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Wednesday, 17 June 2009
Page: 6263


Ms REA (10:12 AM) —I rise to support the Family Assistance Amendment (Further 2008 Budget Measures) Bill 2009. I do so because I understand that this bill will go some way to assisting families, particularly for those on low and middle incomes and who are reliant on family tax benefit, to manage their household budgets a little bit better. Hopefully, it will avoid a number of families inadvertently running up debts with Centrelink. I know that the some 10,300 families who are recipients of family tax benefit in my own electorate of Bonner will certainly feel much easier about managing their incomes when they see these measures being introduced.

Family tax benefit is the third largest expenditure item of this government. After the states and territories grants program and the age pension, the next highest item of expenditure is family tax benefit, at a total of some $17 billion. It supports more than 2.2 million Australian families. This is therefore a sizeable chunk of the government’s budget. Indeed, it is why this House should support measures to see that the management of that fairly significant expenditure supports families and makes sure that we are accountable to the taxpayers, who are ultimately the people who provide that funding.

We know that there are many families doing it tough. We are going through the most severe global financial crisis since the Great Depression. Whilst many economists and treasurers are struggling with that issue, the real people who will be most significantly affected by this crisis will be many of the families out there in the electorates we represent. Any measure that enables those families to manage their incomes better and to reduce the debt incurred as a result of them inadvertently not being able to have their income correctly assessed is not only a very important measure to support those families but also a very responsible and accountable measure when it comes to that expenditure

This money is actually acknowledging that over the period of the financial year there are some families receiving family tax benefit who indeed do receive more income during that year than was originally forecast. As the previous speaker, the shadow minister for families, community services and Indigenous affairs, indicated, family tax benefit is calculated on annual income. Although many receive fortnightly payments, it can often be the case that, as a result of an increase in income, those payments then become overpayments. Then, at the end of that financial year, a family is faced with a debt. Whilst an income increase is a good thing, we all know that it is not very pleasant to enjoy the fruits of that increased income over a financial year only to be faced with a debt at the end that you did not realise you had incurred. So this is a way of enabling families to continue to manage their incomes, to enjoy a modest increase if they receive it and to make sure that it is not curtailed or that they are not disadvantaged by incurring a debt at the end of the year.

Three measures all lead to that outcome. The first one is the mandatory continuous adjustment of family tax benefit payments. This has been voluntary since 2002 and now it is becoming mandatory. It is, as I said, a way in which the government has proposed to reduce any debt incurred, through overpayments because of an increase of income, at the end of the financial year. It is significant when you look at the figures. In fact, there is some $15 million worth of debt affecting 28,500 families across the country. This measure will help and support those families. Whilst many families we know are out there doing the right thing, they might inadvertently, unaware of the rules and because other events in their lives take over, breach those rules. We all know that there are many things that occupy families other than just making sure that their FTB payments are correct each fortnight. It is important that we as a government provide all of the assistance that we can. Through mandatory continuous adjustment, we will do so.

I guess it is important to note at this point that we know that, unfortunately, there are a very small minority of people out there who do actively find ways in which they can exploit the system. Unfortunately, that means that there must be rules and parameters around the way these payments are made. There must be continuous monitoring to make sure that that expenditure is targeted at the right people and is expended fairly. So, unfortunately, because of those few who will always try and flout the rules, there are many families who will inadvertently, because they do not declare an increase in income, end up with a debt. The mandatory continuous adjustment will enable that to be, hopefully, eradicated. Those families will no longer suffer a debt that they did not expect at the end of the year.

The second measure also moves to do the same thing, through dealing with the issue of non-lodger debt, as it is called. This is the case where, for whatever reason, a family eligible for FTB has not lodged a tax return 18 months after the financial year. Currently their fortnightly FTB payments continue to be paid, despite the fact that they have not lodged that tax return. This, again, can mean that a debt is incurred as a result of overpayment. First of all, can I encourage all families out there who do depend on this increased income, this government support, to be diligent about lodging their tax returns. It is the best way to ensure that they will receive all of the benefits that they as a family are entitled to. It will certainly ensure that they do not incur unnecessary debts.

Basically, the way that this will work is that if they have not lodged their tax return the family tax benefit payment will cease. This means that families will not continue to incur a debt as a result of overpayment because that money is being automatically paid to them, regardless of the fact that they have not lodged their tax return. Of course, once they do, as soon as the situation is rectified and as soon as they do lodge the tax return and their income is assessed, it will then mean that that family will receive all of the tax benefits that they were entitled to, even though the payment had ceased. They will receive it in the form of a lump sum at the end of the financial year. They will not receive it as fortnightly instalments. The government appreciates that that is a change. It is a way of making sure that household debt is not necessarily increased, but, at the same time, it ensures that when the situation is rectified those families have not missed out on payments that they would otherwise have been entitled to.

This is actually quite a significant measure when you look at the dollars involved. In September 2008, debts as a result of non-lodgement amounted to around $460 million. If we do not do anything, by September 2011 that debt will rise to $680 million. Not only is that a significant issue for the government in terms of being accountable to taxpayers for the way that we expend money but it is also significant because, as you can imagine, numbers that high obviously indicate that there will be tens of thousands of families affected by this. They, unfortunately, will see any benefit they have derived from an increase of income going towards a debt repayment that they were not necessarily aware of. This also responds to a recommendation from the Australian National Audit Office, who, looking at the possible increase in debt levels if we did not do anything, suggested that this was one way that the government could manage these payments a little bit better.

The third measure extends the period of time in which the tax office and Centrelink communicate with each other in providing information around tax file numbers and other information regarding payments to ensure that the measures that are put forward in this bill can in fact be initiated, because currently they only talk to each other for some 12 months. This will extend that out further. So particularly people who are in the non-lodger category can be assured that their payments are made and made correctly.

This third measure, I guess, indicates the need to always be vigilant about the level of communication between government departments. It is often a case of shock and horror to many people out there when they realise that government departments do not necessarily talk to each other in the way that they would expect them to. But at least we are able to monitor that and put it into legislation to ensure that that communication is there and that it is conducted in a way that will benefit the recipients of payments.

By way of conclusion, once again we see the government supporting low- and middle-income families and targeting government expenditure to those families who most need that support. It is important to see these particular measures in the context of so many other areas of reform that have come as a result of the election of the Rudd Labor government and indeed as a result, I think, of the very diligent care that Minister Macklin takes in making sure, through her portfolio, that those most in need receive the greatest support from our government.

As we know, pensioners and carers have certainly benefited from the recent budget. We have seen the introduction of 50 per cent education tax refunds to support families. We have increased the childcare rebate to 50 per cent. There is the Teen Dental Health Plan. There are tax cuts. And of course there is the an initiative that I am particularly proud of, the announcement by the Treasurer of the introduction of paid parental leave to support families who, obviously, are deprived of an income when a parent is at home caring for a newborn child. This will make sure that they are financially supported and able to give the best care to their family and the newborn but also able to move back into the workforce when it is needed. As someone who has been a working mother since I was 21 years of age I want to put on the record how proud I am to be part of the government that has put in place that particular policy.

With these measures we once again see a government that cares about supporting families, particularly in harsh economic times. We see a government that targets that expenditure to the people we know are most in need. We also know that just providing payments is not enough to support families, particularly those on low and fixed incomes; enabling them to manage their household budgets better and avoid incurring unnecessary debts is just as important as the payments that we make. This is done in a way that is also sustainable and certainly accountable to the taxpayers who provide the revenue to ensure we support these families in an ongoing manner. I commend the bill to the House.