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Monday, 21 June 2010
Page: 5918


Mrs HULL (4:37 PM) —I rise today to speak on the Tax Laws Amendment (2010 GST Administration Measures No. 3) Bill 2010 and take the opportunity to concentrate on one component of this bill. I begin by referring to my media release of 29 September 2006 when I was a member of the Howard government. I was ecstatic at being able to release this information, because a plan that I had worked on for so very long had started to unfold. It was not a panacea, it was not going to rebuild the lives of people caring for disabled children in a flash and it was not going to be the answer to everything; but it was the beginning of an understanding that we had to provide some mechanisms to enable parents to prepare to look after their disabled children. These children may have been born with intellectual disabilities or physical disabilities. They may have acquired disabilities through brain tumours, accidents or simple things such as a cricket ball or cricket bat hitting them in the head and rendering them brain damaged. They may have had illnesses that had afflicted them with a disability from then on. But in each case the lives of the parents of these children are in turmoil as they try to determine how to prepare to care for their disabled child through their adult lives when the parents themselves become aged persons.

I concentrate today specifically on schedule 4 of this bill, which centres around changes to the taxation of the unexpended income of special disability trusts. I recall that I put out my press release of December 2006 after I had lobbied the former Minister for Family and Community Services, Kay Patterson, over an extensive period, had talked to many parents of disabled children and had listened to the advocacy of Judy Brewer—who was the wife of the Hon. Tim Fischer, the former Deputy Prime Minister of Australia—on the needs of parents with disabled children. We wanted to ensure that they could be cared for in the future by ring-fencing property and allowing people to save into a trust while not being penalised for doing so. The idea was that they could put money, property et cetera into a trust and not be penalised by losing their disability support through having an income tax penalty applied to them. I lobbied very hard on both this and a system that could be applied either at birth or at any time afterwards to insure families in their management of the care of disabled children over many years.

I was not successful at the time in getting a national insurance scheme up and running, though not for want of trying. However, we were successful in putting in place special disability trusts. I recall welcoming the fact that families were able to start to prepare for the future care of their disabled sons or daughters through the special disability trusts created at that time by the Australian government. I talked about the measure that would enable families to make preparations financially to provide current and future care and accommodation for a son or daughter with a severe disability without being affected by social security means-testing. I talked about the fact that they could place up to $500,000 in a special disability trust and not have it impact on the beneficiary’s income support, such as disability support pension or the gifter’s pension if they were of pension age. I talked about needing to support both people with a disability and the people who care for them.

I concentrate today on a submission that was sent into the discussion paper on this issue. I will not identify the author of this submission, but it puts everything into context and determines the real issues confronted by parents who are facing the lifelong care of a child. This submission talks about the problems associated with one particular family, and it was so well put together that I could not do better than to come into this House and quote extensively from it. I think it clearly picks up many of the issues.

I welcome the changes in this bill. I think they are good changes. They are the beginning of a recognition of the issues that confront our families, but they do not go far enough, and I am acutely aware of the fact that there should have been changes made by the last government. I am not saying that this government is responsible for making all the changes. I am acutely aware of that, because I lobbied hard for changes while we were in government, and I am just adding that the change needs to continue to happen.

In this submission, the author—who, as I said, shall remain nameless because I do not believe it would be correct to put their name in, although the submission is public—says:

Thank you for the opportunity to comment on the Exposure Draft. At the outset I would like to make the following comments—

and I have been in touch with this person on numerous occasions.

  • The change from taxing the unexpended income within a SDT—

a special disability trust or SDT—

from 46.5% to the beneficiary’s marginal tax rate is a very significant and positive step—

which I absolutely agree with—

that will be appreciated by those who have established or those who are contemplating setting up a SDT.

  • However, the above is only one step forward. This is clearly stated in the Exposure Draft at 1.9 page 2 ie.

1.   9   These amendments remove one of the tax issues identified by the Senate Standing Committee on Community Affairs and are designed to ensure that taxation is not a disincentive for the establishment of a SDT.

There are many other disincentives relating to tax issues that have not been stated in this document or whether they will be considered or addressed in the future.

The author goes on to say:

One example is the CGT impost of placing a residence, however meagre, into a SDT. This is particularly the case for elderly couples who have been extremely frugal during their lives to save sufficient to house their severely disabled son or daughter. Many have been caring for a disabled offspring in excess of 40 years, as in our case.

