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60,000 extra families caught in debt trap.

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The Howard Government has finally come clean and admitted an extra 60,000 families accrued Family Tax Benefit debts in 2000-2001 thanks to its flawed payment system.

Information provided to Labor in Senate Estimates has revealed 728,458 families accrued debts totalling $644.8 million in 2000-20011.

This is 58,176 additional families and $60.86 million extra debt than previous ‘final figures’ provided in the 2001-2002 Centrelink Annual Report.

The figures confirm what a shambles the Government’s family payment system is in.

It beggars belief the Howard Government would still persist with a family payment system that delivers more than half a billion dollars in debt to almost three quarters of a million families.

The announcement today by Amanda Vanstone to extend by a further 12 months the deadline for ‘catch-up’ payments, while welcome, does nothing to address the core problems with Family Tax Benefit.

Few families can afford to defer payments until the end of the year to claim as a lump sum or as a ‘catch up’ payment, so the announcement is of no benefit to most.

What they need is a family payment system that can properly adjust for changes in family income through the year and pay the correct entitlement without the risk of a nasty end of year debt.

As it is the announcement today of a 24 months claim deadline does not go far enough.

The Government asserts Family Tax Benefit is a tax based benefit, yet under the tax system other tax benefits and deductions can be claimed for up to four years.

And as usual the Government has only made these changes after pressure from Labor.

Labor exposed in February this year that 25,000 families missed out on $37 million in Family Tax Benefits for 2000-2001 due to the 12-month fine print.

Far from a boon for families, the Minister’s announcement is yet another band-aid on a system that is haemorrhaging.

ENDS Friday 5 Sep 03 Web:

Contact: Wayne Swan on 0418 795 329 Matt Linden on 0407 430 613

1 Community Affairs Committee Budget Estimates 4-5 June 2003 Question on Notice 27(i)

Wayne Swan MP Shadow Minister for Family and Community Services