- reducing
the FTB-A supplement from the 2015–16 rate of $726.35 per child to $602.25 for
2016–17, to $302.95 for 2017–18 and removing the supplement from 1 July 2018
and
- reducing
the FTB-B supplement from the 2015–16 rate of $354.05 per family to $302.95 for
2016–17, to $153.30 for 2017–18 and removing the supplement from 1 July 2018.
The previous Bill, as amended, removed FTB-B for couple
families whose youngest child was aged 13 years or above (with grandparent and
great-grandparent carers exempt). The previous Bill had originally included the
measures above but with a number of important differences:
- single
parents aged 60 years or above were not exempt from the FTB-B rate reduction
measure, only grandparent carers
- grandparent
carer couple families with a youngest child aged 13–16 in receipt of FTB-B were
to have their maximum rate reduced to $1000.10 per annum and
- FTB-B
was to be removed for all family-types with a youngest child aged 17 or 18.
Background to these measures is available in the Bills Digest
for the previous Bill.[8]
After the Opposition announced that it would only support
one measure in the previous Bill, to remove FTB-B for couple families (other
than grandparent carers) with a youngest child aged 13 or over, and would
oppose all remaining measures in the Bill, the Government moved to ‘amend the
existing Bill down to simply that portion with which the Opposition agrees’.[9]
The Greens opposed the previous Bill in full and criticised Labor for
supporting the changes to FTB-B for couple families.[10]
The previous Bill, as amended, was passed by the Parliament on 30 November 2015
and received Royal Assent on 11 December 2015.[11]
Senate Community Affairs
Legislation Committee
The No. 2 Bill has been referred to the Senate Community
Affairs Legislation Committee for inquiry and report by 1 March 2016.
Details of the inquiry are on the Committee
website.[12]
The Senate Community Affairs Legislation Committee held an
inquiry into the previous Bill.[13]
The report of the Committee, chaired by Liberal Party Senator Zed Seselja,
recommended that the Bill be passed.[14]
Australian Labor Party Senators Carol Brown, Katy Gallagher and Claire Moore
issued a dissenting report recommending the previous Bill not be passed in its
form as introduced.[15]
The Labor senators recommended the Bill be amended to remove all measures
except the changes to FTB-B for couple parents (excluding grandparent and
great-grandparent carers).[16]
Australian Greens Senator Rachel Siewert also issued a dissenting report which
recommended the previous Bill not be passed (in either the original or amended
form).[17]
Senate Standing Committee for the
Scrutiny of Bills
The Senate Scrutiny of Bills Committee is yet to comment on
the No. 2 Bill. The Committee had no comment on the previous Bill.[18]
The Opposition and Australian Greens have stated that they
remain opposed to the measures in the No. 2 Bill. Shadow Minister for Families
and Payments Jenny Macklin described the measures as ‘savage cuts to Family Tax
Benefits’.[19]
Australian Greens spokesperson on families, Rachel Siewert, described the
measures as ‘poor policy’:
The Government has hacked up an awful Bill, got parts of it
through with the help of Labor, and will now attempt to get the rest through
with the help of the crossbench ... The Australian Greens will oppose budgetary
measures that attack struggling low income families.[20]
Minister for Social Services Christian Porter has
indicated that he is negotiating with crossbench senators and was willing to
compromise on some measures in order to secure passage of the main savings
measures: ‘I’ve spoken to the crossbench, and I’m not suggesting they’re all
wildly supportive ... We’re willing to compromise, but we still have to save
enough money to pay for changes to childcare’.[21]
The Australian Council of Social Service (ACOSS) stated in
its submission to the Senate Committee inquiry into the previous Bill that ‘it
will affect those on the lowest incomes the most, including single parents and
low income couple households’ and that ‘the numbers affected and the extent of
the income losses mean that the changes are likely to lead to an increase in
child poverty, noting child poverty is already concentrated in single parent
families’.[22]
ACOSS rejected the Bill as introduced.[23]
The National Welfare Rights Network (NWRN) was also
critical of the measures proposed in the previous Bill (and now in the No. 2
Bill). In its submission to the Committee inquiry on the previous Bill, the
NWRN stated:
The NWRN supports genuine reform of the family payments
system and measures to increase workforce participation rates. But the Bill
fails to address this issue other than by reducing payment rates and
