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Wednesday, 4 December 2002
Page: 7153

Senator STEPHENS (2:57 PM) —My question is to the Minister for Family and Community Services, Senator Vanstone. Will the minister confirm that, between now and Christmas, approximately 140,000 Australian families will get a family payment debt letter or have their tax stripped? Can the minister confirm that, on the basis of reconciliations to date, over 600,000 families will incur debts—only a tiny reduction on the 670,000 families in the previous financial year? When is the minister going to make real changes to the system to end the debt trap?

Senator VANSTONE (Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women) —I thank the senator for her question. Senator, you ask me for a calculation for between now and Christmas. I have not done a calculation from today's date versus a week ago or two weeks ago. In any event, the rate at which it happens is not what is at issue; it is the proportion that is at issue. So I do not really know why you put in a rate question. But, in any event, there will again be some people who will get overpayments in the second year of operation of a new tax system for families that put $2 billion more into the pockets of families and that aligned the family benefits with the tax system. Most people, including on your side of the chamber, understand how the tax system works—namely, that some people at the end of the year get a cheque and some get an assessment saying, `You've got to pay more.' This system works on the basis where you have an annual entitlement that at the end of the year families in the same circumstances would get the same amount of money. We think that is fair. Apparently, you have some other view, but we think that it is fair to say that at the end of the year families with the same income and the same number of children of the same age should get the same amount.

Some people—most people, in fact—obviously prefer to take the money during the year, and we pay them on their estimates of income. Some people have underestimated their income to the extent that they have then had an overpayment. However, it is important to note—I had better not say `none' because there is always an exception somewhere, so let me put it another way—that everybody with an income of up to around $30,000 has paid the maximum rate. So for people on low incomes the question of whether they have got the assessment of their income right does not come into play. It is only people who have incomes over that amount who might have some concern. Then there is a second minimum rate level—another income area higher up the scale— where people are paid a flat rate, and then it starts to cut down.

I have to tell you, Senator, that one of the most depressing things I have to do in my office is to write letters back to people who have complained that they have had an overpayment on their family tax benefit when their family income was estimated to be, for example, around $80,000 or $90,000 and it went up to $110,000. I can tell you that the letters I send back are far more polite than I would actually prefer them to be. This is a very generous country. The maximum rate is paid to families who have incomes under $30,000. There are two taper zones. Within that, as people increase their income, they get less. It is true that at the end of year, if you have overestimated your income or we have not given you enough, you will get a top-up—unlike the situation under the previous government, which did not top up. Of course, if you have earned more than another family in the same circumstances, you will have had an overpayment and we will expect it to come back, presumably by way of a reduction in your entitlement next year.

Senator STEPHENS —Mr President, I thank the minister for her response and ask a supplementary question. Does the minister deny that a lump sum debt at the end of the year is a serious problem for many struggling families and will the minister confirm that she will do nothing more to help these hundreds of thousands of families getting these year-end bills?

Senator VANSTONE (Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women) —Struggling families are certainly not the families earning the higher incomes who, nonetheless, have no difficulty in writing to senators and members to say: `I've got an overpayment. My income was $87,000 instead of $82,000.' I do not regard those as struggling families, unless of course they have 14 children—and there are people who do have a lot of children. People earning under $30,000 do get the maximum rate. Senator, I encourage you to look at the Hansard and at the changes that were announced in July to see everything this government has done to give families even more choice in how they take these payments. That extra choice will give them greater opportunities to avoid an overpayment if they are unsure of what their income will be.

Senator Hill —Mr President, I ask that further questions be placed on the Notice Paper.