Thursday, 4 December 2014
Family Tax Benefit (Tighter Income Test) Bill 2014; Second Reading
The Family Tax Benefit (Tighter Income Test) Bill 2014 cuts government spending by more than $270 million a year by means-testing family tax benefit part A more rigorously. Both the coalition and Labor recognise that welfare payments should be means tested. This may seem an uncontroversial idea, but we should remember that some countries have welfare payments that are not means-tested, like universal age pensions, and we should remember that Labor have a troubled relationship with means-testing. They are proud of their changes in recent years to more rigorously means-test family payments and the private health insurance rebate, but they do not want to means-test access to Medicare, and they defend concessional loans for high-income beneficiaries of higher education. The coalition too have a troubled relationship with means-testing. They have loosened means-testing for the age pension and want the private health insurance rebate to be universal. And both sides have continued tied funding to the states that bans state owned hospitals and schools from imposing fees, even on high-income users of these services.
Thanks to this inconsistency on means-testing, I have no great hope of support from either the coalition or Labor. But let me go through the process of making the case for the bill. Family tax benefit part A is a welfare payment. Do not be fooled by the mention of tax in the name. It goes to families regardless of whether or not they pay tax. Current and previous governments have decided that families with the least income need this welfare payment of up to $6,723 per child but that a family's need for it reduces when family income exceeds around $50,000. For each dollar earned over that amount, the welfare payment is reduced by 20c. This arrangement is unremarkable and is unaffected by my bill.
However, in what is a bizarre and completely unwarranted quirk, when the welfare payment reaches $2,204.60, further rises in income do not prompt further reductions in the welfare payment. The welfare payment for a family with one child remains at $2,204.60 whether their income is around $70,000 or $90,000. So, once your family income exceeds around $50,000, you are sufficiently beyond the reach of poverty that your welfare payment can fall as your income rises, but, once your income exceeds around $70,000, somehow you are back in the clutches of poverty and it would be unjust for your welfare payment to fall as your income rises. You are finally considered to be free from this spasmodic grasp of poverty only when your income exceeds around $90,000, after which the welfare payment is reduced by 30c for each additional dollar earned. This arrangement is ridiculous.
My bill will get rid of the pause in the withdrawal of family tax benefit part A when the payment reaches $2,204. Instead, once your income exceeds around $50,000, so that the withdrawal arrangement has started, it continues until your payment reaches zero. There is no policy reason for a pause in means-testing arrangements. The only reason we have such a pause in current law is that, when John Howard rejigged tax and welfare arrangements as part of the introduction of the GST, he wanted to make sure that he could say there would be no losers and, in particular, he wanted to buy off the middle class so that they would vote for him in the 2001 election and beyond. So he put them on welfare. My bill essentially starts generating losers when family income reaches around $70,000, with most of the impact concentrated on families with incomes over $90,000. This means the impact of my bill falls on middle-income families and upper-income families. Those families who are earning these amounts but who think that they are low-income families do not realise that many people are worse off than they are. It may come as a shock, but at least a third of Australian families are worse off than they are. Low-income families are best served through rigorous means-testing, as this concentrates assistance where it is needed most, and middle- and upper-income families are best served through rigorous means-testing, as any welfare they receive is paid for by the taxes they pay now—or the taxes they will pay in the future when government debt is finally repaid—and any welfare they receive arrives only after they have spent hours listening to Centrelink's crummy hold music and after the bureaucracy has taken its cut.
The economic figures released yesterday are a grim reminder of the problem we face in Australia and that the budget is not going to repair itself. Recent estimates suggest the deficit will be $40 billion this year. Despite what some in Labor and the Greens suggest, this is not a problem of insufficient taxation; it is a matter of excessive expenditure. Paying welfare to people who are capable of looking after themselves is simply unsustainable. It also deprives those who genuinely need welfare to have a decent standard of living. If welfare can be limited to the truly needy, it will be possible to be more generous.
This bill is in the interests of all Australians, but it will take leadership for it to pass into law. I commend the bill to the Senate.
The government recognises that there are fundamental issues with the current design of the family tax benefits system which need to be addressed to ensure that the system can be sustainable into the future. That is why we have announced a number of reforms in the 2014-15 budget to better target those benefits. Reforms like those we announced in the budget are a necessary and important part of bringing the budget back under control and helping to rein in the fiscal gap between revenue and expenditure growth.
