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Tuesday, 16 September 2003
Page: 20201

Ms GEORGE (7:41 PM) —I want to begin by saying that I have just listened intently to the member for Macarthur, and I do not think there is anyone on this side of the House that disagrees with the principle of family payments. It is a great idea. Our objection is that the administration of the family payment system is fundamentally flawed. The flaws in that system have not been recognised by the government, and inequities continue to be perpetuated under this system. The member for Mitchell must live in and represent a totally different constituency to mine, because I constantly deal with individual complaints from constituents about getting caught out in a system where they are treated almost as criminals when they have done nothing other than to advise Centrelink of changed circumstances whenever they occur but where, despite the best intentions, they still find themselves saddled with a debt.

But the world that the member for Mitchell inhabits is certainly not the world that is revealed in Senate estimates, where on the latest information we are told that 728,458 families in Australia have accrued debts totalling $644.8 million in 2000-01. It beggars belief that this government would persist with a system that delivers more than half a billion dollars in debt to almost three-quarters of a million families in Australia. For government members to get up in this debate and pretend that there is nothing wrong with the system fails to acknowledge the reality that is out there. I know, because many families in my electorate of Throsby are bearing the burden of this flawed family payments system through no fault of their own. Honest and hardworking people are being made to feel like criminals, but it is the system, not individuals, which is at fault. Families are making honest estimates of their income, but the system continues to be unable to adjust to changes in people's circumstances.

I will give a couple of examples. In one case, a wife in a single income family in Throsby was lucky to find some part-time employment. Her prompt notification to Centrelink of the changes in her circumstances still left the family with a debt of $1,700. Another constituent was saddled with a debt of $1,800, even after the one-off pre-election waiver of $1,000. Do you know why? I will tell you: all because the husband was retrenched. The list could go on and on. The injustice has been enormous—even more so, and an even greater indignity, when families were stripped of their tax returns without notice.

Suffice it to say, I did what a lot of other members of parliament did and referred individual cases on to the Ombudsman when he was conducting his review. Case studies from local families in my electorate of Throsby comprise some of the 1,855 complaints received by the Ombudsman. It seems to be the case that the members for Mitchell and Macarthur did not have the same complaints coming in to them. It just defies belief. As we all know now, because his report is a matter of public record, the Ombudsman slammed the government's family payment system and admitted that, without fundamental policy changes, it would continue to trap honest, hardworking families in debt that was not of their making.

The Ombudsman's report indicated 12 broad areas of concern in the administration of the family tax benefit system. Again, I make the point that we are not complaining about the principle of family tax benefit or family tax payments; what we are constantly raising with this government is the fundamental flaws in the administration of a system that is haemorrhaging and where all we get is constant bandaid solutions that do not address the fundamentals. Even in tonight's proposition—when I get to the detail of that—you will see that the anomaly has not been rectified for all the people who have been trapped by the system's operation.

But you do not have to take the word of the members of the opposition about the flawed system; have a listen to what the Ombudsman said. He said that the system inherently resulted in large numbers of debts, and these debts are normally high; that debts arising from the scheme are affecting many low-income families, who can ill-afford to have their tax return stripped without any notice—for not doing anything other than abiding by the law, doing the right thing, telling Centrelink of their changed circumstances but incurring debts that are not of their making. The Ombudsman acknowledged that there are situations in which debts are unavoidable, even when families fully comply with all of the requirements, and there are situations in which debts seem to have an unfair retrospective effect—that is, changes in families' circumstances cannot be anticipated. How do you anticipate that your husband is going to be retrenched? How do you anticipate that you might be likely to pick up a bit of part-time work? So the Ombudsman acknowledges that changes in family circumstances cannot be anticipated in many situations and may be beyond the control of any individual but that still results in significant debts and/or other losses or detriment.

Regrettably, but very clearly, this government is happy to continue to place Australian families on a yearly debt cycle rather than do its job and rectify the failures of this system. I cannot believe that Senator Vanstone is allowed to continue in blissful ignorance, blaming individuals rather than accepting her responsibility for a system that is fundamentally flawed. Australian families are being forced into debt by an unjust system. We should, rightly, expect a family payment system that can properly adjust for changes in family income throughout the year and pay the correct entitlement without the risk of a nasty end-of-year debt.

This government should be condemned for its failure to reform this flawed system. It has known about it for years. The Ombudsman, in an independent report, made numerous recommendations. He said it required a substantial policy overhaul—not this constant bandaid to a haemorrhaging system. This government should immediately stop stripping families of their tax returns to recover debts. This government should stop treating honest citizens as if they were criminals. This government should recognise that it is the system, not the individuals, that is at fault. This government should take stock of the financial pressures being imposed on families. There are families in my electorate slowly sinking under the weight of an unfair tax system, the impact of the GST, unpaid or overtaxed overtime and a government induced family payment debt which is nothing short of scandalous.

