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Wednesday, 9 March 2005
Page: 106

Senator MARK BISHOP (4:49 PM) —I want to make a few comments concerning the Family and Community Services and Veterans’ Affairs Legislation Amendment (Further 2004 Election Commitments and Other Measures) Bill 2005. The purposes of the bill, as has been discussed by previous honourable speakers, are threefold: firstly, to introduce a new family tax benefit part B supplement effective from 1 January 2005; secondly, to replace the existing formula for the child income cut-out amount for FTB with a specified cut-out amount of $11,233 and a new formula for its indexation; and, thirdly, to exempt aged care accommodation bonds from the assets test. These amendments, as previous speakers have identified, directly flow from the government’s election platform. Consistent with Labor’s approach on election commitments, and despite our criticisms of some parts of the family tax benefit policy, we support the bill.

The second part of this bill, exempting the capital value of an accommodation bond from the assets test, is good policy. It has long been a serious anomaly that one’s house is not counted as an asset for benefits but its realised cash value is counted and considered. This is worse when that realised asset is not available because it is tied up in an aged accommodation bond. No doubt many senators have received, as I have, extensive representations on this matter in recent years. The result will be that a considerable number of people, including veterans, will now receive an age or service pension increase. Some may have such a pension restored or in fact receive the pension in part for the first time. In passing I would observe that at least now there is some consistency and fairness in the overall policy in this area. Our support for this item is therefore unequivocal.

Our position on the family tax benefit supplement, however, is one of criticism. The payment of family tax benefits as part of the tax regime has been a major problem for the current government for the best part of the last five or so years. The fundamental design feature which asks a family to predict its income for a year in advance is, to say the least, problematic. Of course, it is okay for anyone with a steady income, and pay-as-you-earn taxpayers with an unvarying income do not have the problems. End of year outcomes are unlikely to vary much from their predictions. It is a different matter, though, when there are working partners and one or both are part time or casual. Their hours vary, and their income often varies on a weekly, fortnightly or monthly basis. The system simply does not cope where income is variable and less predictable. The payment of the supplement, therefore, is nothing more than a remedy to reduce the inevitable debts that have become a matter of public notoriety in recent years. The pity is that it has taken so long to have a system with some features that might remedy some of those problems. We would suggest it was only the pressure of the pending election last October which resulted in the promise of this lump sum supplement. However, it must be said that the government has now reneged to some degree on that promise.

As part of its election bribes, the government promised to increase the FTB part B by $300 commencing 1 July 2005. It is understood that the Treasury costing of this promise was that it would not be a lump sum but an increase to fortnightly payments. But now we have an ongoing fraud. It is to be a lump sum—that is, a credit against any debt can be offset—and it has been cut in half for the first year. Instead of $300 to be paid after 1 July this year, it will be $150, and not until tax returns are lodged with the ATO. So the full $300 promised will not be paid until the next financial year, 2005-06. We would suggest that this is simply a fudge to push out the budget outlays by another six months; but, more to the point, it reneges on promises, undertakings and commitments made prior to the last election. Hence Labor’s protest by way of our second reading amendment.

The other aspect of the bill concerns the introduction of a new cut-out limit for child income and the ongoing indexation of that figure. We note that the new cut-out is marginally higher than it is at present; so that element, at least, is supported. The FTB part B supplement, however, was portrayed as an additional benefit. In fact, it is intended to fix the overpayment problem that I referred to earlier. For those with overpayments, as the explanatory memorandum explains, it will be shown as a credit.

Let me turn to some veterans issues which are relevant to this bill. First among these is the discrimination by the government, implicit in this bill, against veterans’ carers. As part of its election promise, the government undertook to pay a $1,000 bonus to those in receipt of a carer payment from Centrelink. These payments of $470.70 per fortnight are available on a means-tested basis to those caring for a disabled dependant. They must be unable to work and receive no other form of income support. The anomaly is that other carers, also looking after disabled dependants, are not eligible for the bonus of $1,000. This is because they are on the age or service pension. Needless to say, these people feel they have been cheated.

