to fail. Eighteen months of trying and not succeeding in training or work related activity could be extremely damaging to already vulnerable people, and we believe it is unnecessarily cruel. People with disability who are placed on Newstart will suffer significant financial hardship as a result of this, as ACOSS made comment on in its submission.

Since the alternative payment, Newstart allowance, is at least $128 per week less than the pension, the bill would deprive the majority of applicants—those with low employment prospects who still have an ongoing need for income support—of additional income to help them meet basic living expenses. At $237 per week for a single adult, the Newstart allowance is inadequate to pay for the essentials of life. Given that most people with a disability face additional costs—for example, transport and medication—and will occur additional costs such as travel costs when participating in a program of support, it is likely that many applicants would struggle financially until such time as they either secure employment or are granted a pension. People placed on Newstart instead of DSP are subject to a double disadvantage. Not only do they receive $128 a week less but also they are subject to the higher taper rates. This barrier to work is ironic considering the government's aim to encourage people with disabilities to engage in the workforce. It is interesting to note, as I said earlier, that this is one of the barriers that has been addressed by the government by lowering the taper rate for those on DSP. Now we have this bill which puts more people on lower payments and higher taper rates. I am really unclear as to how they think they are going to meet the aim of encouraging more people with a disability into work.

Another area of ambiguity in this bill is the role of the job service providers. It was unclear during the inquiry how the providers would be required to contribute to the ongoing DSP qualification assessment process and how and when they would provide information as to whether people were not coping in the process. There will be an increased workload for the providers. Mr Baker from the NDS articulated to the Senate inquiry concern about the fact that the rates paid to people delivering disability employment services had fallen from 4,108 in 2003-04 to 3,621 in 2008-09. I am aware that those budget figures have changed again, but he was saying that he was extremely concerned about whether they would be able to cope with the extra workload and provide quality support. It is unclear how and when reassessment for DSP will take place, and I have ongoing concerns about the assessment process. There is ambiguity about how long a person will have to be on the program of support, what criteria will be used, if and when people will be reassessed to go on DSP and what role the job service providers will play in that decision.

Finally, I greatly object to the way in which this bill has been rushed through this place. It is clearly designed to save $49.7 million at the cost of people with disabilities. There has been inadequate time for community organisations to get involved in this legislation, to express their opinion and for them to consult low-income families and people with disabilities. We are greatly concerned about this. This is a substantial change for people with disabilities, and we are deeply concerned that it is being rushed through in this manner. It is unclear how the government will be ready to roll this out in a matter of months, particularly when you consider the issue of the impairment tables. We do not believe that this schedule should proceed.

As I articulated earlier, I have some amendments that I have circulated. We believe that the bill should be divided and that schedule 2 item 2, which is the indexation of FBT supplements, should be removed from the bill. Given the way that this process has been rushed through, I believe there would be room to amend schedule 3 to make it more acceptable and to genuinely help people on DSP. This is going to have massive unintended consequences for those living with disabilities. You have rushed this through. It is going to unnecessarily impact on those living with a disability. It will not help them. It will hinder them purely to save $128 a week from somebody who should have been on DSP and is placed on Newstart. There are more creative ways of helping people find work than this.

4:48 pm

Photo of Joe LudwigJoe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | | Hansard source

I foreshadow that I will move a motion to adjourn these proceedings to allow a motion to deal with sitting hours this evening. I have advised everybody in the chamber, the parties and the Independents. I move:

That the debate be now adjourned.

Debate adjourned.

Ordered that the resumption of the debate be made an order of the day for a later hour.