HANSARD EXTRACT
| Family
Assistance, Social Security and Veterans' Affairs
Legislation Amendment (2005 Budget and other Measures) Bill
2006: Second Reading |
| 28 March 2006 |
Mr HAYES
(Werriwa)
(7.36
p.m.)—I
support Labor’s amendments to the
Family Assistance, Social Security and
Veterans’ Affairs Legislation Amendment (2005 Budget and Other
Measures) Bill 2006, amendments to be moved later this
evening, because it is high time the government stopped welfare to
millionaires. There will always be a debate about the appropriate
tax mix—the mix between tax and welfare. The government will always
be required to manage the competing tensions between tax reform and
its social obligations to support those in the community who need it
most. Sadly, this debate is a debate that the government is
committed to not having. Sure, tax reform is very topical in the
government ranks, but there seems to be very little interest from
members opposite in examining the interaction between tax and social
security systems and addressing some of the crippling effective
marginal tax rates currently enforced on so many within our
community.
The opposition has shown it is willing to consider the interaction
between the tax and welfare systems, because this is the only fair
way to put incentives back into our system. I welcome a number of
the changes we have before us today, because they will directly
benefit constituents in my area. Werriwa is not one of the
wealthiest electorates in this country, not by any measure. Based on
the income statistics of the 2001-02 financial year, 97 per cent of
income earners in my electorate earned less than $78,000, while
nearly half of them earned less than $31,200. They are simply the
facts. It is for this reason I am compelled to support changes to
the arrangements of family tax benefit A, changes which act to raise
the current income threshold and which will result in payment
increases of up to $828 a year for more than half a million families
currently on family tax benefit A payments.
There is absolutely no doubt there will be some winners in my
electorate as a result of this legislation. But, disappointingly, I
note that these families—families that are below the income
threshold, including those families on income support payments—will
not see any increase in their family tax benefits. In fact, many of
them are likely to see a decrease in their payments in the not too
distant future, as this government implements its Welfare to Work
reforms.
I have no doubt that families who are experiencing financial
pressures will welcome any assistance they can get. Many families
are surviving on income earned from overtime, for instance. Quite
clearly, for these families income from overtime is the difference
between being able to meet the mortgage repayments, feed their kids
and generally go about their day-to-day lives and not being able to.
The families who are surviving on overtime payments are also those
families living in fear that this is likely to be the first thing
taken off them when they are forced to negotiate their new
individual contracts that this government, courtesy of its Work
Choices legislation, will have indirectly forced on them.
At the outset, I stated that I was happy to support Labor’s
amendments to this bill because it is about time millionaire
families stopped receiving government handouts. In the same way that
the tax take of this government continues to grow, sadly so does its
position with respect to being a welfare state. It is not a welfare
state that supports those in most need; it is a welfare state that
continues to hand out money. As the previous speaker, the member for
Rankin,
pointed out, how did we get to the point where the government’s
spending on social security has increased by 50 per cent in real
terms over the past decade? How is it that we find the situation
where more than 20 per cent of working age Australians are receiving
some form of welfare support when unemployment is at the lowest it
has been in decades?
Recently released statistics show that there were 76 families
earning more than $1 million a year receiving family tax benefit B
payments. In addition, there are more than 38,000 families with
incomes of more than $100,000 receiving the payment. There has to be
something wrong with the system when people earn over $1 million a
year and yet are receiving welfare payments. It is for this reason
that I consider the amendments proposed by the opposition to be
reasonable when it comes to addressing the issue of family tax
benefit B. The proposition to place an income cap on family tax
benefit B would not be considered unreasonable by the vast majority
of people, and, quite frankly, it would save money. The introduction
of Labor’s proposal to income-cap family tax benefit B would save in
the order of $7.5 million annually. Labor’s proposal regarding
family tax benefit B not only commences with the process of
restoring some equity to the social security system but also is
fiscally sound. I am sure the amendments will not be supported by
government members, and I will be interested to hear their views on
this.
Amongst other concerns I have about the distorted shape of the
government’s welfare state is the chasm that is now being opened
between families and childless couples. This chasm goes to the heart
of the government’s methodology when it comes to using tax and
welfare systems to support particular groups in our society at the
expense of others. I do not stand here today to argue that all
social security should be removed from families, in the same way I
do not suggest that social security should be removed from single
people and childless couples. I would just like to point out that
there is a disparity in the system as it currently stands.
Recently released research about the comparative position of
families and childless couples quite frankly indicated a number of
things. For instance, it is worth while noting it reported that a
single-income family that were earning $50,000 a year with two
children under the age of 13 received $2,374 more in benefits than
they contributed through the taxation system. That is right; the
Australian government actually paid them. They did not have to pay
tax; they were paid by the Australian government an additional
$2,374 over and above any tax that was paid.
I do not deny that families need help—families are in financial
distress. As we all know, an income of around the $100,000 mark
these days in any capital city or outer-metropolitan area is not
regarded as an excessive income. There are a great many families,
particularly in electorates like mine, who are suffering from
financial stress. In many of the suburbs in my electorate, families
have both parents working in order to keep their heads above water,
but still they are suffering from financial distress. Part of the
reason is obviously the increase in housing prices, but most of the
reason stems from the rapid decrease in housing affordability,
something that this government has shown repeatedly that it is
unwilling to do anything to address.
At the last election the government sold the idea that they were the
only ones who could manage the economy and keep interest rates low.