Veterans’ partners often write to me—as they undoubtedly write to other members of parliament—about a lack of support where they care full time for their disabled veteran partner. Often, as I think is known, this entails the sacrifice of a working career or other opportunities to supplement the family income. The point they make is that, through their efforts, they effectively save the taxpayer significant sums of money. Instead of a veteran being institutionalised or nursing services being delivered, the partner performs that task. Historically, veterans’ wives and families have provided the care, with little question and little reward or recognition. I think it is fair to say that this has always been the expectation. Yet, as they say, the disabilities result from military service, and the government ought to be liable. Further, the carers of these disabled veterans believe they suffer a double jeopardy. Not only has their partner been denied a full working life; they too are unable to work, as they are obliged to provide a degree of care to their partner. This in turn obviously impacts severely on family standards of living.

This is a circumstance not limited to veterans; it is true of all those who are called on to sacrifice their own lives for the care of a loved one. In the case of veterans, it is perhaps worse simply because a veteran has been disabled in service to our nation. Hence the observation and complaint that the government has ignored them in the provision of the carers bonus. Clearly, the policy is arbitrary, made on the run in the lead-up to last year’s election—intended to attract votes, but in the clear hope that those who missed out would not realise in time.

The tandem operation of the Social Security Act and the Veterans’ Entitlements Act is messy in a number of places, and there is no particular blame to be attached to that fact; it is simply the result of history and hundreds of amendments made to both acts over a period of almost 100 years. Over time, different approaches to means-tested income support benefits have been gradually brought together. Hence this combined bill amending both principal acts.

One of the great areas of conflict has been the conflict in policy with respect to the definition of income. The disastrous creation of the defence force income support supplement, DFISA, is one such example. I will not repeat my previous criticisms of this unholy mess, but I do want to refer to another downstream consequence. That concerns rent assistance. DFISA is a refund of the reduction made to Centrelink pensions by the means testing of the DVA disability pension. In effect, this is an admission by the government that a disability pension is not income. But, as we know, the Department of Family and Community Services objected quite strongly. The outcome of this unresolved conflict was that the means test for rent assistance remains unchanged. That is, disability pension from DVA remains as income in the means test for rent assistance. What is more, the DFISA itself is also treated as income. It is little wonder that so few understand this particular mess. It simply makes your head spin to try to get on top of it. The bottom line is that there is no policy—it is just ad hoc reactions made to cater to particular demands at particular times.

The effect for those receiving rent assistance from Centrelink is that the DFISA is swallowed up. They simply receive no benefit from the policy and the promised increase in income that they had anticipated they would receive. How perverse is that! No wonder so many veterans and war widows despair at this ongoing up-and-down in their income. It is no wonder that so many are simply unable to understand their entitlements. What was once a policy of legislative simplification has now turned into a deep and almost impenetrable fog. The tragedy is that many no doubt fail to apply for benefits they need, and others may not be getting what they anticipated to be their full entitlement.

I apologise to the Senate for raising this issue, as it is almost unintelligible—I have done my best to simplify it as I can. Indeed, I very much doubt that any minister involved with the decision would have understood the consequences of what they were doing at the time. I simply hope that the public servants who read this speech in due course and who do understand the mess created by cabinet and the government last year might be reminded of the consequences of the decision and the need to keep it on their list for remedial action as soon as the opportunity arises. The original amendment needed was no more than three words to section 8 of the Social Security Act. It did not need a program costing, as I recall from estimates last year, some tens of millions of dollars to administer. Those dollars clearly would have been better spent on rent assistance, so avoiding the creation of this whole new separate, different and additional set of problems. In that context, it is important that these comments are recorded so that we can return to them in future debates.

Before closing, I wish to raise an issue concerning the seniors concession allowance. This allowance of $200 per year is payable to self-funded retirees with income of less than $50,000, or $80,000 for a couple. Entitlement also requires possession of a Commonwealth seniors health card. War widows who qualify, however, are not entitled to the allowance, simply because they have a gold card and not the Commonwealth seniors health card. The remedy is that they must separately apply for the Commonwealth seniors health card. Unfortunately, as I am advised, it seems that a lot of widows are not aware of this and so do not receive the allowance. The suggestion made to me by the War Widows Guild is that the Commonwealth seniors health card ought to be provided automatically, to save these now ageing members of our community the trouble. It seems to me that their suggestion is sensible, but it would be just as easy to provide the allowance to those with the gold card—that is, if their income limit is not exceeded. I mention this particularly for the attention of the minister at the table, Senator Patterson. It would be nice to think that a useful solution could be found to this minor administrative complication. A response in due course to the issue raised by the War Widows Guild is requested and would be appreciated.