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Wednesday, 27 May 1987
Page: 3382

Mr HOWE (Minister for Social Security)(11.05) —I move:

Clause 15, page 7, lines 13 to 27, omit proposed new subsection 99 (7), substitute the following subsection:

`(7) Where:

(a) subsection (3) applies to a person;

(b) the person makes a request in writing in accordance with a form approved by the Secretary that this subsection apply to the person; and

(c) the taxable income of the person for the year of income following the last year of income of the person is, or is likely to be, at least 25 per cent less than the taxable income of the person for that last year of income;

that following year of income shall be used in calculating the total amount of family allowances payable to the person under subsection (3) during the period commencing at the beginning of the first family allowance period after the request is received by the Department and ending on 14 January in the calendar year following the calendar year in which the request is so received.'.

The amendment is designed simply to ensure that the income test on family allowance, which as a general rule is based on taxable income in the financial year ending in the previous calendar year, may in some circumstances be based on the current year's taxable income, that is, where family income is reduced by 25 per cent. This provision protects families that have suffered such a fall in income against reduction or loss of family allowances. The shadow spokesman, the honourable member for Barker (Mr Porter), referred very extensively to the issue of income testing of family allowances. The Opposition has to make up its mind. After all, it is suggesting that the Government needs to make very substantial cuts in relation to public expenditure. By whatever figure we choose, the cuts in public expenditure proposed by the Opposition, or the several Opposition parties in this Parliament, are very substantial indeed.

The family allowance is the one major benefit within the social security portfolio which is not income tested. It has been in the very nature of our approach to social security since the early days of Federation to apply income testing and it has been targeted. This Government has had to face very difficult economic circumstances. In those circumstances it has had to make some very difficult decisions. I concede much of what the honourable member for Barker and the honourable member for Sturt (Mr Wilson) had to say about the basic justification for family allowances. Family allowances are about equity. A substantial element of the argument, as the honourable member for Sturt pointed out last night, relates to horizontal equity. In the circumstances in which this country has been placed, and in light of the difficult decisions that have to be made, one must ask how far up the income range one should take the question of horizontal equity. This Government had to make a decision about that. It has said that where joint family income exceeds $50,000 a further adjustment of $2,500 will be made in relation to each successive child after the first child, so at the point of $55,000 a family with three children will begin to have the family allowance tapered back. That is a long way up the income range. Less than 10 per cent of families will lose the family allowance as a result of this measure. It is a measure that must be taken.

The amendment simply makes clear that in terms of this legislation we have to take account of a change in circumstances, and when there is a dramatic change in circumstances the Government will look at the current income of the family. I believe that, given the difficult circumstances and the need to achieve reductions within overall expenditure, one simply cannot argue, at least not on the grounds of vertical equity, that the income testing of family allowances at such a high threshold is in any real sense inequitable when one recognises that for the most part people within the social security system have very little additional income apart from the principal pension payment that they receive.

In the course of the debate there has been very little reference to the broader measures that are included in the Bill. It is necessary to refer to broader measures, in a sense, to put the question of the family allowance into context. Those broader measures were described by the honourable member for Melbourne (Mr Hand), who is a member on our side of the chamber, among others, as being harsh measures. I must say to the honourable member for Melbourne that, in terms of achieving the Government's economic objectives, it has been necessary to take measures which are certainly firm and which I believe are essentially fair. It is also important to say that one must contrast the base level contribution made again by the honourable member for Richmond (Mr Blunt) with the concern of the honourable member for Melbourne. No member of this Parliament has more consistently denigrated people on low incomes and more consistently pilloried and stigmatised the unemployed then the honourable member for Richmond. No honourable member has shown less capacity to deal with the broader policy issues which confront a government with respect to social security than that honourable member.

The honourable member has again, in his contribution to the debate today, done nothing at all to put the difficult problems being confronted by the Government into any longer term perspective. It is important to recognise that that is what we are about. We are not simply about piecemeal change. We are about some areas of quite significant and quite fundamental reform, particularly in the area of unemployment benefit administration and policy and in the area of income security policy for sole parents. While the honourable member for Melbourne might regard the measures as somewhat harsh, I think that he and his constituents can be persuaded that they are nevertheless fair. Indeed, some of the alternatives may turn out to be more punitive than the measures actually adopted.

I now turn to the problem of cohabitation, which is sometimes referred to as separation under the same roof, to which the honourable member for Melbourne referred. The Government has made a decision in terms of a period of six months and then a further period of six months where court proceedings are pending. The alternative to that is intrusion into the home in a way that I think the honourable member and his constituents would not want to see. There is concern on the part of the Department of Social Security and me that people might seek to avoid the impact of the Social Security Act in terms of the maintenance of their eligibility as sole parents. The Government has had to address that. It has tried to do so in a way which is fair and which is very much cleaner in terms of setting some time limits to provide an opportunity for people to sort out their affairs. It has sought to do that and, at the same time, it has provided a guide to departmental officers which will enable them to operate, I think, with greater sensitivity and sureness. In addition, it will enable people to understand much more clearly what the rules are.