In 2014-15, the government will provide around $19 billion in family tax benefits. Family tax benefits should provide assistance to families who need it most while encouraging everyone who can work to do so. In the budget, we announced that we want to tighten eligibility for family payments to ensure they support those most in need of assistance. For example, families will continue to receive family tax benefit part B until one parent earns $100,000 per annum, families will receive family tax benefit B until their youngest child turns six and existing recipients would continue to receive payment for a further two years—the thinking here being that once the youngest child turns six the opportunity is there, when the child goes to school, for both parents to rejoin the workforce. Of course, if the choice is for that not to happen then it is not the taxpayers who should be asked to subsidise that choice. Low-income single parents will receive a new supplement of $750 per annum for each child aged between six and 12.
I applaud the work of senators like Senator Leyonhjelm who have serious and positive ideas on how to contribute to the budget repair challenge and how to help rectify Labor's debt and deficit disaster. Senator Leyonhjelm and Senator Day deserve strong credit for laying out a number of savings proposals of their own that are wide-ranging and serious contributions to our debate about the budget. Senators do share a general responsibility to all Australian taxpayers to help with budget repair, and we welcome the kind of debate that we are having today.
There are some very commendable objectives in this bill, including the objective to improve the sustainability of social security; the objective of reducing the long-term taxation burden; and the objective of reducing the level of welfare churn, where cohorts of families are in a situation where they are both paying tax and getting some of it back in welfare payments. We believe that there are already good and viable reforms in the budget and that these should be considered and supported by the Senate in the first instance. There are approximately $11 billion worth of savings in the Social Services portfolio currently before the Senate. Approximately $4.8 billion of those savings relate to the family payments area within the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill. The government believes that the Senate should first deal with the reforms in the budget bills—in particular, those reforms in budget bill No. 4—before pursuing any further reform proposals. To help ensure the long-term sustainability of supports for families, the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill makes changes to the way in which family payments are made by continuing to support those most in need.
The cost of changes to payment systems can be significant due to IT complexities and the need for significant customer interactions. The Department of Human Services is already working on a large number of significant ICT projects with similar scheduled start dates to those envisaged in this bill. These measures will ensure that the social security system in Australia is sustainable into the future. The long-term savings from these measures will help pay down the massive debt left by the previous Labor-Green government and ensure that the next generation is not left to pay off the Labor-Green debt. The government will continue to work constructively with senators across party lines to design solutions that have broad support, but, for the reasons that I have just outlined, the government will not be in a position to support this bill.
I rise to speak on the Family Tax Benefit (Tighter Income Test) Bill 2014. At this time, as Senator Leyonhjelm knows well, people who are not going to support his bill get up and say, 'Thank you very much for bringing your bill to us, and we appreciate your interest in this matter.' That is like a kiss of death to getting the positive votes, Senator Leyonhjelm, and I am going to be consistent. We do think that it is important these issues are discussed in terms of the process, but, as I have said, Labor is not supporting the bill, which comes at a time, as we know, when the Abbott government has already launched a full-scale attack on the cost of living of ordinary Australian families.
This bill is simply an extension of the Prime Minister's attack on low- and middle-income Australian families, and we will not be supporting that. The bill itself proposes to tighten the income test for family tax benefit part A, which people call FTB A, from 1 July 2015. Family tax benefits are modest payments that help low- and middle-income parents with the cost of raising children. Currently around 1.6 million Australian families will receive FTB A payments this financial year. We believe, on the current data, that that will be helping more than three million children. We are not talking about families defined as rich and certainly not families who definitely do not self-define in that way. They are honest, hardworking parents doing the best they can to care for their children and, therefore, are investing in our country's future.
Under the current FTB A income tests, the maximum rate of FTB A is reduced by 20c in every dollar earned above what is known as the income-free area. The current income-free area is $50,151. Payments continue to be reduced until an eligible family's payment reaches the base rate of FTB A, which is currently $2,204.60 per year. The bill before us today proposes to remove the base rate so that FTB A families continue to have their payments reduced by 20c in every dollar until their payment reaches nil.
The Parliamentary Budget Office estimates that 247,600 families will be adversely affected by this bill. That means 89,700 families will no longer receive any FTB payments at all under this proposal. That is almost 100,000 families to have their FTB A completely cut. Under this bill, the Parliamentary Budget Office also estimates that more than 5,000 families will have their FTB A payment rate fall below the base rate. The almost 2,000 Australian families on $60,000 to $65,000 a year will lose on average more than $1,500 a year.