eligibility in a way that affects low-income families the most. The starting
point must remain adequacy for families and children, as a matter of our
community’s responsibility to ensure that all children get a basic acceptable
standard of living, regardless of their parents’ circumstances. The Bill fails
this moral and fairness test.[24]
The Secretariat National Aboriginal and Islander Child
Care criticised the financial impact the Bill would have, particularly on
Aboriginal and Torres Strait Islander families, stating in its submission to
the same inquiry:
A Bill of this nature that negatively impacts parents and
carers on the lowest incomes, including single parents and grandparent carers,
will undermine efforts across government to address disparities in
developmental, educational and later life outcomes for Aboriginal and Torres
Strait Islander children.[25]
Specific issues raised by these and other interest groups
were examined in the Senate Community Affairs Legislation Committee’s report on
the previous Bill.[26]
According to the Explanatory Memorandum, the No. 2 Bill
will provide net savings of around $4.3 billion over the forward estimates.[27]
This consists of:
- a
cost of $584.2 million to increase FTB-A rates and the rates of some income
support payments for young people
- a
saving of $781.1 million from changing payment rates of FTB-B and
- a
saving of $4,063.9 million from phasing out the FTB-A and FTB-B supplements.[28]
The previous Bill, as introduced, was expected to provide
net savings of $4.8 billion over the forward estimates.[29]
The previous Bill, as amended, was expected to provide a saving of $525.5
million of the forward estimates. The changes to the measure affecting FTB-B
rates, as proposed in the No. 2 Bill, have reduced the expected savings by around
$54.2 million.
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the No.
2 Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[30]
The Parliamentary Joint Committee on Human Rights (PJCHR) has
not yet reported on the Bill.
The PJCHR did comment on the previous Bill and was
critical of the explanation provided in that Bill’s Statement of Compatibility
with Human Rights for the limitations the measures would place on the right to
social security and the right to an adequate standard of living (articles 9 and
11 of the International Covenant on Economic, Social and Cultural Rights).[31]
In regards to justification given for the changes to the payment rates of
FTB-B, the PJCHR was critical of the lack of evidence provided by the
Government:
No information is provided as to the impact of these changes
on families and how those families will meet their living expenses with the
reduced rates of FTB Part B or how the measures have been targeted to avoid
undue economic hardship. No information is provided as to why the changes to
FTB Part B are structured around the age of the child and not the income of the
family. Accordingly, no information is provided as to how the measure is the
least rights restrictive way of achieving a legitimate objective.[32]
Similar criticisms were made by the PJCHR in regards to
the justification provided in the statement of compatibility for the removal of
the FTB supplements.[33]
In regards to both measures, the PJCHR sought the advice
of the Minister for Social Services as to:
-
whether there is reasoning or evidence that establishes that the stated
objective addresses a pressing or substantial concern or whether the proposed
changes are otherwise aimed at achieving a legitimate objective;
-
whether there is a rational connection between the limitation and that
objective; and
- whether the limitation is a reasonable and proportionate measure for the
achievement of that objective.[34]
At the time of publishing this Digest, the Committee has
not published any response from the Minister.
For analysis of the key issues see the Bills Digest for
the previous Bill.[35]
The following provides a brief summary of the differences
between Schedule 2 of the previous Bill and Schedule 2 of the No. 2 Bill. The
provisions in Schedule 1 (increasing FTB-A and some youth payment rates) and
Schedule 3 (phasing out the FTB-A and FTB-B supplements) of the No. 2 Bill are
identical to those in the previous Bill.
Schedule 2—Family Tax Benefit Part
B rate
Table 1 sets out the measures proposed in Schedule 2 of
the previous Bill and whether they were passed, reintroduced in the No. 2 Bill,
or amended.
Table 1: Status of measures proposed in Schedule 2 of the
Social Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015 (the previous Bill)
|
Schedule 2 of the previous Bill
|
Current status
|
|
Increase the standard rate of FTB-B by $1000.10 per annum
for families whose youngest child is aged under one.
|
Removed from the previous Bill and reintroduced in the No.
