FAMILY ASSISTANCE LEGISLATION AMENDMENT (EXTENSION OF TIME LIMITS) BILL 2003: Second Reading
Mr CADMAN (Mitchell) (6.51 p.m.) —The measures we are debating tonight with the Family Assistance Legislation Amendment (Extension of Time Limits) Bill 2003 are far-sighted.
They are a huge change in support to families. They were introduced at the same time as the goods and services tax and increased the benefits paid to families by an extra $2 billion per year—an extra $2 billion per year for two million Australian families.
The Centrelink records alone show that fortnightly 1,937,047 customers successfully claimed family tax benefit part A and 1,358,413 customers successfully claimed family tax benefit part B. It is estimated by the Australian Taxation Office that in 2000-01 another 80,688 customers successfully claimed family tax benefit through the tax system. Two million Australian families benefited from the changes brought in by the government in the year 2000. They are a consolidation of 12 complicated programs which were impossible to follow and have been condensed to three basic payments: part A, part B and the child support program. I know that most Australian families understand that they are vastly better off under this system than they were under the previous system.
What are the problems adverted to by the Australian Labor Party? These benefits are there to assist families and are related to their income; the system works on yearly income. Let us look at them. The family tax benefit part A helps families with the cost of raising children. It is paid for dependent children up to and including the age of 20 years and for dependent full-time students up to the age of 24 years who are not yet getting the youth allowance or similar payments, like Abstudy, or assistance under the Veterans' Children Education Scheme. [start page 20193]
For children under the age of 13, the maximum amount varies. It is $130.48 per fortnight or $3,401.80 per year. The highest amount paid is for the high-cost teenage years—between the years of 13 to 15, when children are at high school—when parents pay the greatest amount. The maximum amount paid per fortnight is $165.48, making a total in a year of $4,314.30. It tapers off for full-time students aged 18 to 24 to $56.42 per fortnight or $1,471 per year. The base rate can be paid to families receiving an income of more than $31,755 per year. The amount reduces by 30c for every extra dollar until the base rate of $82,052 is reached. At that base rate each child under 18 years of age receives $42 per fortnight, which amounts to $1,095 per year. Those aged 18 to 24 receive $56.42, which amounts to $1,471 per year.
The income threshold for the maximum rate for families is $31,755 per year. If the income is more than $31,755 a year, the reduction—the part rate—takes place until the income reaches $82,052, plus there is an additional $3,285 for each dependent child. There we have part A: a very generous and worthwhile program for families in Australia—families with medium and modest incomes getting the most.
The family tax benefit part B gives assistance to single income families, including sole parents, and particularly to families with children under the age of five. Part B is a more focused program, being geared towards families with younger children and for single income families. For sole parents, there is no income test. For couples where there is only a single income, the `primary earner's income' is not taken into account. But, if the family has a secondary income earner, that secondary income is taken into account and, if there is income of more than $1,824 per year, payments are reduced by 30c for every extra dollar.
Let me talk about the payment of family tax benefit part B. For children under five years, it is $112 per fortnight or $2,920 per year. For children aged five to 15 years, it is $78.12 per fortnight or $2,036.70 per year. The combined payments of part A and part B are very generous. The total cost for Australians is huge.
On top of that, there is child-care benefit, which is an increase in the maximum level of assistance to $137 per child per week for approved care and $23 per week per child for registered care. The income threshold is $31,755 per year. For those earning above $74,153 per year it tapers off. It ranges from 10 per cent for one child in care to 15 per cent and so on per additional child. This is a very generous program. The total benefits are designed to assist families. There is a targeted part and a general part. Around 68,000 top-ups are needed because people, when they come to fill in their tax forms, find they have earned either more or less than they estimated to gain access to part A, part B or the child-care benefit. Those who received more benefits than they calculated on their taxation are asked to repay that over a period of time. This is not a welfare payment; it is a tax benefit linked to the tax system.
So, despite the complaints of the Australian Labor Party, the benefit is large—it is $2 billion larger than the previous system. It is geared toward families who most need support. It is a generous program ranging for part A from $130 per fortnight to $165 per fortnight and for part B from $112 per fortnight for children under five to $78 per fortnight for children aged five to 15. On top of that there is the child-care benefit. This is a generous program. It is geared to taxation and the final calculations cannot be made until a person has completed their tax return. This legislation is about those who have been underpayed—those who, when they come to the end of the financial year, find that they received less than they had calculated and therefore their tax benefit is smaller than it should have been. This is a topping up process based on the exact and finite calculations of their taxation. [start page 20194]
The original legislation said, `You've got one year to get it straightened out.' That was found to be insufficient because a number of people missed out on payment. I understand from questions asked in the Senate that approximately 25,072 family tax benefit customers who lodged 2001 tax returns will receive an additional $37,033,027, which is an average of $1,477, as top-up for their 2000-01 family tax benefit year. This does not mean to say that tax returns can be put in at a later time—tax returns must be put in on time—but the calculations can now take up to 24 months instead of 12 months as they did previously. This is a very sensible change that adjusts to the needs of families. It is endorsed and supported by this side of the House. The indications are that in the 2001-02 year the number of family tax benefit and child-care benefit top-ups will be higher and the number of overpayments will be lower as people understand what hinges on them lodging the exact and right amounts.