These families cannot afford to take another hit and yet another attack on their cost-of-living pressures, certainly not after the pain that the Prime Minister and the Treasurer handed down in May this year. The budget has caused general concern across every level of the Australian community. All of us in this place know how many emails, visitations and letters we have received from people across the board. In fact, in many ways, it has been a unifying budget because the attacks have been on young people, people on the pension or about to go on the pension, ex-veterans and families. Groups under all those headings have been concerned by what this year's budget has proposed for them, their future and their current payments.
In this environment we are looking at another bill which has an even more significant cut for one sector. I have read out the figures that the Parliamentary Budget Office has helpfully provided. There are a range of statistics. But, as I have said many times, when these figures just roll off the tongue the important thing is then to meet with the families and parents and find out what their concerns and worries are. For them, these discussions are not academic. They are real. That 20c reduction that we are talking about is very real for them and part of their daily budget.
The general budget is one that, as with so many things before the election, we did not know was going to happen. Before the election, the Prime Minister promised that he would 'reduce cost of living pressures and help families with the cost of raising children'. Of course, since the election, all we have seen from the Prime Minister and his government are cuts and broken promise after broken promise, all of which, as we have talked about in this place, make it harder for families to pay bills, pay school fees and see a doctor when they are sick. Then, on top of that, there are the extra costs of any other tests and medications.
Families have even had an increased fuel tax imposed on them by the Prime Minister. We know that we did not have a chance to debate that in this place. I am talking about this range of things because they are important in creating the environment in which this bill has come forward. There have already been so many other attacks. The fuel tax proposal came through. It will not come up for parliamentary discussion until sometime in the future when the 12-month period for the regulation is up.
At the moment, when we have an all-time-low oil price and are talking generally about fuel prices lowering across the board, the true impact of this increased cost may well be hidden because people will probably see, if the oil prices continue where they are at, that fuel is cheaper. So they will not know that this increase in the fuel process will go on whether the fuel prices are lower or they go up again. We have heard the saying that what is most certain in this world is taxes and death; I think another is that fuel prices go up and down and that they will go up again.
The government's budget is nothing short of a full-scale attack on the living standards of Australian families, who, if the Prime Minister gets his way, will have their family benefits and parenting payments slashed at the same time as they are hit with a new GP tax and a new fuel tax. The social services budget bills currently before the parliament, to which the minister referred in his contribution, contain more than $5 billion in cuts to families. Nearly $2 billion is cut from family tax payments as a result of the freeze to the rates of family payments for two years—the same family payments that this bill will also reduce with the changed income test arrangements—a cut to the real value of family payments.
According to the Department of Social Services, a freeze to the low-income free area for FTB A alone—and this is a freeze area that is linked in with Senator Leyonhjelm's bill—will see more than 370,000 families around $750 a year worse off in 2016-17. A further nearly $2 billion will be cut when families are kicked off of FTB B when their youngest child turns six. That alone would leave families around $3,000 worse off each year when they lose their payments. These things are cumulative, and every dollar counts. The Department of Social Services revealed at Senate estimates—after a lot of questions, Mr Deputy President—that around 700,000 families will lose their FTB B if the government gets its way and kicks families off payment when their youngest child turns six. I suspect there is more than a little bit of unease from National Party members and senators as a result of the cuts to families, but there should be more protests, and there should be more questions. Many of the low- and single-income families hit hardest by these cuts, including the proposal in the bill today, live in country and regional Australia. The budget will also see a billion dollars cut from the end-of-year supplements, which will be reduced to their original rates.
The Abbott government's budget will put more pressure on the budgets of millions of families, and low-income families will be hit most of all. Earlier this year, the independent modelling agency NATSEM, once described by the Prime Minister as 'Australia's most respected modelling outfit', put to shame the government's claims that the burden of this budget is shared by everyone. Overwhelmingly, expert analysis has demonstrated that those on the lowest incomes are hit the hardest, while those at the top are spared—and the top is not the group to which this bill relates. The sphere of the attacks already in the budget extends from people on very low incomes to people on the highest incomes; this bill that we have before us today is looking right in the middle, so these people are being hit from both sides.
We believe the Abbott government is arrogant and out of touch. I also think there is a genuine concept that they do not care, that talking about the cuts is a mathematical exercise, an academic exercise, and that no-one looks at or listens to the people who can tell you to a dollar exactly what they do with their weekly and monthly budgets. For these payments that are being frozen or reduced or where in this case, in the proposal put forward to us, there is an extra added taper rate and a reduction, they can tell you what impact that will have on daily living and, particularly in this area of family payments, what activities for their families are offset by the money they receive through their family payments. That goes down to things like school fees and the added things that happen in the school curriculum.
