I support Labor’s amendments to the Family Assistance, Social Security and Veterans’ Affairs Legislation Amendment (2005 Budget and Other Measures) Bill 2006, amendments to be moved later this evening, because it is high time the government stopped welfare to millionaires. There will always be a debate about the appropriate tax mix—the mix between tax and welfare. The government will always be required to manage the competing tensions between tax reform and its social obligations to support those in the community who need it most. Sadly, this debate is a debate that the government is committed to not having. Sure, tax reform is very topical in the government ranks, but there seems to be very little interest from members opposite in examining the interaction between tax and social security systems and addressing some of the crippling effective marginal tax rates currently enforced on so many within our community.
The opposition has shown it is willing to consider the interaction between the tax and welfare systems, because this is the only fair way to put incentives back into our system. I welcome a number of the changes we have before us today, because they will directly benefit constituents in my area. Werriwa is not one of the wealthiest electorates in this country, not by any measure. Based on the income statistics of the 2001-02 financial year, 97 per cent of income earners in my electorate earned less than $78,000, while nearly half of them earned less than $31,200. They are simply the facts. It is for this reason I am compelled to support changes to the arrangements of family tax benefit A, changes which act to raise the current income threshold and which will result in payment increases of up to $828 a year for more than half a million families currently on family tax benefit A payments.
There is absolutely no doubt there will be some winners in my electorate as a result of this legislation. But, disappointingly, I note that these families—families that are below the income threshold, including those families on income support payments—will not see any increase in their family tax benefits. In fact, many of them are likely to see a decrease in their payments in the not too distant future, as this government implements its Welfare to Work reforms.
I have no doubt that families who are experiencing financial pressures will welcome any assistance they can get. Many families are surviving on income earned from overtime, for instance. Quite clearly, for these families income from overtime is the difference between being able to meet the mortgage repayments, feed their kids and generally go about their day-to-day lives and not being able to. The families who are surviving on overtime payments are also those families living in fear that this is likely to be the first thing taken off them when they are forced to negotiate their new individual contracts that this government, courtesy of its Work Choices legislation, will have indirectly forced on them.
At the outset, I stated that I was happy to support Labor’s amendments to this bill because it is about time millionaire families stopped receiving government handouts. In the same way that the tax take of this government continues to grow, sadly so does its position with respect to being a welfare state. It is not a welfare state that supports those in most need; it is a welfare state that continues to hand out money. As the previous speaker, the member for Rankin, pointed out, how did we get to the point where the government’s spending on social security has increased by 50 per cent in real terms over the past decade? How is it that we find the situation where more than 20 per cent of working age Australians are receiving some form of welfare support when unemployment is at the lowest it has been in decades?
Recently released statistics show that there were 76 families earning more than $1 million a year receiving family tax benefit B payments. In addition, there are more than 38,000 families with incomes of more than $100,000 receiving the payment. There has to be something wrong with the system when people earn over $1 million a year and yet are receiving welfare payments. It is for this reason that I consider the amendments proposed by the opposition to be reasonable when it comes to addressing the issue of family tax benefit B. The proposition to place an income cap on family tax benefit B would not be considered unreasonable by the vast majority of people, and, quite frankly, it would save money. The introduction of Labor’s proposal to income-cap family tax benefit B would save in the order of $7.5 million annually. Labor’s proposal regarding family tax benefit B not only commences with the process of restoring some equity to the social security system but is also fiscally sound. I am sure the amendments will not be supported by government members, and I will be interested to hear their views on this.
Amongst other concerns I have about the distorted shape of the government’s welfare state is the chasm that is now being opened between families and childless couples. This chasm goes to the heart of the government’s methodology when it comes to using tax and welfare systems to support particular groups in our society at the expense of others. I do not stand here today to argue that all social security should be removed from families, in the same way I do not suggest that social security should be removed from single people and childless couples. I would just like to point out that there is a disparity in the system as it currently stands.
Recently released research about the comparative position of families and childless couples quite frankly indicated a number of things. For instance, it is worth while noting it reported that a single-income family that were earning $50,000 a year with two children under the age of 13 received $2,374 more in benefits than they contributed through the taxation system. That is right; the Australian government actually paid them. They did not have to pay tax; they were paid by the Australian government an additional $2,374 over and above any tax that was paid.
I do not deny that families need help—families are in financial distress. As we all know, an income of around the $100,000 mark these days in any capital city or outer-metropolitan area is not regarded as an excessive income. There are a great many families, particularly in electorates like mine, who are suffering from financial stress. In many of the suburbs in my electorate, families have both parents working in order to keep their heads above water, but still they are suffering from financial distress. Part of the reason is obviously the increase in housing prices, but most of the reason stems from the rapid decrease in housing affordability, something that this government has shown repeatedly that it is unwilling to do anything to address.
At the last election the government sold the idea that they were the only ones who could manage the economy and keep interest rates low. Mr Deputy Speaker, as part of their re-election strategy, that was the position that they put out to the electorate at large in 2004. As part of their re-election strategy, you will recall, they contrasted the 17 per cent interest rates experienced under the Keating government, when the interest rates climbed during that period, with current interest rates. Naturally, the government did not seek to present the reasons as to why interest rates were currently so low nor did they present any information on relative housing affordability.
