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Wednesday, 9 May 2012
Page: 4262


Mr FLETCHER (Bradfield) (10:51): I am pleased to rise to speak on the Family Assistance and Other Legislation Amendment (Schoolkids Bonus Budget Measures) Bill 2012. Let me start by noting that the process under which the House of Representatives is being asked to consider this bill is a deeply deficient one. The first official announcement of this measure was in the Treasurer's budget speech last night. We now have a bill which was introduced this morning that was only available to members of the House to review from 9.30 this morning. The second reading has been brought on immediately and members of this House, the people's house, are being asked to consider the merits of a bill which extends for some 55 pages and contains some extremely complex provisions with very little notice. That is poor process and it could only lead one to doubt the motives with which the government brings forward this bill and its motives in wanting to have it considered in such a rush. It is hard to avoid the suspicion that the government is eager to avoid detailed scrutiny being brought to bear on the measures contained in this bill.

In the brief time that I have available to me I want to make three points: firstly, that the measures implemented by this bill are poorly designed measures and they do not do what they say they do; secondly, that what is really driving this bill, and the measures contained in it, is politics. This is pure politics, and is about seeking to offer additional compensation for the effects of the carbon tax and the increase that will cause in the cost of living faced by millions of Australians; and thirdly, that families would be much better served by having a better government, lower taxes and less debt to be repaid, including debt that will inevitably fall upon the shoulders of the very children whose families are to receive payments under this bill.

Let me turn first to the proposition that what we have before the House this morning is a poorly designed measure that does not, in fact, do what the governments says it is going to do. The stated intention of this measure is that it will pay for expenses like school uniforms, school shoes, textbooks, camps, excursions and extracurricular activities, such as music lessons. That is what the minister told the House this morning in the second reading speech. The reality is that this money can be spent on whatever the recipient chooses to spend it on. If this is a measures designed specifically to target expenditure associated with the cost of having a child in primary school or high school it is a very poorly designed and poorly targeted measure. Curiously, it replaces a measure designed to achieve the same outcomes—that was much better targeted. Again, one can only wonder about the government's motives in introducing this change.

To be eligible to benefit under this measure, a number of conditions need to be satisfied. The first is that the family must be eligible for Family Tax Benefit Part A. But the class of eligible families goes beyond families who have children in primary school or high school because Family Tax Benefit Part A is available for those who, first of all, meet the income test and, secondly, have a child up to the age of 20 or a dependent student within the family up to the age of 24. In other words, if this measure is to be effective in being targeted only to primary and high school children there are additional eligibility conditions which will need to be met. The family will need to demonstrate that here is a primary school or high school aged child in the family.

There are reasons to be uncertain as to whether the eligibility mechanisms have been adequately thought through. We are told, in the minister's second reading speech, that the design of this scheme means that parents or eligible recipients do not have to collect a pile of receipts. It is paid in full and up-front. It is money in your pocket. The minister's second reading speech says very little about the mechanisms by which eligibility will be established and very little about the inevitable possibility that this money will be paid to some families who do not, in fact, meet the eligibility criteria because although they are eligible for Family Tax Benefit Part A the relevant child is not a primary or secondary school student.

In this regard, it is interesting that when you delve into the bill it says, amongst other things—under proposed section 35U(c) of A New Tax System (Family Assistance) Act 1999—that the bonus can, in some circumstances, be paid even after the child has left school. In other words, the very drafting of the legislation acknowledges that there is a problem is trying to determine who is eligible to receive this bonus. The solution is apparently a quick fudge: we will allow payment even if the child has left school.

There are other provisions of the bill which are equally concerning when it comes time to consider how well designed and targeted this scheme is. Clause 24 provides that the minister has the power, by legislative instrument, to determine a scheme under which ETR payments—education tax refund payments—be made to persons in particular circumstances. This bill, in other words, very deep within it, contains provisions entitling the minister, by regulation, to expand the circumstances under which money is paid.