Particularly in this case—through you, Mr Deputy President, to Senator Leyonhjelm—people in the bracket to which he is referring have told me that things like the family payments are used in the family budget to pay for things like school camps, which in many schools now are becoming very expensive. When you are budgeting for mortgages, rents and other ongoing credit costs, things like an added payment give your child a chance to travel and be involved in extra things like science camps and sport. These are the kinds of exercises to which the money in the family payments is often allocated. In the history of family payments, this was indeed the intent: providing money to families for the cost of raising children.
The concept from when these payments were first introduced was to support families in the responsibilities they have to raise children. In the process that we have before us, these things are under attack, and families are being forced into making decisions about support for families that they had not thought they would have to make, because the issues of cuts were not discussed openly in the community before the election.
Labor will stand up for the low- and middle-income families who are so savagely cut by the proposals in the Commonwealth government's budget legislation and indeed in the bill today. I have made the comparison before about the messaging that is in the community around this area. As we have said many times in this place, the Commission of Audit process, which was introduced by the government at about this time last year to look at what could be made as savings across the board, was actually a bit of a taste of what proposals could become real in government policy—not all, of course, and certainly we do accept absolutely that the Commission of Audit was not a decision-making body; it was a body to make suggestions to the government around policy. But, when these suggestions are made, and when they are made in an environment where we have been built up to the need for massive savings and cuts, you have to think that this could be a taste of what will be moving forward.
The measure before us from Senator Leyonhjelm is a recommendation made by the Prime Minister and the Treasurer's National Commission of Audit. It too recommended that the base rate of family tax benefit A be abolished. Of course, the Commission of Audit was the first indication of what was to come in the year's budget. Released in March, it proposed a range of cuts to families, including exactly this proposal—that the base rate of family tax benefit A be reduced—and also the abolition of family tax benefit B. It also suggested slashing the indexation of the age pension, and there is a very long list, of which we have kept a record, of the other suggestions by this Commission of Audit. We look with interest to see what will pop up in future budget proposals from the government and also whether Senator Leyonhjelm has taken some more ideas out of that area about how we can be more careful with our budget into the future.
Indeed, this is the place where these suggestions should come. In terms of process, we need to understand what the background is. We need to have the debate and also look at the real impact on the people whose budgets will be affected by government changes. The blueprint of the Commission of Audit continues to be part, I think, of decision-making processes. It is important to link that to other proposals that have come forward from the government and also to the other review that is looking into the whole area of Commonwealth payments in the sphere: the McClure report. The Commission of Audit is positively moderate when compared to the extreme cuts that the government included in the May budget. We had the document that put forward all these proposals, and we thought, 'Oh, some of those are just flying in the wind,' but then, when the budget came up, it was even more extensive in the cuts that it was proposing and the expectation that they would all be able to be overlooked in this place and in the wider community because of fears about the budget situation.
I think it has been extraordinarily telling for all of us to see the way that the wider community has responded to the budget. It is not the Labor Party that is saying that this budget and the proposals that have been in it are cruel and have undue impact on people who have the most vulnerability, looking at their futures. We raise the issues, of course, because that is our job. But the people who are raising the concerns and talking to us, saying, 'We want you to raise these concerns,' are the people who are in the community looking at their weekly budgets, and the organisations that support them. A range of organisations have the best day-to-day knowledge of people's concerns about their financial security. I acknowledge the work they have done to bring forward those concerns and issues to us—and, of course, that continues. We see now that, with the cuts to the ABC and the SBS, those people are raising concerns about the impact on their daily plans. We know that it does not matter how loudly and how often you say that the reductions that are in the budget—and, indeed, the proposed reductions that are in Senator Leyonhjelm's bill—are reductions; people understand that they are cuts, and that is the only way that they can result in the savings to the government. You cannot make savings if you are not cutting an entitlement, and that is what we are seeing today.
We know that Australian families feel as though they are under siege from the Abbott government's savage cuts to family payments. I am not sure whether the wider Australian community, Australian families and those people who are currently receiving family tax benefit A are aware of Senator Leyonhjelm's proposals. I do not think Senator Leyonhjelm had quite the same media exposure and discussion around committee processes for this proposal as, perhaps, for some of the other areas of the budget. But, should they become aware that this particular proposal is shadowing a proposal that was in the Commission of Audit and which talks about reducing the base rate payment and also about ensuring that it is a tighter taper rate for the entitlement for the process—hopefully this process today will help that awareness—they will know that the proposals are talking about losing money with which they have been making their family budgets operate. Family tax benefit A is not an overly generous payment. It is scrutinised. We do follow the process, and we make sure that the processes look at the real situations of families when decisions are made.
