Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (9:05 PM) —I would initially like to place on record the thanks of the government to all honourable members who made a contribution to this very important debate. The Taxation Laws Amendment (Baby Bonus) Bill 2002 will implement the government's election commitment to introduce the first child tax refund, known as the baby bonus. Unlike the Australian Labor Party, the Howard government places a very great store on our election promises, and upon being returned to office with such an outstanding majority we were determined to deliver at the first available opportunity on this keynote policy which we took to the poll last year. The baby bonus recognises that one of the hardest times for families financially follows the birth of a first child. A family could lose one of its two incomes for a period of time as the mother, or father, gives up or reduces paid employment to care for the child.

The honourable member for Lilley made the outrageous statement that the Howard government has put Australian families last. If anyone was listening to the member for Lilley, he or she would have found that comment absolutely laughable. The member for Lilley has clearly forgotten what was the policy of the Australian Labor Party at the last election when it claimed to want to assist families with newborn babies. In his policy statement `Kim Beazley's plan for families' under the heading `Extra assistance for families with newborn babies' Labor put forward a pathetic $22 million over a few years, all to be handed over to the Australian states. This offensive policy pales into insignificance when compared with the almost $1 billion this government is now committing to Australian families through this legislation. Once again, the member for Lilley has clearly overlooked why the Australian Labor Party was so resoundingly rejected by the Australian people at the poll in November last year.

This government has always believed in supporting Australian families. The honourable member for Cunningham suggested that the measure comparing income before birth with income in the following year was a complex provision. The measure is designed to pay back to people, over five years, tax paid in the year prior to the birth of their child. The comparison between income years is necessary in order to improve the equity of the measure. For example, where a person re-enters the work force and earns one-third of the income of the year before birth, he or she will receive one-third of the baby bonus.

The honourable member for Werriwa criticised the fact that the baby bonus can be contributed to superannuation and claimed that the benefit will not be available until the child turns 55. `Why can't families put it into a trust fund until the child turns 18?' was the point of view of the honourable member for Werriwa. The baby bonus will be paid to eligible parents annually as part of the tax return process. Parents can choose how to spend their baby bonus. In a democracy this is a fair and appropriate way to go. However, as part of a package of superannuation measures the government took to the election, it will allow the baby bonus to be contributed to superannuation. Allowing the baby bonus to be deposited in superannuation provides a further choice for people caring for children, and who can oppose that choice? I do not know how the Labor Party can possibly claim that the choice the government is providing is somehow inequitable.

The honourable member for Cunningham claimed that high-income earners who may receive $2,500 will benefit five times more than low-income people who will receive only $500. That was a thread running through the speeches by a number of opposition members. The facts are that women on incomes of around $53,000 or more will have their baby bonus capped at $2,500 per year. However, if they remain in the work force after the birth of their child, they will have their baby bonus reduced in proportion to the income they earn. The $500 is a guaranteed minimum. Some women who earn $25,000 or less in the year they claim the baby bonus may receive more than $500.

We also had the bizarre statement by the honourable member for Cunningham accusing the Howard government of following in the footsteps of Tony Blair, who he claimed brought in a similar policy. Isn't it amazing that the Australian Labor Party is opposing the successful political approach of the Blair government in the United Kingdom? Perhaps if the Australian Labor Party had the intestinal fortitude to follow in the footsteps of its British cousins, such as pulling itself away from the trade union movement, it may find similar support to that which Prime Minister Blair currently enjoys. But we all know that the current leadership of the Australian Labor Party is far too gutless to cut the umbilical cord. The Labor Party is where it is only because of the union movement. The Labor Party is the party of the unions. It is governed by the unions, and its policies are created for the unions. Most Australians believe that is an entirely inappropriate way for an alternative Australian government to operate.

The honourable member for Gellibrand is, I suppose, living and breathing proof that numeracy has been a major problem in the Australian community for some time, because she made the incredible comment that the calculations that are required to work out how much people are entitled to are very complex. Let us look at the facts. Let us reassure the honourable member for Gellibrand that there is not going to be great difficulty in working out the amount to which people are entitled. The Australian Taxation Office will be developing systems to make claiming the baby bonus easy. Those lodging by e-tax, for example, will simply have to answer some questions and their baby bonus will be calculated for them. For those who do not need to lodge an income tax return, the Australian Taxation Office is developing a simple two-page form. Running through the speeches of another member or two from the Australian Labor Party is this suggestion of complexity. There is not going to be complexity. What we are looking at is delivering on our election policy in a very appropriate way.