The honourable member for Melbourne also referred to the phasing out of the class B widow's pension. I assure the honourable member that that measure was not taken for any punitive reasons. What we are concerned to do is to say to sole parents: `We expect you to be moving towards independence'. Therefore, in terms of the legislation we have saved, effectively, all sole parents over the age of 45 years. However, we have said to the younger groups-those under the age of 45 years: `Your expectation has to be that in the future you will seek to achieve economic independence. If you fail to achieve that outside the social security system, the safety net will be the unemployment benefit and not a class B widow's pension, where there are no dependants'. As to the other change regarding children who reach the age of 16 years, again, the income floor that will be provided, the safety net, will be the unemployment benefit.

By giving people a clear indication of where the Government is going, we are saying: `As a government, we will make every effort to ensure that sole parents receive all the assistance they need in terms of access to training and in terms of incentives in relation to restructuring of income tests'. As people know, we have introduced major changes-that is, income testing thresholds-which will take effect from 1 July. We will provide all the incentives and all the assistance we can. However, the bottom line, basically, is that we expect people to do all they can to get back into the work force and to become economically independent. I do not regard that as harsh. Every time that I have met with a group of sole parents around Australia they have said the same thing. They have said: `What we want to achieve is economic independence'. The Government is committed to taking up that challenge. We will provide the training that has not been provided and we will provide the support that has not been given in terms of access to child care places where there are government places available. Where they are not available, we will provide a subsidy in terms of private child care places. We will give priority within the Department of Employment and Industrial Relations to sole parents in a way which has never been the policy before. I do not think that that is harsh; I think that it is firm. People need to know where we are going and we are seeking to do that.

The third area which the honourable member for Melbourne went to was the treatment of unemployment benefit and beneficiaries, particularly in terms of extended waiting periods. Regarding that aspect of the legislation, what we are seeking to do is to give a very clear message to young people which is, essentially, that we do not believe that there is any future for young people being on the unemployment benefit for an extended period. We believe that young people will have to plan and seek to get into the work force while they are still at school. Young people up to the age of 21 years and above from low income families will be eligible for Austudy until the end of the calendar year, not to the point at which they leave school. We are not talking about income support for a period of about 13 weeks, but for a lesser period. The Government has also indicated that it will provide a safety net for very low income people in terms of special benefit and that it will seek to protect young people who are exposed, if you like, by the new measures. We are saying very clearly to young people, and we must say it for their own good, that there is no future on the unemployment benefit, that the unemployment benefit is not a program which exists in its own right; it is a means to an end and the end is clearly job search. The unemployment benefit is there for job search and nothing else.

The question that must be asked is: How early should we provide income support? Basically, the philosophy behind the legislation is that we do not believe that overall there is a responsibility to provide continuous income support, so that people are never without it, for people leaving school and moving towards the work force. However, we do believe that there is a need to ensure that once people have had a chance to think about their future and to test the labour market they are eligible for unemployment benefit after a reasonable time-we say 13 weeks. We are not stopping there. We are saying that once 16- and 17-year-olds go on to the jobsearch allowance, the rules change and we have a different situation. The Government will follow those young people through to ensure that every opportunity is provided so that they may enter education, training or work, or a combination of all three. In that position I do not think that we are out of line with the thinking within the trade union movement, or with many people in the welfare and education sectors who say that the fact that we have had tens of thousands of young people on unemployment benefit for extended periods of time, receiving no education, training or work experience has been extremely harsh. In the past this country has not been supportive of young people; it has been very harsh. We are able to make this move because, as part of our family policy and our income support policies, we will raise Austudy as a payment for 16- and 17-year-olds from $20-odd to $50 next year and the improved rates for people in the 18 and over age group who are in tertiary education and receiving Austudy payments have been dramatically improved. Those very substantial and unprecedented increases have laid the basis for further changes.

Honourable members must look at what the Government is doing, not in isolation, but in terms of the gradual build-up of a range of policies which have enabled us to increase retention rates in schools in a very dramatic way. Also, those policies have enabled the Government to build the basis for major training programs for young people in the form of traineeships and to move towards restructuring, in many ways, our approach to the support of technical and further education and the higher secondary area. Those measures should not be seen in isolation. Certainly, it is a shock when governments make decisions such as the decision to introduce an income test relating to family allowances. It represents change, but I suppose one of the great virtues of this Government is that it has been prepared to make changes and to respond to the fundamental reality of very serious structural changes occurring within the Australian economy. Massive structural changes are occurring.

In the period when the Opposition was in government, unemployment was left at something like 800,000. No significant measures were taken to address the problems of unemployment or the lack of a skilled work force. During that period of structural change no efforts were made to deal with the colossal problems being faced by sole parents, or to deal with the problems of transition. When the Opposition is faced with having to make its position clear for the future, we get waffle and piffle and not much else. The crass suggestion is made that somehow we can make people work for unemployment benefit and that it will not cost anything or that it will not create another round of problems.

The amendment provides for a particular aspect of the change in terms of people whose income situation changes dramatically from one year to another. It is a similar provision to that which is embodied in previous legislation with respect to an earlier income test in relation to family allowances. I commend the amendment and the Bill to the Committee.