So we will not be supporting the proposal that is before us. We think it is very much in line with a range of attacks that have already been put in the government's budget. So, within that whole package, what the Labor Party have done is that we have looked at each proposal that has come forward in the budget. We are looking very carefully at Senator Leyonhjelm's proposal in this private senator's bill. We assess that by how it would operate, what the impact would be and, indeed, whether it is fair. It is the same process that we have used all the way through, and we will continue to do so. We believe that this one does not pass the fairness test. It does not effectively take into account the needs of the families who are receiving family tax benefit A. I have already given the number of families who would be affected by this proposed change and the impact that it would have on their budgets. We believe, as we have said on a number of occasions in this place, that it does not pass the fairness test, and we will not be supporting it.
I stand to make a contribution to the debate on the Family Tax Benefit (Tighter Income Test) Bill 2014. This bill proposes to change the family tax benefit A income test from 1 July next year. It probably will come as no surprise to Senator Leyonhjelm that we will not be supporting this legislation. We think that, if we are going to be targeting how we actually make savings in the budget, there are other ways to be doing that than once again having a go at low- and middle-income families in Australia, and I will go into where we think we should be getting more revenue during my contribution.
This bill, as has been pointed out, will adversely affect 5,530 families who have incomes between $50,000 and $65,000 and are in receipt of child maintenance payments, and 242,070 families with incomes over $65,000; most of these incomes are between $90,000 and $95,000. The bill proposed by Senator Leyonhjelm continues to pursue, basically, the government's agenda of asking low- and middle-income families to bear the brunt of cuts and lets the big end of town once again off scot-free. This bill cannot be seen in isolation and needs to be seen in addition to the range of budget measures that the government is proposing that will make life harder for Australians. We have the GP co-payments and sweeping changes to the social security safety net, increasing the retirement age, targeting young people, reducing pensioner supports and, of course, removing the pension education supplement. These all combine to hit many Australians and those that are doing it toughest. The federal government is clearly willing to cut some citizens adrift and to see them hit by this budget. We are deeply concerned that this bill basically does the same.
I tabled yesterday in this place the report of the Senate Community Affairs References Committee inquiry into income inequality. That gives us a picture of what is happening in this country. We called it Bridging our growing divide: inequality in Australia, and that is because we have seen from that inquiry that income inequality, as gauged by various measures, has increased. There are various ways that you measure income inequality, but these studies show that income inequality has increased from the mid-1990s to now. Yes, there have been little steps, little dips and increases over that period of time, but the data shows that income inequality has increased in Australia. The study also showed that the likely impacts of the budget measures would be to exacerbate income inequality and poverty in Australia. There is substantial evidence from the inquiry into the social security budget measures about the impacts of the cuts on individuals and families, and the cumulative impact of these budget measures was a recurring theme during the public hearings for the social security bills and also in the income inequality inquiry.
The fact is that we do have growing inequality in this country. Income inequality has deleterious effects on people, and there are numerous studies to show that. Richard Wilkinson's report clearly shows the impacts of inequality around the world on people's health, people's access to opportunity—and I will come back to that—and in fact on productivity. Even the IMF—and the Greens are not always known for quoting the IMF—are now thoroughly convinced of the impacts of growing inequality. They did a paper earlier in the year on redistribution, and also Christine Lagarde has made several comments about the impact of income inequality and inequality on productivity.
This issue, from my perspective and our perspective, is not only a fairness and moral issue, an ethical issue, about not leaving people behind. If you do not get that argument—and I am distressed that people do not—listen to the productivity argument. Listen to the argument about the fact that income inequality and inequality have an effect on productivity and have an effect on our economy. In these days when the government keeps talking about the need to tighten the belt and get us out of deficit, increased productivity will address income inequality, because that is one way that you start addressing productivity and helping our economy. For the Right in particular, if you are not engaging with that argument about the need to ensure that we have a fair and just community, if you are solely concentrating on the argument that economics brings everybody up and raises all the boats—and we know from the income inequality inquiry that in fact just improving the economy does not raise all the boats, and I will go into that in a minute—we know that, if you are growing the economy and increasing productivity, you need to be making sure that you are still putting in measures that make sure that all the boats are floated and that just 'fixing the economy' does not do it. The point that is clearly being made by the IMF is that you need to make sure you fix inequality to fix productivity and to help fix the economy. It is not just a one-way issue there.