2 Bill unchanged.
|
|
Reduce the rate of FTB-B for single parents with a
youngest child aged 13–16 to $1000.10 per annum and remove FTB-B in respect
of children aged 17–18.
|
Removed from the previous Bill and reintroduced in the No.
2 Bill but single parents aged 60+, grandparent carers and great-grandparent
carers are exempt from the rate reduction.
|
|
Reduce the rate of FTB-B for grandparent carer couples
with a youngest child in their care aged 13–16 to $1000.10 per annum and
remove FTB-B in respect of children aged 17–18.
|
Removed from the previous Bill and not reintroduced.
|
|
Remove FTB-B for couple families (other than grandparent
carers) with a youngest child aged 13 or over.
|
Passed with amendments to also exempt great-grandparent
carers.
|
Source: Parliament of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015’, Australian Parliament website; Parliament
of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill (No. 2) 2015’, Australian Parliament website, both
accessed 14 December 2015.
The changes between the two Bills
essentially exclude older parents and carers from the FTB-B rate reductions. The
Minister for Social Services stated that these older parents and carers ‘may
have limited capacity to increase workforce participation’ and thus offset
their loss of family assistance with employment income.[36]
A similar argument was made for the measure in the previous Bill that reduced
the FTB-B rate for grandparent carer couples.[37]
The majority of single parents in receipt of FTB-B with
older children will still have their FTB-B rate reduced (around 3.6 per cent of
all FTB-B recipients (singles and couples) are aged 55 or older).[38]
Provisions
Item 1 of Schedule 2 inserts new subparagraphs
22B(1)(a)(ia) and (ib) into the A New Tax System (Family Assistance) Act
1999 (FA Act) so that FTB-B will no longer be payable in respect of
a secondary school child aged 17 or 18 unless their parent/carer is a single person
aged at least 60 years of age or the grandparent or great‑grandparent of
the child.[39]
Currently, for a parent/carer to be eligible for FTB-B in
respect of a child aged 16 or over, the child must meet the definition of
secondary school child at section 22B of the FA Act. This definition
currently allows FTB-B to be paid in respect of children aged 16, 17 or 18
(where the calendar year in which the child turned 18 has not ended) if they
meet the schooling requirements (also set out at section 22B). The new
subparagraphs will amend the definition of secondary school child for the
purposes of calculating a person’s FTB-B rate so that it only applies to
children aged 16 (where the calendar year in which the child turned 16 has not
ended) who meet the schooling requirements unless the person is a single person
aged at least 60 years of age or the grandparent or great-grandparent of the
child (in which case the current definition will continue to apply). Older
children will still meet the definition of secondary school child for the
purposes of other sections of the FA Act (for example, for the purposes
of calculating FTB-A rates) due to consequential amendments by items 2 and 3.
Item 7 repeals and inserts a new table at clause
30 of Schedule 1 of the FA Act setting out the standard rates of
FTB-B depending on different family situations. The current clause sets out two
rates based on the age of the youngest child: under five years (currently
$152.88 per fortnight) and five to 15 plus those who meet the secondary school
child definition aged up to 18 (currently $106.82 per fortnight). The proposed
table sets out five rate categories and subclauses 30(2), (3) and (4) set out
the amounts that apply to the first four categories:
1.
youngest child aged under one year: the current under five years rate,
as if it were indexed on 1 July 2016 under the current indexation rules (in
line with movements in the Consumer Price Index (CPI)), plus $1000.10
2.
youngest child aged at least one year but less than five years: the
current under five years rate, as if it were indexed under the current
indexation rules
3.
youngest child aged at least five years but less than 13 years: the
current over five years rate, as if it were indexed under the current
indexation rules
4.
youngest child aged at least 13 years and the parent/carer is either
single and aged at least 60 years or is a grandparent/great-grandparent of the
child: the current over five years rate, as if it were indexed under the
current indexation rules
5.
youngest child aged at least 13 years of age but less than 17 years of
age where the parent/carer is not single and aged at least 60 or a
grandparent/great-grandparent of the child: a standard rate of $1000.10.