That is just one piece of evidence amongst many that this is a poorly designed and hastily cobbled together package of measures, and we all know the underlying political reason for that. It is that the government panicked, late in the day, as it was developing this budget. There was not sufficient compensation for Australians who are going to face cost-of-living increases as a result of the introduction of the carbon tax. So they have come up with a new way of throwing money at people and they have dignified it with the term 'schoolkids bonus'. We know from past experience of similarly hastily put-together and poorly designed cash-splash schemes by this government—such as the $900 cash bonus in the Rudd years of this government—that such schemes are rife with problems. Money gets pumped out to a whole range of people who ought not to have received it, even under the rules of the scheme. That is an inevitable consequence of a scheme being cobbled together in a rushed fashion to meet political objectives.

We have heard claims from members opposite this morning that the policy objectives here are worthwhile and important and that this is in some way a better designed and targeted scheme than the one it replaces. But even a moment's consideration suggests that that claim cannot be substantiated. There is no attempt to link the amount that is paid to the actual expenditure incurred. In other words, the amount is paid regardless of whether the child goes to a school where the uniform costs $50 or the child goes to a school where the uniform costs $250, and regardless of whether the child does sport and music, and incurs fees in doing so, or does not. There is no linkage at all between the amount of the schoolkids bonus and expenditure actually incurred by the family in supporting the child in his or her education.

It is a bizarre approach to policy to say, 'There was previously a tax rebate which was payable for a defined objective if the taxpayer provided evidence of having spent money in the designated areas but we are going to replace that scheme because not enough people claimed under it.' The government is saying: 'Not enough people wanted to claim money from the government. Something must be wrong; we're going to fix that up by replacing it with a scheme which has no restrictions and no requirement to demonstrate eligibility, at all.'

Economists speak of 'revealed preference'—that is to say, you work out what it is that people want to consume based upon what they actually do. If people have chosen not to make a claim it is a pretty good inference that that is because they did not need the money or they made a judgment that the time incurred in gathering the documentation and making the claim was time that could have been spent more productively doing something else. But that is not good enough for this government because it is determined to push money into the pockets of people even if, to date, they have shown no desire to make a claim. The consequence is that we have moved from having a measure which was well designed and well targeted at education expenses towards a generalised cash splash.

The government's arguments on this point are completely threadbare when you give the matter even a moment's thought. If their true objective was to make it simpler procedurally for parents to obtain this money to use for the specified purpose, there are a range of alternatives they could have considered. They could have considered, for example, a voucher scheme under which you are given a certain amount of money which can only be spent with specified suppliers. You could be given a voucher which could only be spent with people who make and sell school uniforms, with providers of sports and music lessons and so on, or with the school itself, which will often be the one which is charging the extra fees. The point I make is this: there are a raft of other policy designs which could have been used if the government was genuine in wanting to achieve its stated objectives. But the reality is that the stated objectives are merely a smokescreen for the government's true purpose.

The second point I want to make today is that this is purely about politics. This is a measure which is designed to deliver further compensation for the cost of the carbon tax, because the government knows, despite its protestations, that the carbon tax will materially increase the cost of living for millions of ordinary Australians

The Treasurer told us last night in his budget speech that families will not pay the carbon tax; it will be companies that pay. If that were true there would be no need for compensation. But the reality is, as the Treasurer either knows or ought to know, there is a well-established distinction between the legal incidence of a tax and the economic incidence of a tax. This is a tax the economic incidence of which will fall upon all Australians. This is pure politics designed to try and soften the blow of an ill-judged carbon tax.

The Treasurer and the government are desperate to ram this measure through quickly because they are desperate to get the money out before 30 June. Amongst other things, we know that the true cost of this measure in 2011-12, according to the budget papers, is $1.32 billion. If that money were to be spent in the 2012-13 year the consequence would be that the Treasurer's wafer-thin surplus would disappear almost immediately. So it is politics that is motivating the government's desire to move to this supposed new scheme. It has nothing to do with the policy merits or otherwise of the existing education tax rebate scheme.

The third point I want to come to, in the brief time I have remaining to me, is to argue that what families deserve is a better government, lower taxes and less debt to repay. Of course, if we could all have an extra $820 in the pocket, which did not cost us anything to get, that would be wonderful and we would all sign up for it. But that is not the proposition on offer. This $820, far from costing us nothing, is going to cost us all a lot of money. The people who will end up paying the most for it are the very schoolchildren purported to benefit, because in years to come they will be the ones repaying this government's debt. That is why we oppose this ill-judged measure.