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Tuesday, 26 March 1985
Page: 795

Senator HAINES(3.46) —The Australian Democrats will support the urgency motion which is before the Senate today. There is absolutely no question at all about the justice of the concept that there must be provision in the tax and social security systems to allow for the additional responsibilities of those with dependants. That, of course, is the nub of the motion that Senator Chaney has put before us today. The question that arises is not, I would hope, whether these provisions should exist but what the provisions should be. I suggest that that is the source of the kite flying to which Senator Chaney referred in the first part of the motion.

If we argue that there is a limited cake to be distributed by governments in the area of tax cuts, social welfare payments and so on-and listening to some Opposition members in a debate yesterday and their comments about deficits I was left with no doubt that they believe that a limited cake is available-the argument stems not from whether provisions should be made but how those provisions should be distributed. The Australian Democrats have always argued that in the case of limited funds being available, those who are in most need should have first access to the available funds. I doubt whether there is anyone in this chamber who would disagree with that. Unquestionable and beyond doubt is the fact that those in most need are families with dependent children and, in particular, pensioners and low income earners with dependent children.

Last year the Australian Democrats put forward a notice of motion indicating some areas in which we felt the social security and taxation systems could be used to improve the lot of those people in poverty and in particular those on low incomes with dependent children. Our suggestions included fairly basic things, such as increasing the child allowance for pensioners, increasing the family supplements, additional supplementary rent allowance to families whose breadwinner was unemployed, increasing rent allowances to families with children and tax equity measures including tougher provisions against tax avoiders, a tax on windfall and speculative gains, reduced income tax and increased consumption taxes except, of course, on the necessities of life, which we opposed in 1981-82 and will continue to oppose on the ground that there is no way that we can see of off-setting those costs to low income families, particularly those with children, with any formula of benefit. We costed those not excessive requests to a government which sees as a high priority income support for those in need and particularly income support for families with dependent children. It is fairly well known to most members of this chamber that in the event of there being no additional assistance provided by governments, I have expressed personal support for the redistribution of money that is currently spent on the dependent spouse rebate to family allowances. Again I say that that must be taken in the context of there being a specific and limited cake to be distributed. While I accept that it is abhorrent to have to trade off these sorts of supports, it is nevertheless a fact of life in all budgets that when somebody gets more, somebody else has to get a little less unless there is to be the massive deficit blowout that some members of the Opposition so vehemently decried in the Senate yesterday.

I share with people like Senator Chaney a commitment to families with dependent children and believe that they must be any government's top priority. As the parent of two teenage children, I have observed from some years of horrified onlooking at our budget that children are not cheap. I sometimes suspect that if people worked that out before they launched into having large families perhaps the families would not grow to the extent that some of them do. They are a huge drain, lovely as they are, on the budget of any family and, of course, the smaller the budget the worse the drain. A recent Institute of Family Studies report indicates the cost of children, and it is a substantial cost. The findings suggest a need for governments to rethink the basis on which social security pensions and benefits are made and to take a new look at maintenance awards made for children in the Family Court of Australia and magistrates courts. The media release put out by Dr Don Edgar includes this statement concerning the figures that the Institute released:

They are, however, 'basic survival' figures which cannot be challenged on the grounds of being over-generous. Any allowance which falls below these estimates is likely to mean real poverty for the child and the family concerned.

The release went on:

The study, compiled by Ms Kerry Lovering, Senior Research Fellow at the Institute, shows that basic food costs per week vary from $10.59 for a two-year old to $16.23 for an eleven-year old child. Minimal clothing purchases for children amount to a weekly average of $2.24 for a two-year old, rising to $3.67 per week for an eleven-year old.

When some additional costs are added for toys, gifts, pocket money, household provisions, heating and school trips--

all calculated, according to the Institute of Family Studies, at bare minimum figures--

the total costs per week for children range from $16.69 at age two, $21.41 at age five, $26.25 at age eight and $27.86 for an eleven-year old.

For 'middle income' families these costs range from $25.11 for a two-year old to $45.90 for an eleven-year old.

I repeat that they are per week figures. Not surprisingly, as I have observed myself, teenagers cost even more-ranging from $2,156 per annum for low income families to $3,588 per annum for medium income families. Those are not the sorts of amounts that families, particularly with large numbers of children, can afford to part with easily.

