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Tuesday, 22 June 1999
Page: 7026

Mr TRUSS (Agriculture, Fisheries and Forestry) (5:42 PM) —In summing up the debate, can I thank honourable members for their contributions to the debate on these two family assistance bills, in particular the members for Blair and Parkes for their strong interest in the government initiatives to assist Australian families and for their constructive comments on this important legislation, with which the comments coming from members opposite contrasted sharply—with their lack of any kind of policy initiative. It seems to me quite incredible that any group of people in this parliament actually would vote against these pro-family measures. The only people who could vote against these measures are people who are not pro family. It is most regrettable that members opposite would seek to deny these very substantial benefits to Australian families.

The bills are a part of an ambitious program to reform our tax and social security systems. We inherited from the previous government an arrangement which was far from cohesive, and we are now moving to unwind the complexity of the system to get rid of a dozen or more different benefits payable to families and replace them with a simpler, fairer and more generous system. There are many instances in the past where the interaction of the tax and welfare systems produced high effective marginal tax rates that effectively penalised families seeking to escape from poverty traps. One of the government's major priorities when we took office in March 1996 was to restore balance to the social security system.

From the outset, the government recognised the pressures on low and middle income families, particularly single income families. The coalition has never doubted the critical role and the importance of families in our society. By building stronger families, we build a stronger society and a stronger nation. In January 1997 we introduced significant benefits for Australian families through the family tax initiative. That initiative is worth about $2 billion to Australian families, and it raised the level of Commonwealth assistance to families with children to more than $7 billion a year.

It was a significant step but now the government is going even further. As part of the wider reform of the tax system, the government announced a comprehensive reform to family payments, and this legislation gives effect to those announcements. We will be reducing the 12 existing benefits to three: family tax benefit part A, family tax benefit part B and the child-care benefit. Under the new tax system means testing for benefits will be liberalised, especially for family tax benefit part A which will replace family allowance and related payments. The threshold for the maximum rate of family allowance will be raised by almost $4,000. The threshold for the low income health care card will be raised by more than $2,000. The current tax-free thresholds under the family tax initiative will be doubled. Enhancing the family tax initiative will allow families to retain more of the income they earn. The greatest beneficiaries will be single income families with very young children which will have an effective tax-free threshold of $13,000. Sole parents and two-parent single income families can also look forward to significant and substantial tax relief.

These latest changes to family assistance will provide a further $2.4 billion a year in benefits to Australian families, and the reforms target the areas of greatest need. Recent research by the National Centre for Social and Economic Modelling suggests that single income families have faced particular problems in past years. From 1982 to 1996, the centre claims, single income families experienced a fall in living standards, unlike other families. At the same time the proportion of children in single income families also fell, suggesting that many families were choosing, or being obliged to seek, a second income. The NATSEM research confirms that the government is responding to a genuine community need.

The Australian newspaper has no doubt that these changes are long overdue. A few moments ago we heard an honourable member selectively quoting from a newspaper, but obviously he did not turn to the editorial in the Australian on 8 June. It commented that `the traditional family'—that is, the two-parent single income family—`was left behind' during the 1980s and that the coalition has correctly sought to address this social problem. The newspaper pointed out that the government has been criticised in some quarters for assisting single income families, but said that with tax reform `families will benefit no matter what personal choices are made on work and family'.

The two family assistance bills now before the House, A New Tax System (Family Assistance) (Administration) Bill 1999 and A New Tax System (Family Assistance) (Consequential and Related Measures) Bill (No. 1) 1999 , are primarily technical bills. The House has already passed the major family assistance legislation.

One of the most important characteristics of the new system will be choice. Families will be free to choose how they receive their family assistance. In commenting on these aspects of the legislation, the honourable member for Calare, and I think also the honourable member for Lilley, expressed some concern or wonderment about the notion of a virtual office. In fact, the Family Assistance Office will operate effectively through Centrelink, through Medicare and through the Taxation Office to deliver services in an efficient way and to offer choice to families who want to use them.

These members also expressed concern about the estimates of annual income and the difficulties that can be created in determining income. This has been an unavoidable problem associated with the means test system for people receiving unpredictable income. The system has relied on estimates of annual income for many years, but in the past the system has been unfair in that if people overestimated their income they received no benefits. If they underestimated their income, they were forced to pay back any benefits they had received. This legislation introduces a reform which I would have thought would be welcomed by all. People will receive their exact entitlement. Families which otherwise miss out if they have overestimated their income will receive a top-up payment—something that has not been available in the past—whereas those who have underestimated their income will continue to have to pay that money back. But people can change their estimates at any time, as they can under the current system.

Someone made the claim that social security debts are largely made up of people who have underestimated their income. The reality is that only 11 per cent of preventable debts, according to the 1997-98 figures, arise from family payment estimate errors. In actual fact this has been an issue causing concern. I freely acknowledge that, as minister, I have been receiving quite a lot of correspondence about this issue, but it is effectively addressed in this legislation.

I was disappointed with the contribution of the honourable member for Lilley, as I usually am. I am ready to give up on endeavouring to correct the errors that he repeats time and time again. We are not allowed to call people in this House liars, so I will not do that. But I find it difficult to think of pleasant words to describe the situation when the honourable member for Lilley came in and repeated the same false statements that he made the last time we confronted one another across the table. I pointed out to him at that time that his statements were totally inaccurate. They are still inaccurate, but he still goes on with his nonsense about waiting periods at Centrelink and about the `new billion dollar cuts' in the budget. He knows all of that is nonsense. He knows it is false. But, sadly, he keeps repeat ing these false statements. It is hard to think of a nice word to describe someone who keeps making the same false statements even though he must know that the statements he makes are inaccurate.

This legislation is very important for Australian families. It represents an important new deal. It represents an opportunity for Australian families to be more fairly treated through the tax system. It will provide real benefits to Australian families through family tax benefit parts A and B and through the new child-care benefit. It gives effect to this government's commitment to ensuring that Australian families get a fair deal under the new tax system. I commend the bills to the House, bills which will be warmly welcomed by Australian families as a recognition of the special role that they play in our society.

Question put:

That the words proposed to be omitted (Mr Swan's amendment) stand part of the question.

The House divided. [5.52 p.m.]

(Mr Deputy Speaker—Mr F.W. Mossfield)

Ayes . . . . . . . . . . . . . . . . 74

Noes . . . . . . . . . . . . . . . . 64


Majority . . . . . . . . . . . . 10


Voting details are recorded in the Votes and Proceedings.

Question so resolved in the affirmative.

Original question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.