As part of their re-election strategy, that was the position that
they put out to the electorate at large in 2004. As part of their
re-election strategy, you will recall, they contrasted the 17 per
cent interest rates experienced under the Keating government, when
the interest rates climbed during that period, with current interest
rates. Naturally, the government did not seek to present the reasons
as to why interest rates were so low nor did they present any
information on relative housing affordability.
Recently, I read that the repayment burden on households is higher
under this government than at any time under the Hawke and Keating
governments. Even at the peak of interest rates, households
experienced a lower debt repayment burden than they are currently
experiencing under this government. At its peak, that debt burden,
that share of household income devoted to interest repayments, was
8.9 per cent under the Keating government. You will be interested to
know, Mr Deputy Speaker, that it currently stands at 9.8 per cent.
This is the reason that families are struggling so much: now more of
their income is dedicated to debt repayment, even though nominal
interest rates are significantly lower.
The situation exists where so many are suffering financial stress,
but among those receiving financial benefit and relief in the form
of social security payments are those who need it least. This
government has presided over a stunning increase in middle-income
welfare by extending welfare to high-income earners, at the expense
of single parents and the disabled, through its system of child-care
benefits.
Raising the issue of child-care benefits brings me to the amendments
proposed to the administration of child care. Child care is of
critical importance to parents in my electorate of Werriwa because,
as I mentioned earlier, in order to have some form of financial
security ordinarily you will find that both parents need to work.
That is the same in most areas of outer-metropolitan
Sydney, and I presume the same would be the case in any other
capital city. But, if both parents need to work, someone needs to
look after the kids.
One of the changes before us gives the departmental secretary the
power to allocate unfilled places of a child-care provider on the
basis that this will allow the redistribution of places from areas
of low demand to areas of high demand. Ordinarily, I would say that
that sounds like a great thing, something that I would probably rush
to lend my support to. I would imagine that any member concerned
about child care could not do anything but support that notion. But,
as always with the approach of this government, you do have to have
some caution because you tend to find that the devil is in the
detail.
One possible problem with this change is that, once places are
removed from one service, they do not have to be reallocated to
another. There is a real and distinct possibility that the change
could actually exacerbate the child-care shortage. With the stroke
of a pen, a child-care place could simply disappear. As I understand
it, the process of reallocating places is a slow and rigid one and
places are generally only reallocated in advertised windows, which I
also understand have only occurred five times since 2000. I also
understand that services wait up to two years from the point of
their initial request for new places to be allocated to them. This
will be cold comfort for anyone in a high-demand area waiting for
the provision of child-care services.
One of the amendments proposed by the opposition would limit the
secretary’s power to reduce the allocation of places to a service—in
this case, only if the place has been continually vacant for a
period of 12 months—and we propose that the places would be required
to be reallocated within seven days of their removal. That in itself
would require the department to actually plan and not simply remove
a position and wait some time before its reallocation. In other
words, if a place were taken away from an area of low demand, it
would be known in advance and would be reallocated to an area of
high demand to satisfy that need within seven days. This is yet
another reasonable amendment that the opposition has put forward, in
my opinion, but I do suspect again that it will not be supported by
the government.
I would also like to offer my strong support for Labor’s amendment
to require annual reporting to the parliament on the number and
location of services suffering an involuntary removal of places; of
services that have been reallocated those places; and of services
seeking more places, which would provide some indication of unmet
demand. Those are figures that I would have thought anyone in this
place would be very interested in. Again, it is not an unreasonable
amendment and it is one which I think ought to be supported in this
place.
Helping families is one thing but helping families who earn multiple
hundreds of thousands of dollars—or, worse, millions of dollars—each
year is another thing altogether. Labor has proposed some fair and
reasonable amendments to this bill. It has proposed amendments that
would bring some sense back into the system of social security,
amendments that would act to curb the growth of the welfare state
that this government has presided over. Members who feel that
placing an income cap on family tax benefit B is unreasonable, while
continuing to support the cutting of payments to the most vulnerable
in society, quite frankly are symptomatic of a government who have
their priorities misplaced. In my opinion, what is occurring in
welfare to work is completely wrong.
I would welcome any member who does not support the sensible
amendments being proposed here to come and visit my electorate—to
visit suburbs like Minto, Macquarie Fields and Miller, suburbs with
high degrees of welfare dependency—and explain to them how it is
better for everyone to have people earning millions of dollars and
receiving welfare while their payments are being cut. I would then
welcome the opportunity to take them to visit suburbs like Prestons,
Austral and West Hoxton and have them explain to the people there
why they would support people with incomes of more than $250,000 per
year receiving social security payments while people in those areas
are forced to work two jobs to struggle to keep bread on the table
for their families, relying on overtime to meet their mortgage
repayments and day-to-day living costs.
I have always found it quite amazing that this government—the
government who makes the claim that it is the greatest budgetary
manager of all time—is the same government who collects record
levels of tax and who spends record levels on social security. As
the Prime Minister has previously been advised, this government
could save $100 million a year by simply scrapping payments to
stay-at-home mothers if their family income is more than $125,000.
In 2003-04 there were nearly 13,000 families living in our 10
wealthiest postcodes and receiving family support payments.
This is really a crossroads for this government. Either this
government is happy to go along the path of maintaining these
welfare state provisions, or, alternatively, it starts looking at
the real and very much needed tax reform provisions that are
required in a developing society. This is not about simply slashing
and burning when it comes to welfare; this is about a proper
redistribution of the tax burden with a view to ensuring that people
who need assistance most receive it and that those who do not need
assistance contribute properly to our society. (Time expired)
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