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Tuesday, 16 September 2003
Page: 20195

Ms JACKSON (7:12 PM) —Whilst I do not oppose the Family Assistance Legislation Amendment (Extension of Time Limits) Bill 2003 in its substance, I very much want to speak in support of the second reading amendment moved by the member for Lilley. In doing so, let me say I have had opportunities to speak on my concerns about the family tax benefit regime now applying in this country since being elected as the member for Hasluck. Whilst I think this bill represents a small step being taken to improve that family tax benefit regime, it still seems to me a long way short of what should be done to amend the scheme to make it a far more sensible scheme for Australian families.

As I said, I do not oppose this bill. In some respects it is reasonable, though it is worth noting that this will bring the family tax benefit rules closer to the relevant current tax legislation but still not in line with it. Essentially, the bill will allow top-up payments to be claimed for up to two years after the end of the income year to which the payments relate. As I understand it, the two-year time limit is at odds with tax law which allows adjustments and subsequent claims to be made for up to four years. I think, if for nothing else but the purpose of internal consistency, that the government ought to have given consideration to ensuring that such leeway, or time for claims, was allowed to families with respect to family tax benefit top-ups. I am also assuming, in supporting this legislation, that if this legislation is passed those who missed out on their top-up for the 2001-02 financial year will be able to claim.

At this point I would urge the government to make some effort to advertise the availability of the top-up payment and how it works. I appreciate that many in Centrelink try to keep people informed, but it is a complex scheme. I note the government's willingness to advertise some of its other initiatives, such as the changes to the Pharmaceutical Benefits Scheme and the earlier advertising campaign requesting people to notify Centrelink of changes to their income or their status as soon as possible. I urge the government to take similar steps to advise families about this measure. The government's own estimate is that this will benefit approximately 35,000 families, which I think includes 25,000 families who chose to receive a lump sum payment at the end of the financial year. As I said, I urge the government to take some steps to advertise this improvement to the scheme.

My only concern is that it is too little, too late. Whilst it might assist some families in Australia, unfortunately it seems that it is more likely to benefit those who are already in a financially secure position to claim their family tax benefit at the end of the financial year. That is contrary to the situation of many thousands of families—certainly in my electorate of Hasluck—who, due to their financial situation, have to claim their family tax benefit up front and receive that payment on a fortnightly basis. To that extent, I am terribly disappointed that the bill does nothing to address the flaws in the family tax benefit system. Year after year, I have seen families not only in my electorate but throughout Australia hit with debts that, frankly, are through no fault of their own but through the fault of a system that does not recognise the practical situation of many families in Australia. The bill does nothing to bring to an end the stripping of many of these same families' annual tax returns to recover the family tax benefit debt. In many cases, these are tax returns that families count on to help them get through the financial demands placed on them these days.

The bill also does not correct the raft of problems with the operation of the family tax benefit system. I have spoken in the House about a number of those problems. This gives me another opportunity to raise a new concern about the operation of the system. Overlooked so far in what I call `the family tax debt fiasco' is the potential debt facing families whose children find employment for the first time at some stage during the financial year. I am talking here about families that, firstly, are rightly entitled to the family tax benefit for the period that a child is at school—or that children are at school—and, secondly, cease receiving the family payment as soon as the child or children receive employment. However, these families are still incurring debts for the payments that I say they would otherwise have been entitled to.

There is the example of a family in one of the suburbs in my electorate, Huntingdale. They contacted my office last year after receiving notice of a debt for a period in which they were rightly entitled to the family tax benefit. That period was during July and August 2001. At the time, the son was enrolled as a student and was living in the family home. As a consequence, his family were entitled to the family tax benefit payment. At the end of August that year, the son gained employment and the family dutifully notified Centrelink of the change in their circumstances. Centrelink ceased the family tax payments upon notification in August 2001.

It was therefore with some shock and anger that that family in Huntingdale received notification in 2002 that they had been overpaid for the period July to August 2001 and that they would have to pay back the entire amount of their family tax benefit. Had that child remained studying until the end of the financial year and then gained employment, the family would have been entitled to the family benefit payment. That the child subsequently received employment cannot—and, in my view, should not—take away from the fact that the family were absolutely eligible for the family tax payments received during July and August 2001.

It seems ironic that the system has penalised them. The son's only crime was to go out and find work at a time that did not neatly coincide with a financial year period. Is it correct to say that this family were not entitled to receive the family tax benefit in July and August 2001, despite the fact that they met all of the criteria for the payment during that period? Is it the case that all families now need to guess at the commencement of each financial year whether or not children or a child in that family will gain employment in the oncoming 12-month period and, if so, whether they should forfeit the year's family tax benefit payments in order to avoid a debt?

The Huntingdale family I have referred to are not an isolated case. A constituent from Caversham who incurred a similar debt also contacted me. She stated that she had received a debt notification because her son had left school. However, she says—and I will quote directly from her letter:

... unfortunately the school and financial years are not the same. Now I need to pay back what I got while he was at school.

I would like to know how many other families across Australia are affected by this system which is designed to penalise families for claiming their due entitlements whilst their children are studying. Why is there no mechanism in place to ensure that families do not have to pay back payments they were entitled to, especially when they take all steps possible to notify Centrelink of changes in their circumstances?

Another local family had two debts arising from a similar situation. The first of their debts was for approximately $1,600 in the financial year 1999-2000 and the second was for $878 in the financial year 2001-02. The first debt centred around whether or not Centrelink were notified of a change in income, and that matter has been the subject of much discussion. The second debt was due to the actions of their son, who was quite industrious and went out and got himself a job over the summer holidays. He ended up earning more than $8,079 for the entire financial year 2001-02. The letter that my constituent received from Centrelink said:

Your child had income, that, for a student, was over the limit from 01 Oct 2001. Consequently you have been overpaid Family Tax Benefit from 01 Oct 2001. If income exceeds limit then there is no entitlement for the financial year. We are therefore, required to recover this amount.

