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Tuesday, 16 September 2003
Page: 20216


Mr SIDEBOTTOM (8:49 PM) —As was mentioned earlier, this side of the House supports the Family Assistance Legislation Amendment (Extension of Time Limits) Bill 2003, but we do so with amendments, as outlined by the shadow minister earlier in this debate. In effect, we say that we believe the family tax benefit system is flawed. As an opposition, we have sought to highlight the anomalies that exist—anomalies that have existed in this system since its introduction.

The bill before us amends the family tax benefits rules, which were introduced in July 2000. The family tax benefit requires most eligible families to provide a forward estimate of income or, more accurately probably, a guesstimate of income to receive family payments on a fortnightly basis. Approximately 2.1 million families receive payments each financial year. Of these, approximately 95 per cent receive payments fortnightly. The system provides that families who overestimate their annual income receive what is termed a `top-up' payment when they lodge their tax return. Their top-up is equal to their total entitlement. About 140,000 families receive their payments as a lump sum payment at the end of the financial year.

While tax legislation normally provides individuals with the opportunity to amend their tax returns over a period of four years, the family tax benefit rules currently only allow for topups to be paid within 12 months of the financial year in which the family was eligible to receive payments. That limitation has meant that 25,000odd family tax benefit customers who, for instance, lodged their 2001 tax returns after 30 June 2002 and/or whose partners lodged their 2001 tax returns after 30 June 2002 were denied something like $37 million, or an average of $1,477, in topups of their 200001 FTB entitlements. In other words, they did not get them—zilch, zero; they were entitled to them and they did not get them—whereas under normal tax legislation you have up to four years to amend your tax returns. Anybody would regard that as inequitable and pretty much an anomaly in the flawed family tax system. That is the basis of the bill before us—to fix that anomaly.

Labor has been critical of this one-year limitation on the payment of top ups. However, it is our belief that it is only one of the smaller anomalies within a system that has resulted in nearly 800,000 Australian families accruing debts totalling nearly $650 million on top of debts they already have from 2000-01. A further 643,000 families are expected to incur debts from underestimating their incomes for the 2001-02 financial year. Currently, I understand, families remain in debt to the value of $373 million. This bill seeks to take this into account and amend the government's FTB rules introduced, as I mentioned, in July 2000. The bill also makes consequential amendments to the Income Tax Assessment Act 1997 to enable families to use the services of a recognised tax adviser from 1 July 2003 to 30 June 2004 to make past period claims and to continue to be able to claim the adviser's fee as a taxation deduction.

The government estimates approximately 35,000 families will benefit from the changes to the top-up rules. Amen and thank you very much; that is 35,000 families who will at least get some equitable treatment at last. These are the families who missed the 2001-02 deadline to receive a top-up. Approximately 10,000 families in this group receive payments fortnightly. The remainder are families who would have been eligible for their full entitlement through a lump sum payment but who had not lodged their tax returns within 12 months. The extension of the top-up deadline, as I mentioned earlier, is a small but positive improvement in the family tax benefit regime. However, it is our belief that it is likely to predominantly benefit better-off families within the system who can afford to claim payments at the end of the year. We do not believe the changes do anything of note to address the problems faced by the majority of families, who require and claim their family tax benefit payments fortnightly.

I have spoken in this House on about four occasions on the family tax benefit scheme. I have sought, as an opposition member should, to raise a number of the anomalies associated with this system and to bring the individual cases of my constituents to this House, and also to the minister through correspondence. That is our job and that is what we will continue to do. We have had a minister who has fundamentally denied most of the flaws in the system, and that is why we note these in our amendments to this bill. These were also outlined earlier by our shadow minister, the member for Lilley.

But I will take you back to August 2002, which is relevant to this. I put out a newsletter in my electorate with an article entitled, `Family tax grab'. What really angered a lot of people—and I am absolutely aghast if members on the other side do not have heaps of examples of constituents talking to them about the flaws in the system—is that people in the main tried to do the right thing by the family tax benefit scheme. They guesstimated and they estimated but, in the nature of work in our world today, things are not consistent. People go in and out of work; they become casual or part time, or they are restructured or downsized—all these things go on and people try to do the right thing. But what really upset people was that they made honest estimates, they contacted Centrelink with the changes in their circumstances and they were under the misapprehension that when they alerted Centrelink to these changes there would be an automatic change—Centrelink would adjust the formula and they would be paid accordingly more or less family tax benefit, as the case may be. The trouble is, of course, that did not happen. It did not happen and they got very rude shocks when they came to the end of the financial year two years ago. A lot of these families were assured by their accountants that their tax returns would not be raided to pay these honest debts, but in actual fact they were raided. So there they were, on tight family budgets, with moneys that they had budgeted for hit with these raids.

Something else that really got a number of people angry was that, if anyone on this side raised any comments about this, we were regarded as supporting a system that encouraged people to be dishonest. The current Special Minister of State, Senator Abetz from Tasmania, accused the Labor Party of supporting people trying to promote a dishonest system. I actually had a family in my electorate write to me, and I quote:

It is totally offensive for Abetz to label myself and my wife Lyn dishonest. I find Senator Abetz's comments completely offensive and out of touch. Having rung his office and being given the run around—

that is not unusual when you are dealing with the Special Minister of State—

I now wish to raise my concerns with you.

And that has been the history of this family tax benefit scheme. It is not only flawed, but it is offensive to people who try to do the right thing. At least this legislation sets out to give legitimate top-ups to families who deserve them, who have done the right thing. But why has it taken us another financial year to get around to doing that? This system is flawed; it needs to be looked at and we, on this side, will continue to point out the anomalies. Mr Speaker, now that you are with us, I look forward to continuing my part in this debate tomorrow.

Debate interrupted.