The rates worked out according to the above formula are to
be indexed on 1 July 2017 (as explained in the application provisions at item
11). This means for example, that the rate for a child under one year that
will be adjusted on 1 July 2017 in line with CPI movements will be the current
rate, as if it were indexed on 1 July 2016 plus $1000.10. That is, the
additional $1000.10 amount will be included in the total to be indexed on 1
July 2017.
As noted in the Bills Digest for the previous Bill, the
Government has attempted to present a more palatable range of FTB savings
measures than those contained in Bills stalled before the Senate. Rather than
stop FTB-B payments to eligible families when their youngest child turns six,
changes in the previous Bill cut off the payment for couple families when the
youngest child turns 13. Changes in the No. 2 Bill mean that single parents with
a youngest aged child 13 or above will receive a reduced rate until their
youngest turns 17 while certain older parents/carers will be unaffected.
To offset the lost savings from this relatively softer
approach (compared to the measures in the 2014–15 Budget), this Bill proposes
to completely phase out the end-of-year supplement amounts. Despite the small
increase in the fortnightly rate of FTB-A, the loss of the supplements
constitutes an overall reduction in the rates of both FTB-A and FTB-B.
The new savings proposals spread the financial impact on a
broader group of family assistance recipients than those proposed in the
2014–15 Budget. Vulnerable groups such as single parents still face a
significant loss of income and a much larger group of families now face the
loss of thousands of dollars in financial assistance from the Government.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill (No. 2) 2015 homepage’, Australian Parliament
website; Parliament of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015 homepage’, Australian Parliament website,
both accessed 14 December 2015.
[2]. C
Porter (Minister for Social Services), ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015’, House of
Representatives, Debates, 26 November 2015, p. 13860, accessed 14
January 2016.
[3]. Family
Tax Benefit Part A (FTB-A) and Family Tax Benefit Part B (FTB-B) are the two
main forms of direct financial assistance the Commonwealth provides to families
with children. Both payments are means tested to target assistance at
lower-income families. FTB-A is available to all families who meet the care,
residence and income test requirements. Different income test requirements for
FTB-B restrict the payment to single parent families and couple families where
one parent has a low income or is not in paid employment. Department of Human
Services (DHS), ‘Family
Tax Benefit’, DHS website, last updated 14 October 2015, accessed 17
December 2015.
[4]. P
Yeend and M Klapdor, ‘Family
payments’, Budget review 2014–15, Research paper series, 2013–14,
Parliamentary Library, Canberra, 2015, accessed 17 December 2015.
[5]. Firstly,
via the Social Services and Other Legislation Amendment (2014 Budget Measures
No. 2) Bill 2014 and, secondly, via the Social Services and Other Legislation
Amendment (2014 Budget Measures No. 4) Bill 2014. See ‘Background’ in M
Klapdor, Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, Bills digest, 50, 2015–16,
Parliamentary Library, Canberra, 18 November 2015, pp. 4–6, accessed 15
December 2015.
[6]. C
Porter (Minister for Social Services), ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015’, House of
Representatives, Debates, 21 October 2015, p. 11919, accessed 17
December 2015.
[7]. S
Morrison (Treasurer), C Porter (Minister for Social Services), S Birmingham
(Minister for Education and Training), Transcript
of joint press conference: Canberra, media release, 21 October 2015,
accessed 17 December 2015.
[8]. M
Klapdor, Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, op. cit.
[9]. B
Shorten (Leader of the Opposition), C Bowen (Shadow Treasurer) and J Macklin
(Shadow Minister for Families and Payments), Turnbull’s
big fail on fairness for families, media release, 10 November 2015, pp.
1–2, accessed 15 December 2015; C Porter (Minister for Social Services), ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015’, House of
Representatives, Debates, 26 November 2015, op. cit.
[10]. R
Di Natale and R Siewert, Government
and Labor must abandon watered down cuts to FTB B that will hurt low income
families, media release, 11 November 2015, accessed 16 December 2015.
[11]. Parliament
of Australia, ‘Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015 homepage’, op. cit.