In the income inequality inquiry—which I think is very important in this debate, when you are talking about income inequality; I have already been into the issues around impacts on productivity—we looked at the impacts that inequality has on people's access to opportunity, the entrenching of inequality and the entrenching of poverty and what that does to people's social mobility. And that is also linked to access to opportunity. What the research shows is that, by not addressing income inequality, you are actually impacting on people's social mobility and access to opportunity. In other words, people are not able to access education, adequate health services or affordable housing.
The issue around affordable housing here is extremely important, because what we have seen—and Senator Ludlam, who is our spokesperson on housing and homelessness, knows this very well—and what has come out very strikingly during the income inequality inquiry is that access to decent, stable, affordable housing is critically linked to income inequality. The fact that people are not able to have safe, sustainable, decent, stable, affordable housing is intimately linked to their capacity to gain employment. To have stable accommodation is linked to being able to have a job and gain access to employment and other services.
The issue around affordable accommodation is two things. One is supply. We do not have that supply yet, and there are a number of reasons for that. One of those is that the federal government now seems to be extracting itself from issues around housing and homelessness and has now put off dealing with housing and homelessness to one of its Federation discussion papers. But the federal government is critical in the supply of affordable housing, because it has the policy levers. It has money, obviously, and we want it to be investing money, but it has the policy levers as well. So it is critical.
The point here is that there is the supply issue but there is also the affordability issue. People on low and middle incomes cannot afford accommodation. The evidence to the inequality inquiry showed that people can be spending up to 70 per cent of their income just on rent. So, if you are spending 70 per cent of your income on rent, how can you afford some of those other basics? Then you have utilities and essential food, and that is, of course, one of the issues that drop off, because that is where you have some control over your spending. You have a bit of control over your spending on food, so that gets dropped off. Then, of course, how do you and your family afford all those extras that kids need to address their education and their extracurricular activities? We also know from the evidence received that it is the extra add-on things when you are growing up that help you gain access to opportunity and help you get the best out of your education—help you access education.
So, if you have a very low income, whether you are on income support or are one of the growing band of working poor in that area of insecure, temporary work, it is very difficult for you to get ahead, because what happens is that you are in this cycle of temporary or casual employment. We know there are a group of people that are stuck in this process. You are going off and on income support, but to go back on you have to have worn down all your assets, so you never get ahead, again being denied access to opportunity. To think that $50,000 in this day and age is sufficient—that is one of the bands that will be affected by this bill—is ludicrous. It simply is not sufficient for people to do the things that I have just been talking about—in other words, to gain that access to opportunity.
Bearing in mind all this information—the government knows about issues around income inequality, because the Treasury has done papers on it and there has been a lot of work done on it, and there is more work that we have brought together under the income inequality inquiry—what the government does is to put in place a budget that will have significant cumulative effects on many families. As these numbers of measures combine, they reduce people's access to income support and to other assistance. The impact of the GP co-payment, particularly for low-to-middle-income families, is very significant and it does put people off accessing the health system, which then obviously has roll-on impacts. It does make it more difficult.
The so-called higher education reforms—I don't like calling them reforms; I call them so-called reforms—will have a significant impact, particularly on people on low and middle incomes, or they would have. Obviously they were kicked out of this place, but the government is talking about bringing them back. Again, what they are talking about will have an impact on low- to middle-income families.
We are dealing with real people's lives here. These are people who are struggling to make ends meet and who are dependent on every cent to help them address the huge issues around renting. There is a new study which just came out a couple of days ago from AHURI that shows the impact of not having your own home and the fact that it is getting more and more difficult for those in the rental market. Of course, people are caught in that cycle. If you have a low income, you lack access to opportunity and you are not able to build up your nest egg through the circumstances I have just talked about. It becomes a never-ending cycle where you are stuck in the rental market, getting further and further behind.
This budget has a significant impact on low- to middle-income families and the government knows that, because the government's own modelling showed that. But it still went ahead and brought those measures in. NATSEM's modelling also shows very similar results, because the government was using a model that I understand NATSEM helped to develop. NATSEM has gone on to develop this further. The point is the modelling showed that the biggest impact of the budget was on low- to middle-income families, and what does this measure do? It tightens the screws even more. Do you think the Greens are going to be supporting something like this? Not on your life. We will be supporting measures that assist low- to middle-income families.