The member for Gellibrand also claimed that not everyone will get $500 each year. She said if the child is born later in the year, parents may receive less than $500. Again, I am happy to reassure my good friend the honourable member for Gellibrand. The baby bonus is pro rataed from the date of the child's birth. Those on low incomes will be guaranteed $2,500 over the five years. Where a child is born later in a year, the balance is paid in the last year. Low income earners are guaranteed a minimum of $2,500 over five years. So the ALP arguments are shown as being shallow and are simply unsustainable.

The member for Gellibrand was also worried about the fact that Treasury was involved. She said it was a concern that the Department of Family and Community Services was not involved in developing the baby bonus. The baby bonus policy, Madam Deputy Speaker Gambaro, as you well know, was a key election promise of the Howard government. It will repay to parents over five years the tax they paid in the year before the birth of their child, up to a maximum of $2,500 per year. It is a refundable tax offset. Isn't it reasonable, then, that, if it is a refundable tax offset, it should be administered by the Australian Taxation Office and not by the Department of Family and Community Services? Maybe the member for Gellibrand ought to look at the various government departments. Once she does that, she would concede that it is appropriate that it be administered by the Australian Taxation Office. It is therefore appropriate that this measure be developed and introduced by the Treasurer.

The member for Lilley also claims that the baby bonus is not available until the end of the year and will, therefore, not be of immediate benefit to families. The object of the baby bonus is to recognise the loss of income that generally follows the arrival of a first child. As I pointed out—and I point it out again and again, for honourable members opposite—it is being delivered through the tax system because, for most people, it is a repayment of tax over a period of five years. People not in the work force or those who have not paid any tax would still be eligible for the minimum amount of $500 per year until the child turns five years of age. People who are not required to lodge an income tax return may still lodge a claim for the baby bonus with the ATO. The baby bonus does not require people to estimate their income. This would add greater complexity to the measure.

The member for Lilley claimed that people who earn a little more actually get more than low income earners. Again I repeat that the baby bonus is designed to repay, over five years, the tax paid in the year prior to birth. As an equity measure, it is capped at a maximum of $2,500 per year.

The member for Werriwa said that there are better proposals available than this measure. The government simply would not agree with this. What the ALP brought forward prior to the last election was nothing short of pathetic. It was pathetic, it was a sham and it was rejected by the Australian people. This is a simple bill; it is only 12 pages long. It is not a complicated measure. The baby bonus is in addition to other measures introduced by this government to support Australian families.

The member for Werriwa also made us all wonder why the new Leader of the Opposition brought him from the far back row of the opposition to the front bench. He says he does not know anybody who understands how the baby bonus works. What an incredible statement on the part of the honourable member for Werriwa! It presumes that he does not understand how it operates and that no-one else does. In order to simplify the baby bonus, the government will base the payments on the tax payable and taxable income. These amounts are provided on the notice of assessment provided by the Australian Taxation Office and will remove the need for taxpayers to undertake complicated calculations. For parents who do not pay tax, as I said a moment ago, the Australian Taxation Office will prepare a simple two-page form.

I am very pleased to have this opportunity to elucidate this matter for the benefit of the honourable member for Werriwa and, apparently, every other person that he knows. He, like other members, criticised the ability to use the baby bonus to contribute to superannuation. I have explained that; we simply reject that comment.

We had some really peculiar remarks made by the honourable member for Sydney, accompanied by the honourable member for Lilley. The honourable member for Lilley said that the baby bonus does not encourage families to have subsequent children. The member for Sydney said that the baby bonus will not have the effect of increasing the birthrate. Sure, Australia has a major problem in that we have a declining birthrate and an ageing population, and, like everyone else, the government would like to see more Australian children born, but the aim of this policy is not to boost the Australian birthrate. If that happens as a by-product or consequence, that would be wonderful, but it really is strange to suggest that the aim of this policy is simply to boost the Australian birthrate.