Recently, I read that the repayment burden on households is higher under this government than at any time under the Hawke and Keating governments. Even at the peak of interest rates, households experienced a lower debt repayment burden than they are currently experiencing under this government. At its peak, that debt burden, that share of household income devoted to interest repayments, was 8.9 per cent under the Keating government. You will be interested to know, Mr Deputy Speaker, that it currently stands at 9.8 per cent. This is the reason that families are struggling so much: now more of their income is dedicated to debt repayment, even though nominal interest rates are significantly lower.
The situation exists where so many are suffering financial stress, but among those receiving financial benefit and relief in the form of social security payments are those who need it least. This government has presided over a stunning increase in middle-income welfare by extending welfare to high-income earners, at the expense of single parents and the disabled, through its system of child-care benefits.
Raising the issue of child-care benefits brings me to the amendments proposed to the administration of child care. Child care is of critical importance to parents in my electorate of Werriwa because, as I mentioned earlier, in order to have some form of financial security ordinarily you will find that both parents need to work. That is the same in most areas of outer-metropolitan Sydney, and I presume the same would be the case in any other capital city. But, if both parents need to work, someone needs to look after the kids.
One of the changes before us gives the departmental secretary the power to allocate unfilled places of a child-care provider on the basis that this will allow the redistribution of places from areas of low demand to areas of high demand. Ordinarily, I would say that that sounds like a great thing, something that I would probably rush to lend my support to. I would imagine that any member concerned about child care could not do anything but support that notion. But, as always with the approach of this government, you do have to have some caution because you tend to find that the devil is in the detail.
One possible problem with this change is that, once places are removed from one service, they do not have to be reallocated to another. There is a real and distinct possibility that the change could actually exacerbate the child-care shortage. With the stroke of a pen, a child-care place could simply disappear. As I understand it, the process of reallocating places is a slow and rigid one and places are generally only reallocated in advertised windows, which I also understand have only occurred five times since 2000. I also understand that services wait up to two years from the point of their initial request for new places to be allocated to them. This will be cold comfort for anyone in a high-demand area waiting for the provision of child-care services.
One of the amendments proposed by the opposition would limit the secretary’s power to reduce the allocation of places to a service—in this case, only if the place has been continually vacant for a period of 12 months—and we propose that the places would be required to be reallocated within seven days of their removal. That in itself would require the department to actually plan and not simply remove a position and wait some time before its reallocation. In other words, if a place were taken away from an area of low demand, it would be known in advance and would be reallocated to an area of high demand to satisfy that need within seven days. This is yet another reasonable amendment that the opposition has put forward, in my opinion, but I do suspect again that it will not be supported by the government.
I would also like to offer my strong support for Labor’s amendment to require annual reporting to the parliament on the number and location of services suffering an involuntary removal of places; of services that have been reallocated those places; and of services seeking more places, which would provide some indication of unmet demand. Those are figures that I would have thought anyone in this place would be very interested in. Again, it is not an unreasonable amendment and it is one which I think ought to be supported in this place.
Helping families is one thing but helping families who earn multiple hundreds of thousands of dollars—or, worse, millions of dollars—each year is another thing altogether. Labor has proposed some fair and reasonable amendments to this bill. It has proposed amendments that would bring some sense back into the system of social security, amendments that would act to curb the growth of the welfare state that this government has presided over. Members who feel that placing an income cap on family tax benefit B is unreasonable, while continuing to support the cutting of payments to the most vulnerable in society, quite frankly are symptomatic of a government who have their priorities misplaced. In my opinion, what is occurring in terms of welfare to work is completely wrong.
I would welcome any member who does not support the sensible amendments being proposed here to come and visit my electorate—to visit suburbs like Minto, Macquarie Fields and Miller, suburbs with high degrees of welfare dependency—and explain to them how it is better for everyone to have people earning millions of dollars and receiving welfare while their payments are being cut. I would then welcome the opportunity to take them to visit suburbs like Prestons, Austral and West Hoxton and have them explain to the people there why they would support people with incomes of more than $250,000 per year receiving social security payments while people in those areas are forced to work two jobs to struggle to keep bread on the table for their families, relying on overtime to meet their mortgage repayments and day-to-day living costs.
I have always found it quite amazing that this government—the government who makes the claim that it is the greatest budgetary manager of all time—is the same government who collects record levels of tax and who spends record levels on social security. As the Prime Minister has previously been advised, this government could save $100 million a year by simply scrapping payments to stay-at-home mothers if their family income is more than $125,000. In 2003-04 there were nearly 13,000 families living in our 10 wealthiest postcodes and receiving family support payments.
This is really a crossroads for this government. Either this government is happy to go along the path of maintaining these welfare state provisions, or, alternatively, it starts looking at the real and very much needed tax reform provisions that are required in a developing society. This is not about simply slashing and burning when it comes to welfare; this is about a proper redistribution of the tax burden with a view to ensuring that people who need assistance most receive it and that those who do not need assistance contribute properly to our society. (Time expired)