I used to have some sympathy for the argument about this so-called middle-class welfare. But when you look at the role that family tax benefit A and B plays for low- to middle-income families it is very important. It is very important for those families and gives us an opportunity to start addressing the growing divide between the people who are doing very well, in the top quintiles, and those who are doing very poorly. It is not just people in the very lowest quintiles who are doing poorly.
We know that this budget is going to have a negative effect on low- to middle-income families, those who are on income support and those who are on low incomes, particularly the group people call the working poor. We are seeing a growing number of working poor. But what we have here is a bill that would hurt those at the lowest ends of the income quintiles, when the government has virtually let the big end of town off scot-free. That is what Senator Leyonhjelm does with this bill.
There are measures that could have been pouring money into our budget coffers by now—things like the mining tax. They voted to get rid of the mining tax and it should have been tweaked. The Greens are well on the record saying the mining tax that came in was not as adequate as it should have been. Instead of fixing the problems, they got rid of it. Money was just thrown back to big business. It was the same thing with the carbon price. Money would have been pouring into the coffers now and that would have helped our revenue base. They are refusing to deal with the tax concessions to the big end of town, to the mining companies. They refuse to deal with the diesel rebate for big mining companies—again a revenue stream they could have had.
They are not sufficiently cracking down on tax evasion, because they have sacked so many staff in the tax office that it cannot possibly do the work that used to be done. Of course, then there are the tax concessions to the big end of town. There are the tax concessions that are very clearly articulated in the income inequality report. Are they showing significant backbone to start adequately addressing that revenue source? No, they are not. They are going very slowly on that, but they are having a so-called crackdown on income support.
Australia needs to look at where we can get revenue beyond attacking the most disadvantaged in our community. By attacking that, they are actually attacking productivity, as I said. If we have a growing divide and growing income inequality, that hurts the most vulnerable but it actually hurts our productivity as well, because the more you attack them the more you increase that divide and that income inequality.
As I said, modelling from the Treasury shows that the spending cuts in the budget cost an average of $842 a year for lower-income households, while the average high-income family lost only $71. Here we have another bill that starts trying to rip money off those people that are not doing as well. They are not having their boat floated when income is rising for others. Not all the boats are being floated, and that was clearly shown by the work done by the Bankwest Curtin Economics Centre. That clearly showed that the impact of the boom in Western Australia has not flowed through to everybody.
At the same time, in my home state of Western Australia—because that was done in the boom in Western Australia—you see WACOSS talking about the cost of living. I want to put this into context so that you see that not everybody has gained sufficiently in Western Australia. The lower quintiles have not gained as much as the higher quintiles, and income inequality has risen in Western Australia over the boom period. We have the fastest growing income inequality in Western Australia. WACOSS—the WA Council of Social Service—does a yearly cost-of-living survey, and in 2014 it found:
… housing remains the major weekly expense facing … households. The unaffordability of Perth's housing market for households on low and fixed incomes remains a significant concern for the Council and its members, particularly those delivering financial counselling, emergency relief and community legal services. The cost of housing remains the biggest single driver for households facing financial crisis.
They also found here that, while the cost of living had stabilised a little bit in Western Australia for some, what has happened with the comedown from the boom a bit is that the lower income households have remained static and have not improved their situation. They think that is because they were not able to gain sufficiently through the boom and so, while prices have continued to rise, they have stabilised. Their situation has not improved, while the situation of some of the higher-income households has improved.
Anglicare's Rental affordability snapshot for 2014 found that less than one per cent of rentals in Perth were affordable to people on benefits and pensions, and only three per cent were affordable for families on a minimum wage. The affordability was calculated at 30 per cent— (Time expired)
I wish to speak briefly on Senator Leyonhjelm's bill, the Family Tax Benefit (Tighter Income Test) Bill 2014. I think it will come as no surprise to Senator Leyonhjelm that I would not support this bill. To quote the explanatory memorandum:
The Bill will adversely affect:
Families are not an economic burden; they nurture the future of our country. I believe any legislation that adversely affects any family is bad legislation. Families are already doing it tough with their mortgages, food, utilities, education et cetera. I will be voting against this bill, as I earlier said. The economy is the servant of the people; the people are not servants of the economy.
