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Minister's band-aid solution causes more pain to families.

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Senator John Cherry Australian Democrats Community Services Spokesperson

18th September, 2002 MEDIA RELEASE 02/452

Minister’s band-aid solution causes more pain to families The ‘solution’ to the Family Tax Benefit problems proposed by Minister Amanda Vanstone will cause families as much financial difficulty as the debts it is trying to fix, according to the Australian Democrats.

Democrats Community Services spokesperson Senator John Cherry said the Minister had failed to explain why the pre-2000 income test system of applying income changes from when they occur rather than backdating them to the previous July 1 could not be re-introduced.

“The Minister’s new ‘options’ ask families to defer most of their FTB until the end of the tax year. Children can not wait until the end of the year for the basic necessities of life, yet this is what the Minister is asking families to do,” he said.

“By asking families to accept the base rate of FTB only, she is asking them to cut their benefit by up to $130 per fortnight for every teenage child and $86 for every child under 14, and instead raise a child on $20.37 per week. It simply can not be done and shows how out of touch this Minister is with the costs of supporting children.

“The Minister continues to misunderstand social security when she claims that family assistance for children is a ‘Tax Benefit’. It is a payment to assist families with the cost of raising children when they need it, and families should be able to receive it without the fear of huge debts occurring at some time in the future.

“The root cause of FTB debts is that even if a person’s circumstances change during the year, that change is attributed over the whole year, right back to 1 July, even if the person had no income at that time.

“This is patently unfair in that it deems income to have been received when it wasn’t, and denies Family Tax Benefit for the time when it was most needed.

“The Australian Democrats propose a solution where a change only impacts on family tax benefit from the date it occurs. This will allow families to receive Family Tax Benefit when they need it. We propose monthly reconciliations so that Australian families can be assured they will not be faced with large debts that they are unable to pay,” concluded Senator Cherry.