Despite all this, the tax and social welfare systems in this country tend to be skewed against families with dependent children. This includes families with a sole supporting parent, who of course does not qualify for the dependent spouse rebate since he or she does not have a dependent spouse for whom to get the rebate. Families with large numbers of dependent children are allowed a pitiful tax deduction for the education expenses of those children, and families with low income levels in which both parents must work-so that they too are not eligible for the dependent spouse rebate though they are still on very limited incomes-are not entitled to claim child care as a tax deduction since that is still not seen by the powers that be as expenditure incurred in earning an income, notwithstanding the fact that those old steadfast businessmen's lunches and so on are classified as expenditure necessarily incurred in earning an income. On the other hand, the husbands of a large number of families with no children receive $830 a year as a direct gift from the Government via that dependent spouse rebate.

If we are looking as a top priority at families with dependent children-that is what Senator Chaney indicated the Opposition was looking at, and we fully support that-and if we have a limited budget, we must look seriously at redirecting tax and welfare benefits from those who do not need them to those who do. If, for example, the nearly $1 billion we spend on the dependent spouse rebate were directed into the family allowance that allowance would double. There is no question that families with dependent children would benefit from that. An additional benefit would occur if the allowances were taxed in the hands of the recipient parent. A moment ago Senator Walsh challenged Senator Harradine to indicate just how much he earned from his family via the family allowance and Senator Harradine pointed out, quite rightly, that it is not he who receives any money but his wife. In his particular circumstance, and presuming that his wife is not in receipt of any other income, the family allowance would stay with her. High income earners, such as I would classify myself, or recipients of the family allowance who are able to take part in family trust arrangements thereby cutting back their tax payments, would have their family allowances taxed when they received them. Therefore some of that money would go back to the Government with attendant benefit if it were directed to others.

People argue-I think Senator Walsh was implying this-that the simple fact of Senator Harradine's high income should render his wife, or the wife of any other person in the same position, ineligible for the family allowance. I point out to Senator Walsh and anybody else who has that belief that unfortunately there are still families in this country in which the income earned by one spouse is not shared equitably, or in any other way, with the dependent spouse or dependent children. It is deplorable but that situation exists. If we are to look at people in need we have to bear that in mind. Senator Chaney pointed out that the family allowance was never intended to be a welfare payment but I am not sure, if we go back and look at the history of it, that he is precisely right. The family allowance was originally introduced- it was then called child endowment-under the Child Endowment Act which came into force in July of 1941. That Act provided a small payment of 50c a week for each child after the first one under the age of 16 years. There were a number of reasons for excluding the first child, including the fact that the cost of the scheme would have been doubled.

Senator Messner —Populate or perish.

Senator HAINES —In regard to the populate or perish principle, as Senator Messner points out, this payment was probably another argument for encouraging people to have larger families. The endowment was not means tested and it was available to all parents, employed or unemployed. The child for whom endowment was claimed was required to have been born in Australia or to have resided here for 12 months. There were a number of other eligibility requirements. When the scheme was introduced it offered substantial help to low income families with several children, although as the years progressed inflation tended to eat into it. On 20 May 1976 the then Treasurer of the new Fraser Government, the late Sir Phillip Lynch, announced a number of fiscal policy decisions to be introduced by his Department in the new financial year, including a scheme of family allowances designed, as he said, to improve the lot of the disadvantaged in society at a relatively slight net cost to the Budget deficit. So certainly the Fraser Government in 1976 saw family allowances as some sort of welfare payment. I think we can be forgiven for casting family allowances in that light now.

Senator Chaney refers in the first part of his motion to kite flying. He is an experienced politician and one does not have to be involved in politics for very long to know that kite flying, or what is more vulgarly called dead pig floating, is a familiar pre-Budget activity.

Senator Walsh —I haven't heard that before. Is it a vulgar Adelaide term?

Senator HAINES —It is a good South Australian expression. I would have thought most South Australians were familiar with it from the State Government area. Perhaps it comes from my involvement in State politics. However, I agree with Senator Chaney that it is lamentable that these sorts of stories are floated by whoever sorts them out; they cut right across the spirit of the proposed tax summit. All parties, all groups, have some idea of what they want as far as tax and social welfare concessions are concerned. The Liberal Party has made no secret of its commitment in some areas to income splitting and I have indicated today some of our commitments. Nevertheless, in general these sorts of things do get about. They have to be accepted but they should not be used to sink the tax summit. As I said earlier, the Australian Democrats fully support the urgency motion before the Senate.