I rise to oppose the Family Tax Benefit (Tighter Income Test) Bill 2014, put up by Senator Leyonhjelm to further target and reduce the entitlement of family tax benefit A recipients. I think the point needs to be made here that this is already a targeted payment. It is a targeted payment to medium- and low-income families. It provides those families with—
Honourable senators interjecting—
Senator Lines, I am sorry to interrupt. There are a number of senators engaged in conversation. I cannot hear you, and I would ask that the senators remove themselves outside. Carry your conversations outside and extend the courtesy for Senator Lines to be heard.
The family tax benefit A payment is a payment provided to families to support their family budgets. If we know one thing in this place, we know that family budgets are already under attack by the Abbott government. We have seen the Abbott government wanting to put on a tax when you are sick and a tax if you need specialist care. We have seen the increase in fuel excise, which has hit people in the hip pocket. We have seen the cuts to how pensions are going to be determined into the future. We have seen massive cuts to health, and we have seen an attack on education in this country like we have never seen before. And yet we have this bill before us from Senator Leyonhjelm which further seeks to put a harsh and unrealistic burden onto medium- and low-income families. That is who is being attacked here.
If you look at the website, you will see that, to be eligible for family tax benefit A, you have to have at least a dependent child or a secondary student under 20. You have to be not receiving a pension, a payment or a benefit such as youth allowance. You need to be providing for your child 35 per cent of the time. And, of course, there is already a means test. So this is not like the Prime Minister's gold Paid Parental Leave scheme, which will benefit the wealthy in the country; this is a targeted payment to families who need that additional support to buy school uniforms, to buy books, to enable their kids to play sport on the weekend or to supplement the family budget. This is what family tax benefit A does.
I cannot believe that a senator in this place would introduce a bill that further reduces that entitlement—that further penalises Australian families. This bill is designed to tighten the income test, which is already fairly low. Family tax benefits are modest payments—they are not outlandish payments; they are modest payments—and they help low- and middle-income parents with the cost of raising children. I just cannot imagine why anyone would support this, and Labor certainly does not support this bill.
We are a party who support families, who recognise that families need this additional support, who know that come January, after Christmas and holidays, families struggle to provide the new school uniforms required by children, the books that are required in school, the new schoolbags and so on and so forth. Even buying boots for kids to participate in sport is a burden on families, and that is what this benefit is designed to assist with. Yet we see an attack in this place by a senator from New South Wales, our largest state. One assumes there are many families in New South Wales, whom Senator Leyonhjelm is supposed to be representing, who will be hit if this bill is successful. It just does not make sense at all.
There are about 1.6 million Australian families who receive family tax benefit part A, and that is who will be hit if this bill passes this place. In those families we have three million children. Is that who we really want targeted? Do we really and truly want to target three million Australian children? I don't and Labor does not, which is why we will not be supporting this bill. As I said, this comes at a time when the Prime Minister is still pursuing his very expensive paid parental leave scheme—although he has told us these 'barnacles' are supposed to be coming off before Christmas. I am not sure if the paid parental leave scheme is a barnacle. Certainly that is our view.
But this bill attacks honest, hardworking parents doing the very best they can for their children and therefore our country's future. That is what this bill does. It will reduce the payment. Imagine how families are feeling. We already have families and ordinary Australians carrying the burden of Mr Abbott's unfair budget. They are already carrying the burden and this bill will target them even further. It is an outrageous suggestion that anyone in this place could seriously contemplate supporting a bill which says to Australian families, 'You're on your own.' We already know that the Prime Minister and the Abbott government are saying to families, 'You're on your own,' and this bill takes it one step further.
I, along with many other Australians who pay taxes, want my taxes to support those who need a helping hand. I am proud that my taxes support our health system, our education system, our social security system. I am happy to pay more tax to enable that support to be there. To suggest that as a country we do not support Australians who need a helping hand is an outrage and it goes against what we are as Australians. We are a fair go country and it is a fair go to say that those in receipt of family tax benefit A are not the rich and wealthy in this country. They are deserving. They are hardworking. This bill seeks to attack three million children and I will have no part of it.
The question is now that the bill be read a second time. Those of that opinion say aye, against no. A division is required? Ring the bells.
The bells having been rung—
Senators, before we go to the count, I just want to clarify a bit of confusion. The motion was put. There was no division. Then the motion was put to read the bill a second time, on which there was the vote, the ayes and the noes. I thought I heard two ayes. I think I might have got that one wrong! I call Senator Leyonhjelm to tell it for the ayes—and this should not take long—and Senator Bilyk to tell it for the noes.