…            …            …

Data provided by FaHCSIA in September 2005 gave an initial estimate of 5,000 trusts to be established by 2010 however, very few trusts have been established and these are by carers with an average age of 78 years, which is indicative that the SDT was an option of last resort before they themselves lost legal capacity or met their demise. Currently the only means for elderly parents to avoid the substantial financial impost of CGT on placing a residence in a SDT is through their death, whether that is brought about by natural causes, tragic accident or suicide. In the press release to herald the Exposure Draft, the Assistant Treasurer, Senator Nick Sherry and Parliamentary Secretary for Disabilities, Bill Shorten MP stated:

‘This Bill will rectify an inappropriate taxation outcome and further assist immediate family members and carers to make private financial provision for the care and accommodation needs of people with severe disability.’

The author goes on to say:

The question arises then, what other inappropriate taxation outcomes are a disincentive hindering parents from establishing a SDT?

It is worth noting that the only change to the administration of SDTs prior to the 2009/2010 budget was to permit agencies/institutions to combine aids and accommodation expenditures. This was possibly sanctioned specifically for accounting/auditing purposes. It appears that very little thought has been given to the concept of social inclusion within the community in the legislative framework of SDTs. Many severely disabled people with complex health problems and needs may not survive within the confines of an agency’s institutional care and accommodation. In the case of our 43 year old severely disabled daughter, she would not be alive today if she had been subjected to such ‘care’. Currently, after at least two years we are still waiting for approval to be granted conditions for inclusion in a SDT that are outlined in Guidelines 2006, subsection 2.8 ( 1 ).

In raising this issue and quoting extensively from the submission outlining this family’s plight, I wanted to thank the government for making some changes to this legislation that will ease one very small part of the burden for carers who are trying to make arrangements for the future care of their children. But I also ask the government to continue to make these changes—to continue to understand that these changes are sometimes the most important thing that a carer who is an ageing parent can hope for when they care for a disabled ageing son or daughter.

The pure fact of special disability trusts being established, I thought, could be the beginning of monumental change in the future. As I said, when they were established, I saw their limitations; I was not advocating that they were the best thing that had ever happened to families struggling through such a crisis in their lives, but I did feel proud that we had made movement on it and that people were being recognised for the pain they have suffered and for their endurance. They have been asked to accept these things without receiving true and proper recognition. When I speak on the carers bill, hopefully later this week, I will quote extensively from a book that has been released, which I have been fortunate to receive a copy of, detailing the feelings and experiences, the fun and the pain of dealing with someone with a severe disability. I am looking forward to making that speech.

But in this speech I want to appeal to the minister: please, this is a good movement, but let us look at capital gains tax; it should not apply. You should be able to place a family home into a disability trust. You should be able to secure and ring-fence that home. That is what I thought was the intention of the special disability trusts. I do not know how I missed the fact that it would attract capital gains tax and that this would be a major impediment for people wanting to take this up.

If you could ring-fence and put your home or a future home for your child in the trust and earn income from it and leave that in the trust and not have tax implications or capital gains implications for it, imagine how much relief you would have in actually being able to provide for the future care of your child should something happen to you and should you not be the one who is able to provide that care. One of the carers in my region is 93 years old, and he has been caring for 70 years full time, 24 hours a day, seven days a week. There seems to be no real answer to how we could structure an appropriate vehicle to enable families to adequately provide for the future of their child.

In speaking to this bill, I want to say to the government: thank you for making a small change. We appreciate it. The people of Australia who have disabled children and who want to enter into a special disability trust thank you as well. But I do ask you not to say: ‘Well, we’ve done something there and that is all we need to do.’ It is not all we need to do. Regardless of who is in government and who runs this country, we have so much to do—and it begins with removing things like capital gains tax and implementing things like a national insurance scheme that people can pay into in order to care for their children.

I will continue to raise this before I leave this parliament. It has been one of the things that I have advocated most for and railed against in this parliament. I feel that the recognition of carers with disabled children is still far from top of mind in any government that I have witnessed since being in this place. I would like to see it far more top of mind and I would like to see more effort put into trying to resolve the issues of carers of disabled children and particularly those carers with ageing disabled children. I thank you for the opportunity to speak.