[12]. Senate
Community Affairs Legislation Committee, Inquiry
into the Social Services Legislation Amendment (Family Payments Structural
Reform and Participation Measures) Bill (No. 2) 2015, The Senate,
Canberra, accessed 16 December 2015.
[13]. Senate
Community Affairs Legislation Committee, Inquiry
into the Social Services Legislation Amendment (Family Payments Structural
Reform and Participation Measures) Bill 2015, The Senate, Canberra,
accessed 16 December 2015.
[14]. Senate
Community Affairs Legislation Committee, Inquiry
into the Social Services Legislation Amendment (Family Payments Structural
Reform and Participation Measures) Bill 2015 [Provisions], The Senate,
Canberra, 30 November 2015, p. ix, accessed 12 January 2016.
[15]. Australian
Labor Party Senators, Dissenting report, Senate Community Affairs Legislation
Committee, Inquiry
into the Social Services Legislation Amendment (Family Payments Structural
Reform and Participation Measures) Bill 2015 [Provisions], The Senate,
Canberra, 30 November 2015, p. 25, accessed 12 January 2016.
[16]. Ibid.
[17]. Australian
Greens Senators, Dissenting report, Inquiry
into the Social Services Legislation Amendment (Family Payments Structural
Reform and Participation Measures) Bill 2015 [Provisions], The Senate,
Canberra, 30 November 2015, p. 27, accessed 12 January 2016.
[18]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 12, 2015, The Senate, 11 November 2015, p. 21, accessed 12 January
2016.
[19]. J
Macklin (Shadow Minister for Families and Payments), Turnbull’s
Christmas present to families: more cuts, media release, 2 December
2015, accessed 18 December 2015.
[20]. R
Siewert, Family
payment cuts are still poor policy, media release, 2 December 2015,
accessed 18 December 2015.
[21]. C
Porter (Minister for Social Services) quoted in S Medhora, ‘Coalition
willing to further compromise on changes to family tax benefits’, The Guardian,
(online edition), 1 December 2015, accessed 18 December 2015.
[22]. Australian
Council of Social Service (ACOSS), Submission
to the Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, 18 November 2015, p. 4, accessed 18 December
2015.
[23]. Ibid.,
p. 1.
[24]. National
Welfare Rights Network (NWRN), Submission
to the Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, 2015, [p. 5], accessed 18 December 2015.
[25]. Secretariat
National Aboriginal and Islander Child Care, Submission
to the Senate Community Affairs Legislation Committee, Inquiry into the Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, 20 November 2015, [p. 2], accessed 18
December 2015.
[26]. Senate
Community Affairs Legislation Committee, Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015 [Provisions], The Senate, Canberra,
30 November 2015, accessed 18 December 2015.
[27]. Explanatory
Memorandum, Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill (No. 2) 2015, p. 2,
accessed 16 December 2015.
[28]. Ibid.
[29]. Explanatory
Memorandum, Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015, p. 1, accessed 18
December 2015.
[30]. The
Statement of Compatibility with Human Rights can be found at page 12 of the Explanatory
Memorandum to the Bill.
[31]. Parliamentary
Joint Committee on Human Rights, Thirtieth
report of the 44th Parliament, 10 November 2015, pp. 53–60, accessed 18
January 2016.
[32]. Ibid.,
p. 55.
[33]. Ibid.,
pp. 57–60.
[34]. Ibid.,
pp. 55–57, 59–60.
[35]. M
Klapdor, Social
Services Legislation Amendment (Family Payments Structural Reform and
Participation Measures) Bill 2015, op. cit.
[36]. C
Porter (Minister for Social Services), ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill (No. 2) 2015’, House of
Representatives, Debates, 2 December 2015, p. 14428, accessed 15 January
2016.
[37]. C
Porter, ‘Second
reading speech: Social Services Legislation Amendment (Family Payments
Structural Reform and Participation Measures) Bill 2015’, House of
Representatives, Debates, 21 October 2015, op. cit.
[38]. Department
of Social Services (DSS), ‘DSS demographic
June 2015’, data.gov.au website, last updated 15 October 2015, accessed 17 December
2015.
[39]. A New Tax System (Family
Assistance) Act 1999, accessed 15 January 2016.
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