The government's family assistance arrangements are fairer and simpler than the previous system and, as I have said, will provide around $2 billion per year extra for 2 million Australian families. Families receive exact entitlements when payments are reconciled at the end of the year. Underpayments are topped up and overpayments are recovered. This ensures that all families receive their correct entitlement, and that is the way it should be. This is a reasonable program based on exact income. Around 680,000 top-ups for family tax benefits and child-care benefits were paid—no families received top-ups under the old system. This is a new system, a change and an improvement. The method of calculating the reconciliation results was revised in February this year and now more accurately reflects the overall net income of families who have a revised reconciliation. The final number of payments topped up or recovered for 2001-02 payments will not be known until the completion of the reconciliation process, which is approximately a year away.
Families are required to estimate their yearly income but there is no limit on the number of times a family can update their estimated income within the family assistance system. The whole system is family oriented. The previous time limits applying to FTB and the child-care benefit have been extended by 12 months. The one-year time frame for claiming the payment of top-ups as a result of income reconciliation will be extended to two years after the end of the income year to which the payments relate. The time frame relating to the exchange, use and deduction of tax file number data for income reconciliation purposes is extended from two to three years, so the tax office and Centrelink face the prospect of making sure that their data matching processes are extended by the same period.
Samantha Maiden in Canberra wrote an article for the Hobart Mercury with the headline `Families win with $50m top-up move'. The article says:
Under changes to the controversial system, families will be given an extra year to claim a lump-sum FTB payment or a “top-up” if they overestimate their income.
In Tasmania, Anglicare welcome the move. [start page 20195]
“At last the Federal Government is responding to low-income families,” chief executive officer the Rev Chris Jones said.
“It won't affect everyone and these sorts of reforms should not be the be-all and end-all, but they are very welcome.”
Under the previous Labor government, parents who overestimated their income were not eligible to receive extra top-up benefits.
The article concludes:
More than 18,000 Australian families earning over $100,000 a year received FTB payments worth up to $4300 per child per year.
It is generous across the board for all families. This is an excellent family friendly policy, devised by the government and put into action on coming to government. It is part of a total package which is supportive of families with children.
In conclusion, I want to draw the House's attention to work done by Catherine Hakim of the London School of Economics for the British Cabinet Office's Women's Unit. Catherine Hakim was in Australia recently, and she said:
Small elites of women born into wealthy families, or prosperous families with liberal ideas sometimes had real choices in the past, just as their brothers did. Today, genuine choices are open to women in the sense that the vast majority of women have choices, not only particular subgroups in the population.
She went on to try to identify some of the choices women are making. She said:
Reviews of recent research evidence ... show that once genuine choices are open to them, women choose three different lifestyles: home-centred, work-centred or adaptive ... These divergent lifestyle preferences are found at all levels of education, and in all social classes.
So women in a range of classes are choosing different types of lifestyles. Hakim went on:
Adaptive women prefer to combine employment and family work without giving a fixed priority to either.
An adaptive woman makes a choice between employment and family work, determined by needs. Hakim said that approximately 60 per cent of women prefer that lifestyle. She said:
For example seasonal jobs, temporary work, or school-term-time jobs all offer a better work-family balance than the typical full-time job, especially if commuting is also involved ... Work-centred women are in a minority ... and ... are focused on competitive activities—
such as careers in sports, politics or the arts or maybe the professions. The third group, home-centred women, are also in a minority, according to Hakim. She said that as a group they are:
... a relatively invisible one, given the current political and media focus on working women and high achievers.
This is a very interesting approach and one which the government must pay attention to. The majority of women mix their home duties with work responsibilities. The family tax benefits are certainly geared to assist those families, but I believe that further refinements are needed to really take into account the majority of women who want to adapt their lifestyles to the needs of their families—their families being their prime focus—and also not leave unconsidered those women who want to have a full-time career or want to be full-time home carers and managers. (Time expired)
Author: Alan Cadman MP
Source: House Hansard - 16th September 2003
Release Date: 4 Nov 2003