The baby bonus is designed to recognise that one of the hardest times for families is the birth of their first child. However, as a transitional measure, the baby bonus will be available to families who have children who were born on or after 1 July 2001. So I am pleased to be able to clarify those matters for the honourable members for Sydney and Lilley.

The member for Sydney referred to parents who were outside the tax system and claimed that they would have to submit a tax return and may not take up the baby bonus. I pointed out that parents who do not normally lodge a tax return will be able to apply for the baby bonus through a simple two-page form and will not have to complete a full tax return. This form will be available through the Family Assistance Office and the Australian Taxation Office. The honourable member for Sydney will be pleased to know that communication campaigns are being developed for hospitals, health care providers, et cetera, to educate people outside the tax system.

The member for Shortland claimed that those who need the money the most will receive the least and that high income earners will get the most. Various members opposite claimed that the baby bonus does not adequately compensate people for having children. The measure is not about compensation for the cost of raising a child; it is designed to repay the tax paid in the year prior to birth. Members opposite should at last appreciate that.

The member for Shortland, who seems to be one of the last old-time socialists in the House, is concerned that baby bonuses are to be spread over the five years. The baby bonus effectively allows a parent to pay tax as if their income before the birth of the child was spread over up to five years of the child's life.

The member for Fremantle queried whether the baby bonus penalises mothers who returned to work. The baby bonus is intended to recognise the loss of income that generally follows the birth of a child when one parent may give up work or reduce their hours of employment. Certainly, while people who go to work might have the baby bonus slightly wound back, at the end of the day people who return to work part time will still receive benefits under this measure.

The member for Lilley actually claimed that the bill before the House will encourage families to delay having children so that they can maximise their family bonus. I think that is amazing, and it is interesting that the member for Fremantle saw through that ludicrous statement made by the member for Lilley when she acknowledged that it is unlikely that parents would delay the birth of their child to take advantage of the baby bonus. That is a commonsense proposition put forward by the honourable member for Fremantle, in clear contrast to the utter tripe uttered by the member for Lilley, who stated the exact opposite. The Labor Party is unable to form a common view on this legislation. It is another example of the shambles that the opposition has become under the current opposition leader.

The government always supports Australian families. That is why we like to keep mortgage interest rates low. That way, families can afford to buy their own homes. That is why we announced extra support for families with the baby bonus. This is practical, direct assistance with the cost of raising children. Before the 1996 election, the Liberal and National parties announced the family tax initiative to increase the tax free threshold for families with children and to provide additional benefits for single income families with one child under five—we delivered. Before the 1996 election, we said that we would make it easier for people to take out private health insurance—we delivered with a 30 per cent rebate. In 1998, we said we would introduce a new system of family tax benefits, worth another $2 billion a year— we delivered. We said we would cut income taxes so that people on incomes up to $50,000 would pay a top tax rate of 30c in the dollar—we delivered. We said we would provide a $7,000 first home owners grant to assist home buyers with the purchase of a new or existing home—we delivered. Then we went one better by introducing a $14,000 grant for new home buyers and now a $10,000 grant.

Under Labor, mortgage interest rates were 10.5 per cent. Today they are at 6.05 per cent, the lowest since man first walked on the moon. For a family with a mortgage of $100,000, this represents a saving of $4,440 a year, or $370 a month. Relative to the 17 per cent peak in interest rates under Labor, that same family is saving $912 a month, or $10,950 per year. That is putting money directly back into family budgets and taking the pressure off. Now, once again, we are delivering with the baby bonus. This is targeted help for hundreds of thousands of families. We expect that around 245,000 mothers and their families will benefit from the baby bonus in the first year and that eventually it will deliver benefits to some 600,000 families at any one time.

This is implementation of a solid policy that only this government has the credentials to deliver. We do not just bleat and whine about Australian families the way those opposite do; we do not just talk about Australian families and their needs; we deliver. We are proud to deliver and we are proud to deliver this key election promise of the Howard government. I commend this bill to the House and on behalf of the government utterly reject the second reading amendment moved by the honourable member for Werriwa on behalf of the Australian Labor Party.

The DEPUTY SPEAKER (Ms T. Gambaro)—The original question was that the bill be now read a second time. To this the honourable member for Werriwa has moved as an amendment that all words after `that' be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.