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Thursday, 14 November 2002
Page: 6381

Senator MARK BISHOP (3:06 PM) —I move:

That the Senate take note of the answers given by the Minister for Family and Community Services (Senator Vanstone) to questions without notice asked today.

I want to discuss the flawed family tax payments system that this government brought into operation some three years ago. Before I address some of the comments in the Ombudsman's report, it is probably useful to remind senators and put on the record the details of the system that the government brought in some three or four years ago.

The details of the package are well known. The government, in introducing the package some years ago, said the changes were going to mean more money, greater benefits and more simplicity for families. The design features of the scheme are also well known. Proposed recipients advise Centrelink of their anticipated income and then advise Centrelink of variations to the proposed income that occur from time to time in an economy such as ours. The recipients receive family tax payments based on the information provided, as amended, to Centrelink, and at the end of the financial year there is the usual balancing activity. Overpayments are recovered as debts; underpayments are paid out. The overpayments are, by and large, stripped back through the taxation system. That is essentially the system that the government brought in some three years ago and which was going to bring much heralded change—more benefits for families, improvements to the system and efficiency introductions. The bottom line was that there would be more, immediate and larger benefits to families, particularly low-income families.

It is obvious to just about anyone—excluding, perhaps, the Minister for Family and Community Services—that the entire system which she brought in is in an absolute shambles. Over 650,000 families—and the figure is going up—were overpaid and have debts, and 400,000 families were underpaid their fortnightly entitlements and only now, at the end of the year, have a catch-up payment. This means that in excess of one million families—around one in two in this country—are not being paid their correct fortnightly benefits. That is almost impossible to comprehend. A system designed to assist families has resulted in one in two families who receive benefits receiving the incorrect payment every fortnight. Both of these groups are being disadvantaged. Those who were overpaid are being hit with debts from out of the blue and those who were underpaid missed out on vital payments throughout the year when they needed them.

If we go back to the origins of the system, it was to assist families on a fortnightly basis, particularly low-income families who have need of such assistance. This system has been the subject of some examination in recent times by the Commonwealth Ombudsman, after a special investigation into the government's administration of this system. The Ombudsman acted on many complaints that he, his office and members of parliament had received which indicated that many families had been caught up in the government's debt trap. The Ombudsman's report has identified 12 core concerns which he saw as indicative and which reflect the problems that families are experiencing now because of the design features of the system introduced by Senator Vanstone some three or four years ago.

Let us look at some of the problems that ordinary families in this country are experiencing every day. Firstly, the Ombudsman said that the system inherently results in large numbers of debts and that these debts are significantly high. Secondly, he said that debts arising from the scheme are affecting many low-income families and their ability to operate satisfactorily. He said that there are situations in which debts are unavoidable, even when families fully comply with all of their requirements. So the design feature of the scheme requires changes in income levels to be notified. When families comply with that regularly, on a fortnightly basis, there are still problems that lead to unavoidable debts being incurred—a funny sort of system to design, you might note. He went on to say that there are situations in which debts seem to have an unfair retrospective effect—that is, changes in family circumstances cannot be anticipated and may be beyond their control, resulting in significant debts and/or losses or detriment. He also said that there may be particular circumstances in which it is difficult to avoid a debt, such as when a previously non-working parent in a two-parent family gains employment or receives some other income. (Time expired)