What I am trying to say is: this rule means that parents who think that their child will finish studying at the end of the school year, and who are thinking and hoping that the child will gain full-time employment, should not claim the family tax benefit for at least the July to December period in which that child is in school. Even though they are eligible for the money during the July to December period and may very well need the money they will have to pay it all back if their child starts work and earns more than $8,079 in the following January to June period. Frankly, there must be a more sensible way to address this particular issue. I cannot believe that these problems are not known to the government, because they are certainly well known to Centrelink staff.

It is even more infuriating when we discover, through new information that has been obtained, that one in three families are still accruing unavoidable debts under this flawed family tax benefit system. Recently our shadow spokesperson for family and community services discovered that a whole new loophole allowing the wealthy in our community to obtain the maternity allowance has been identified. The double standard shows that this government is continuing to squeeze average families while leaving loopholes open for the wealthy to exploit. Labor obtained information that shows that 643,000 families have been hit with debts over the past year due to the family tax benefit system's inability to determine and pay their correct entitlements during 2001-02. Most families have been unable to avoid the debts because the government system is unable to account for fluctuations in family income and adjust payments accordingly. The debts accrued by families over the first two years of the scheme now total more than $1 billion.

Earlier this year, the Commonwealth Ombudsman recommended wholesale reform of the scheme because minor policy changes would not prevent a large number of families still accruing unavoidable debts. It is of some concern to me that the government has not taken this opportunity in the legislation to address that raft of problems. We also discovered that, just as many wealthy families may obtain access to the family tax benefit by submitting a low estimate of income at the time of the claim, they can also access the maternity allowance. The minister responsible has claimed that the family tax benefit may eventually be recouped from these wealthy families, but she also acknowledges that it is unlikely that the maternity allowance will ever be recovered.

We have been asking Senator Vanstone to release the figures for this financial year on family tax benefit debts. We estimate there are a substantial number of families who have again incurred debts this year. Figures that I have received indicate that around one in three families eligible for the benefit have been hit with end of financial year debts and these are usually stripped straight from tax returns. As I said earlier, families that lodge their tax returns can expect to be slugged to make up the difference and to pick up that debt. I imagine that this year we will again see an average of $1,000 taken out of many families' budgets as a consequence of the family tax benefit system.

I understand that in my home state of Western Australia there are some 65,297 families who had family tax benefit debts for the financial year 2001-02, with the accumulative value of those debts being $116,515,243. Hundreds of thousands of families across Australia have been hit with debts two years running and, as they lodge their 2002-03 tax returns, many of them will find out about their third debt. The failure to fix this flawed system is putting a financial squeeze on families who need benefits fortnightly and contrasts with loopholes available to the wealthy to gain money out of the system.

Last year, during the consideration in detail stage of the debate on the 2002-03 appropriations bill, I indicated to the Minister representing the Minister for Family and Community Services the figures that actually affected my electorate of Hasluck. Whilst I do not want to bore members of the House by reiterating those figures and those debts—

Mr Kelvin Thomson —I'd like you to do it.

Ms JACKSON —You would like me to do it; I am happy to do it. I can tell you that, after the first year of operation, some 5,052 families in Hasluck received notification of a family tax benefit debt—

Mr Kelvin Thomson —5,052!

Ms JACKSON —that is right—and 971 families received notification of a child-care benefit debt. What is worse, after the second year of operation another 2,550 families received notification of a family tax benefit debt and 559 families receive notification of a child-care benefit debt. In my electorate alone, the government debt was $6,743,869. As I indicated to the minister last year, I undertook a survey of a number of families who had received debt notices—and I have taken him through those figures. By far one of the most disturbing figures that emerged from my survey was the fact that 70 per cent of families who received a debt notice for the 2000-01 financial year also received a debt notice for the 2001-02 financial year. As I indicated at the time, I was concerned that many of those same families were likely to receive a further debt notice this year.

I also pointed out to the minister that in the scheme's first year of operation—and, of course, it had nothing to do with the federal election in 2001—the government very generously waived the first $1,000 owing in family tax debt. At the time I asked the minister if he would offer a similar concession to those people who received debt notices the following year partly because, as many of you will recall, it took the government—or Centrelink, as its official representative—nearly seven months after the end of the financial year to actually advise many people that they had incurred a debt in the scheme's first year of operation. At the time the minister refused to grant that waiver.

During the consideration in detail stage of the debate on that appropriations bill, I also asked him whether it was not in fact the case that the most significant proportion of debts now being incurred through the welfare system, and through Centrelink in particular, was in the family tax benefit area. At the time he was not able to answer me—he was very vague—but he did go on to say an extraordinary thing about the top-up payments that the government now make. I think he thought that this would somehow assuage my concerns about the operation of the system. On 19 June in the Main Committee, Minister Anthony said:

The system has been far more flexible over the last few years. The onus is on families to ensure that they either try to accurately reconcile their income or, perhaps, overestimate their earnings so that they do not incur an overpayment. But I must say again that it was this government that introduced that top-up payment. Interestingly, as the projections are now, even with the child-care benefit we will actually be paying out more through top-up payments than, let us say, the amount families will be paying the Commonwealth because they have been overpaid.

I think this was somehow a source of pride for the minister. Even though Minister Vanstone has refused to publish the full-year figures at this stage—that was an undertaking she gave during the Senate estimates process—it is clear when you look at the figures the government have that at the end of June 2002 the top-up was $403 million and the overpayment was $577 million. If you look at the figures to March 2003, the top-up is $349 million and the overpayment is $462 million. Fix the system. (Time expired)