Senator MARK BISHOP (3:14 PM) —I rise to take note of responses to questions by Senator Vanstone and to shift the discussion from the entitlements of those in our community who are better off—that is, company directors—to those in receipt of family assistance payments. At the outset, I make the point that any shred of credibility that the Howard government thought it had on family policies has been stripped away with the Commonwealth Ombudsman's special report into family and child-care benefits entitled Own motivation investigation into family assistance administration and impacts on Family Assistance Office customers. While the government dithers over paid maternity leave and new policies to help young families, it refuses to address the mess that is the current system. In its first year of operation, one in two families received the wrong payment and one in three had debts averaging $800. In the second year of operation, which sees the government denying families top-up payments, tax returns have been stripped and around 600,000 families who have played by the rules will again get caught. The Ombudsman's investigation has slammed the government's family payment system and admits that, without fundamental policy changes, it will continue to trap families in debt. The report attacks the estimation rules at the heart of the family payment system, arguing that they `inherently result in a large number of debts and that many debts are significantly high', that they `are affecting many lower income families' and that `debts may be unavoidable'. The Ombudsman concedes that, even if his recommendations are implemented in full, `the scheme is likely to continue to result in significant numbers of unavoidable debts for families'.

Minister Vanstone clutches at a thread— that is, the systems adjustments announced by the Prime Minister in September last year. The Prime Minister was forced to admit then what the Ombudsman clearly points out now: tinkering will not substantially reduce the number and impact of debts. The Prime Minister admitted that around 400,000 families would continue to be slugged. That is why the Ombudsman has called for a fundamental rethink. The Ombudsman's report is highly critical of many elements of the current system which the government has refused to address. He recommends that the government abandon its controversial up-front stripping of tax returns. He argues that it should extend current provisions relating to waiving debts that arise from administrative error. Currently, families must prove not only that the government has messed up but also that they are suffering severe financial hardship. This is just a tricky way for the government to avoid responsibility for the administrative problems that permeate the entire family payment scheme.

The Ombudsman also criticised the current limitations relating to top-up payments which saw 25,000 families denied $30 million in payments last year. He has criticised the government's policy in relation to shared care which allows one parent to claim a proportion of family payment at the end of a tax year. The Ombudsman made it clear that he considered it unreasonable that one parent can make a retrospective claim that has the effect of putting the other parent into debt. When Labor warned that the government's shared care rules would result in debts and acrimony between separated parents, Senator Newman, the then Minister for Family and Community Services, promised to evaluate the provisions in the family payment system after its first year of operation. Today it is clear that this never happened. Through laziness or sloppiness, the review was never commenced. So the families who rely on payments to see them through each week have to bear the brunt.

Finally, the Ombudsman points out that family payment rules governing families of young people who are making a transition from school to apprenticeships or work are unfair and that a parent can incur a substantial debt as a result of an unplanned change in a child's circumstance. One dollar of income over the threshold earned by a young person can turn a year's worth of family payments into a massive debt. Surely, that is not the way to support families who have a child trying to make the transition from school to employment. The coalition's family payment system is fiscally and socially irresponsible. Minister Vanstone takes home a nice salary of—(Time expired)