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PM stands firm on family tax benefit -

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(generated from captions) prices until that occurs. That report from Ros Childs. The Prime Minister has tonight set the ground for the next big political battle with the Labor Party. In a speech to the Menzies Research Center in Canberra just a short time ago titled 'Keeping Faith with Australian Families', Mr Howard has reiterated his government's commitment to the family tax benefit system and attacked Labor's planned amendments. With echoes of his attacks in the last election on Labor's schools' policy with its hit-list of private schools Mr Howard made the case today that Labor's plan to cap the payments for single income families earning more than $250,000 was an attack on the aspirations of middle Australia. Labor argues the system is flawed because currently even millionaires are eligible for the benefit. We'll be talking to the Shadow Treasurer Wayne Swan in just a moment but, first, I'm joined by political editor Michael Brissenden who's been watching the Prime Minister's speech.

Michael, first of all, what seems

Michael, first of all, what seems to be interesting about this speech

tonight is what is not in it. Here

we have this tax report out there

we have this tax report out there by Peter Hendy and Dick warburton. It

appears that would demand some kind

of response from the Prime Minister?

Maxine, I guess the response to

Maxine, I guess the response to this report will come ultimately in the

budget. That report argues for cuts

to the top rate but show was eare

relatively - are a relatively low

tax country compared to others in

the OECD. Although there have been

rumbling from within the Government

that tax cuts should have more of a

priority, the message from John

Howard very much tonight is that

Howard very much tonight is that the family tax benefit system will

remain the centrepiece of tax

policy. This speech tonight was

really a celebration of, and in

part, a defence of the family tax

benefit system and of course a

benefit system and of course a tough attack on Labor's proposal on

attack on Labor's proposal on family mean package B with a $250,000 cap.

Labor wants to undermine the family

tax benefit system and let me put

tax benefit system and let me put to you that the thin end of the wedge

is its proposed family income test

of $250,000 a year on family tax

benefit Part B. Once a means test

benefit Part B. Once a means test is proposed by the Labor Party, and

this current benefit is nonmeans

tested in relation to family income,

applies to FT BHP, there's nothing

to stop that threshold being

whittled down. The fact is that the

current means test proposed by the

Labor Party by way of an amendment

introduced in the Senate would save

a poultry $6 million a year and

a poultry $6 million a year and that poultry saving can mean only one

thing - that in government Labor

would have a much tighter income

test that would affect tens of

thousands of single income

Australian families who by no

stretch of the imagination could be

described as "rich". Let me

illustrate: a family income test

for family tax benefit B of $125,

for family tax benefit B of $125,000 a year would yield savings of under

$100 million. Mr Howard made the

point tonight. , Maxine, that his

government has been pretty

government has been pretty effective in the redistribution of money to

families, particularly low and

middle income families. He said

almost 40% of families this

financial year will receive more in

cash benefits than they actually

cash benefits than they actually pay in personal income tax disb. So

certainly sounds like much more of

certainly sounds like much more of a political speech, doesn't it, than

any kind of new policy blueprint?

I don't think there's any doubt

about that. This is clearly

about that. This is clearly designed to attack Labor just as they hope

to attack Labor just as they hope to paint themselves in the run-up to

the election as the party that puts

the interests of low and middle

income families first. As you said

in the introduction there, it had

echos of the campaign against Mark

Latham's schools' policy in that by

introducing a means test for the

FTB, this would hit a lot of people

who the Prime Minister says don't

really regard themselves as rich.

So it sounds like we're starting to

see the jut line already of next

year's campaign, 2007? Yep. I don't

think there's any doubt about that

either. It certainly sets the tone

of the politics for the next 18

months or so. It will be a battle

for the middle ground and

aspirations of middle income family

here's a sample of the sort of

rhetoric we will be hearing a lot

more of in the coming months.

Whether it is FT BHP or funding for

independent schools or support for

private health insurance, Labor's

old ideological agenda can never be

totally killed off. So that when it

comes to choice, don't trust them,

don't believe them because they

don't believe in it themselves.

We can expect to hear about the

politics of envy more than a few

times in the coming months I would

say, too. Interestingly we're

say, too. Interestingly we're seeing a disstint pitch to women. The

a disstint pitch to women. The Prime Minister was strong on the impact

women to the FT BHP system.

Minister was strong on the impact of women to the FT BHP Let me make a

final point. That is if the

anti-churn advocates get their way,

and the family tax benefit system

were to be dismant med, in favour

were to be dismant med, in favour of tax cuts for individual taxpayers,

the people who will suffer most

the people who will suffer most will be Australian women. Because one of

the distinguishing features of FTB,

spre icely because most families

choose to take the payment as a fortnight

fortnightly payment, is of course

that overwhelmingly it is paid to

the principal carer and again

overwhelmingly in most families

overwhelmingly in most families that is the mother. So if you simply

is the mother. So if you simply roll into a reformed income tax system,

the existing family tax benefit

system, the bulk of the individual

tax cuts would go to men financed

tax cuts would go to men financed by the withdrawal of direct

the withdrawal of direct fortnightly payments to women. On that

interpretation what our critics are

really advocating is redistribution

within the tax system from women to

men. You'd almost think from that

that the election was almost upon

us. You certainly would. Michael,

the Government has the harder task

in arguing this one. I mean,

a very good argument, always has in arguing this one. I mean, there's

been, for means testing these kind

of payments and certainly it's been

pointed out it's 70 families in

category, not very many, but pointed out it's 70 families in this

certainly 70 millionaire families

actually get this benefit. Yeah,

Labor has a strong point here

think the government knows it, but Labor has a strong point here andise

it's not just the few millionaires,

70-odd million their family but

those who earn over $250,000 a year.

Labor will argue this is welfare

the rich but what the Government is Labor will argue this is welfare for

trying to do is set up a new policy

argument and paint Labor as

against the aspirations of middle argument and paint Labor as standing

Australia. Already Mr Howard has

painted this means testing of the

family tax benefit 3 as the thin

of the wedge so I think we are family tax benefit 3 as the thin end

seeing the par metres of the next election starting to be played out

and there will certainly be more in