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Govt appeals for patience over tax plan -

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ELEANOR HALL: The Federal Government is today pleading with employees in the community, welfare and
church sectors to be patient while it fixes a tax measure it acknowledges will have a savage effect
on their incomes.

The ABC revealed yesterday that charity workers could lose up to $50 a week in family and childcare
payments from the first of July because of a Federal Budget measure that redefines income.

Amid claims that 200,000 low-income families will be left worse off, the Government is now trying
to deal with the problem. But it's warning it may take some time to fix.

In Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: The Government is scrambling to fix a problem it says it only recently became aware
of and inherited from the Howard Government. Treasurer Wayne Swan says fixing the Budget measure
will be extremely difficult.

WAYNE SWAN: What I am saying is that I don't think there was a thorough appreciation of the savage
impact this was going to have in the charitable not-for-profit sector. It was announced in the 2006

Now that we have been made aware of just how badly people will feel the impact of this, then we
intend to right the wrong.

ALEXANDRA KIRK: Families and Community Services Minister Jenny Macklin is asking for patience,
pledging the measure will be changed, but can't say exactly when.

JENNY MACKLIN: We've given it a commitment to do this as quickly as possible, but I just say to the
people who are working in this sector, doing a very important job to bear with us. It is very
complex and we're currently seeking advice from the department about the best way forward.

ALEXANDRA KIRK: As revealed on AM yesterday morning, charities, public benevolent institutions,
not-for-profit hospitals, ambulance services and many other community welfare sector organisations
use salary packaging to make up for poor pay rates.

But a new fringe benefits tax measure treats the salary packaged part of their wages as extra
income, meaning many in the sector will receive less in family and childcare payments. In some case
$50 a week less.

Jenny Macklin says the Government intends to have a clear policy on this before the end of this
financial year.

JENNY MACKLIN: But I would say to you today that we do understand how complex it is, how complex
the systems are to change as well and that may mean that it takes Centrelink extra time to, in
fact, implement the change once we have a clear policy position.

ALEXANDRA KIRK: The Government says it doesn't know how many people are affected, though The World
Today has been told it could be as many as 200,000. The Treasurer isn't saying how much it will
cost to fix.

WAYNE SWAN: We'll announce that when we've got the full set of proposals.

JOURNALIST: Do you know what the cost of revenue is?

WAYNE SWAN: Well when we've got the full set of proposals we'll give you the.

JOURNALIST: (inaudible) these concerns amount to making sure they are not worse off?

JENNY MACKLIN: Well obviously what I'm saying is that we understand their concerns, we don't want
them to be worse off so we're trying to find a way through it.

ALEXANDRA KIRK: Frank Quinlan from Catholic Social Services thinks if a solution is outlined in the
next couple of weeks, employees will feel a lot better.

FRANK QUINLAN: Well I think what we really have to ensure is that the wages of people are not
affected so that individuals are not affected detrimentally. More importantly we really have to
ensure that the community sector and public benevolent organisations have the capacity to pay their
staff who are delivering these services.

So it really does open up some big questions about the on going viability of the sector and about
the way in which funding to the sector is delivered.

ALEXANDRA KIRK: That's a nice way of saying you want the Government to put more money into the
community welfare sector.

FRANK QUINLAN: Well potentially as I understand the effect, it would have resulted in savings to
payments that would otherwise have been made via Centrelink. So I would expect that there will be
funding available to assist in solving the problem.

ALEXANDRA KIRK: How much funding?

FRANK QUINLAN: It's really too hard to know at this stage.

ALEXANDRA KIRK: If people's family payments and childcare payments are cut because the Government
can't fix the problem quickly enough, would you be asking for that money to be restituted to those

FRANK QUINLAN: Look I think we would certainly want to see a situation where workers aren't worse
off because of this legislation. And I think as I understand it, that's the position of the

ALEXANDRA KIRK: Have they told you that?

FRANK QUINLAN: Not as yet. What they have told us is that they're very eager to fix this problem,
that it was an unintended consequence of the legislation and that they're working very hard in
consultation with the sector to find a solution.

ALEXANDRA KIRK: Will you be seeking an assurance from the Government that your workers won't be
worse off?

FRANK QUINLAN: Well I understand that the Government have already offered some assurances about the
fact that they intend to announce a fix to the problem by July the 1st. So we are encouraged by

ALEXANDRA KIRK: It's not quite the same thing though.

FRANK QUINLAN: It's not the same thing but we're certainly ... we'll be looking for the solution and
the Government are saying that that'll be on the table by July the 1st.

ELEANOR HALL: Frank Quinlan from Catholic Social Services ending that report by Alexandra Kirk.