This is hurting families that I represent. Almost 30 per cent of those in my electorate, on recent census data, had a weekly income of less than $500. The median family income in my electorate is about $860 before tax. Families are waiting for their tax returns to be able to purchase things that are needed by their families; they cannot afford to do that, other than with the money that they manage to get by way of their tax returns. Debts of several thousand dollars, as is the case in my electorate, for average working families are a serious impost, particularly when the debt arises through no fault of their own.

The announcement by the government in this bill to extend by a further 12 months the deadline for top-up payments is welcome, but it neither addresses the core problems within the family tax benefit scheme nor applies to everybody who has been caught up in the fine print and in this ridiculous situation since the introduction of this scheme. This bill before us tonight is no more than a concession to basic commonsense. From the start, it was a crazy system which only allowed top-up payments to be paid within 12 months of the financial year in which the family was eligible to receive payments. This bill seeks to extend the time limit from one year to two years. It is a small start, and it will certainly provide relief for many families who are innocently caught up in the system. But let us be clear that the government has been forced to make this minor concession due to public pressure and the recommendations of the Ombudsman.

The absurdity of the system was highlighted in a case I pursued on behalf of the Gaggin family, who live in my electorate. I was hoping that, when I saw this bill, I would be able to ring the Gaggins and say to Patricia and her husband—honest, hardworking small business people—that the $4,189.69 that was owed to them had finally been acknowledged by this government and that they would be getting it back. But what do we find? We find that, no, this does not go back to the 2000-01 financial year; it leaves out half the families. So it makes a concession and recognises that there was an anomaly but leaves out half of the people—those who were trapped in the first year of the system.

Let me tell you a bit about the Gaggins. The Gaggins sought the top-up in the 2000-01 financial year. As I said, they were entitled to a top-up of $4,189.69—a huge amount for a small business family. Mrs Gaggin's husband had approval from the ATO to lodge his tax return by 31 October 2002. It was later than normal because, like many small businesses, they were hit with the impact of the GST and it took them a bit of time to work it out, but they had approval from the ATO to lodge the return by 31 October. But what they found was that the system was unable to exercise any discretion, despite this granting of an extension for the lodgment by the ATO.

The Gaggin family were not going to take this lying down and they pursued their case through the Social Security Appeals Tribunal. The Gaggins argued convincingly—and the tribunal accepted this argument—that Centrelink had never told them about the fine print that their return had to be lodged by the end of June. The government now accepts that the two-year rule is a reasonable outcome, but it does so for probably only half of those people who have been caught in this absurd situation. The Social Security Appeals Tribunal, while it had no power to order the payment to the Gaggins, suggested that Centrelink consider making the payment of $4,189.69 to Mrs Gaggin, pursuant to the compensation for detriment caused by a defective administration scheme.

The Gaggins pursued their case through the tribunal, and I have pursued the case with the Minister for Family and Community Services. I argued the case on its merits in a letter to Senator Vanstone on 21 May 2003. I would have thought that by now I would have had the courtesy of a reply, but there has been no reply, no justice and no recognition of the anomaly—nothing. Justice needs to be served for the Gaggins. They did everything by the book in terms of the ATO's authority. The tribunal considered that they were credible witnesses when they said that they were not advised of the fine print at any time by Centrelink, and yet they have been denied $4,189.69. That might not seem like a lot of money to a lot of politicians, but it is a lot of money for that family.

I take this opportunity tonight to place on the public record my thanks to broadcaster Alan Jones for his willingness to take up the Gaggins's case when I contacted him. As we know, he is often on the side of the battlers against the bureaucrats. He, no doubt, will be—as I am—very disappointed by and very disapproving of the government's failure to remove this anomaly for everybody who was caught up from the inception of this system. While I am thankful that this bill provides relief for families who sought a top-up in 2001-02, it leaves families like the Gaggins, who sought the top up a year earlier, hanging out to dry.

The government has recognised the anomaly; it has conceded the principle. We know that people can change their tax returns and have leeway to do that for several years. We know that the ATO does give approval for late lodgment. What we have seen in the case of the Gaggins is one government department doing one thing and another government department acting quite contrary to the authority provided by the ATO. I think it is absolutely scandalous. I intend to ring Mr Jones to thank him for his efforts to date and to tell him how sorry I am that Senator Vanstone has not acknowledged that the detriment was caused back in the 2000-01 financial year.

Why is it—please explain, Senator Vanstone—that half the families caught in the system will get relief but the ones caught up in the first year will not? I do not think this is good enough. The changes to the system should be backdated to the introduction in July 2000 of the government's family tax benefit rules. This would resolve the problems for families like the Gaggins, who were caught up in the first year of the system. It is not too late for the government and Senator Vanstone to solve this mess of their own making and recognise that the fault is in the administration of the scheme and not with the innocent families who have been caught up in a scheme that is so maladministered.