Senator HARRADINE (2:30 PM) —My question is to Senator Vanstone, the Minister for Family and Community Services. What does the government think about the Centre for Independent Studies identification that families with dependent children generally need to make about twice the average weekly earnings before they start to rise significantly above welfare levels? What is the government's position on recommendations from some economic modellers that one way to overcome major anomalies in the taxation system which work against families is to establish tax thresholds based on the number of people actually dependent upon that income? Given Australia's declining fertility rate and the situation of that unfair tax treatment of families, what action is the government considering for the May budget, or even before the May budget, which will provide a more family friendly taxation policy?

Senator VANSTONE (Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women) —I thank Senator Harradine for the question. We all know his longstanding interest in issues relating to families and the income available to them. Can I say that I have not looked at the study myself, but the advice I am given is that the study makes a mistake in making that assertion. But I will come back to you, if I may, on that when I have had a look at the basis on which it makes it. I think the advice I have is itself based on the statement that family tax benefit is not a welfare payment. I would probably say in response to that, `Look, that is a moot point whether you call it a welfare payment or not,' but it might be quite relevant to whatever formulas the centre has used to come to that assessment. So in a sense I am saying to you: let me have a further look at that report before I give you a final answer on it.

It is important to recognise that family tax benefit is available to people who are on what everyone would agree are strictly welfare payments and to other families. So in that sense it is not restricted as a welfare payment in the same way as others are. People on Newstart or the parenting payment can get it, as Australians in the broader community can. It is a recognition of the costs of bringing up children.

Senator Harradine, you ask about proposals to acknowledge in the tax thresholds the number of people who are dependent on that particular income. I think there is a problem with that proposal, and the problem is that it, generally speaking, benefits the rich more than people on lower income levels. It certainly offers no benefit whatsoever to people who are not in a position to be paying tax, and I think in that sense it could be said to be regressive. I believe the family tax benefit is a much more direct and much fairer and easier way of doing what some propose to do through tax thresholds. In my early days in parliament and even before I got in, I was involved, as many women were, in discussions about income splitting. I think that the family tax benefit we have provided is a much fairer way of helping families. As you would know, it focuses on the income of the family, so it is a variable payment depending on the income the family has got. I support that element of the policy because I think people on lower incomes should get more help than people on higher incomes. The other aspect is that it varies according to the number of children in the family, and I support that because I think people should get assistance based on the number of children that are dependent on them.

We have got a very friendly family tax system. Since the introduction of family tax benefit, which, as we know, maximises choices for families, if averages mean anything I think we can say on average families are $40 better off. I am reluctant to use that, though, because it does not highlight how significantly better off lower income families are in a relative sense. In short, I think this system we have introduced is the best system. It is a better one than some people recommend by fiddling with tax thresholds because we are able to help all families on a range of incomes with a range of number of children.