Chapter 2
Key issues
2.1
In speaking of the changes proposed in the Social Services
Legislation Amendment (Family Measures) Bill 2015 (Bill), the Minister for
Social Services, the Hon. Christian Porter MP (Minister) stated that in
2015-16, the government will provide around $20 billion in family tax benefit
payments, and that:
These two budget measures, along with the reform package
introduced recently by the Social Services Legislation Amendment (Family
Payments Structural Reform and Participation Measures) Bill 2015, will improve
the sustainability of family payments, while providing continued support to
those most in need of assistance.[1]
2.2
While many submitters supported reforms to the family tax benefit (FTB)
payments system to ensure it is simpler, fairer and better targeted, most
submitters opposed the two measures proposed in the Bill and raised concerns
with the overall potential impact on low income and/or vulnerable families, particularly
Aboriginal and Torres Strait Islander families.
Impact on low income and vulnerable families
2.3
Multiple submitters raised concerns that reductions in income assistance
disproportionately impact low income families.[2]
The St Vincent de Paul Society submitted:
While the current Bill correctly recognises that, for many
people, the large family supplement and portability of Family Tax Benefit A
don’t provide a significant financial benefit, the government has failed to
take into account the impact this will have on families on very low incomes.[3]
2.4
The Australian Council of Trade Unions (ACTU) agreed with this view and
stated the Bill would:
...contain substantial cuts to family payments which will
significantly disadvantage many families who rely on this financial assistance
to achieve an adequate standard of living.[4]
2.5
The Refugee Council of Australia (RCOA) stated both provisions of the
Bill will adversely impact refugee community members, who often travel overseas
for prolonged periods and also often have large families.[5]
2.6
Children with Disability Australia (CDA) raised concerns that families
with children with disability have increased costs of living, and recommended
that 'further consideration should be given to families experiencing multiple
disadvantage due to low income, cultural or linguistic status or other
indicators of vulnerability.'[6]
2.7
FamilyVoice Australia commented on the provision of income assistance to
families, proposing the general principal that during child-rearing years,
self-supporting families should be assisted through tax rebates while low to no
income families should be assisted through the welfare system.[7]
2.8
The National Welfare Rights Network proposed this Bill be reviewed in
conjunction with other changes to social security payments:
In recent years, governments on both sides of politics have
introduced a series of measures that have steadily undermined the adequacy of
the family payments system. This affects the most vulnerable children in our
communities whose parents and carers rely on family payments to help meet the
costs of raising a family.[8]
2.9
The National Welfare Rights Network further stated support for 'careful
and comprehensive review of the family payments program aimed at ensuring it
provides adequate support to low income families, while minimising disincentives
to take up paid work, especially for second income earners who are
overwhelmingly women.'[9]
2.10
The Welfare Rights Centre estimated that the change to Family Tax
Benefit (FTB) portability will impact around 34 200 families in 2016-17, while
the removal of the large family supplement would impact 375 500 families in
2016-17.[10]
In contrast, the ACTU submitted the removal of the large family supplement
would mean that
125 000 families will lose, at least, $321.50 a year.[11]
Impact on Aboriginal and Torres Strait Islander families
2.11
Two submitters raised concerns that the measures in this Bill would have
a disproportionate impact on Aboriginal and Torres Strait Islander families.
The Western Australia Commissioner for Children and Young People (WA
Commissioner) submitted that because the average size of families was 3.3
persons for Aboriginal families and 2.6 for non-Aboriginal families, the
removal of the FTB Part A Large Family Supplement would therefore have a
greater impact on Aboriginal families.[12]
2.12
The WA Commissioner went on to state that one-parent Aboriginal families
also tended to be larger than one-parent non-Aboriginal families and
recommended:
[C]onsideration for the retention of the large family
supplement for vulnerable families, particularly large Aboriginal families. In
the alternative I recommend that the government phase out supplements for
existing vulnerable families over a period of time to minimise the impact of
this change on already struggling families.[13]
Comments on specific measures
2.13
The Bill seeks to:
-
Reduce the time for which FTB Part A will be paid to recipients who are
outside Australia, known as portability, from the current 56 weeks to six
weeks. Portability extension and exemption provisions that allow longer
portability under special circumstances will continue to apply.
-
Cease the large family supplement component of FTB Part A.
Reducing the portability period
2.14
While some submitters agreed that 'the present threshold of 56 weeks
might be considered overly generous and not reflective of short-term absences
from Australia' they also expressed concern that a six-week cut off may be too
short, for example because many such families remain Australian residents for
tax purposes.[14]
2.15
Other submitters also agreed that 'being overseas does not necessarily
lessen someone’s 'connection to Australia'; it does not imply that the person
or family does not wish to return, or no longer identifies as Australian.'[15]
2.16
The National Welfare Rights Network acknowledges that
[T]his measure is likely to impact on very few families, as
few have the means to travel for longer than six weeks at a time.[16]
2.17
The Chinese Australian Services Society Ltd (Chinese Society) expressed
appreciation for the need for the Government to allocate limited resources, and
agreed that families who receive FTB should have strong ties to Australia.
However, the Chinese society also expressed concern that the reduction from 52
weeks to six weeks:
[D]oes not take into account those families going overseas
for a relatively longer period of time, where they may still incur expenses in
raising their children.[17]
2.18
The Chinese Society recommended the current provisions be retained,
whereby the FTB rate is reduced to the basic rate after a six week absence, and
the portability period is reduced to a total of 28 weeks. It also recommended
establishing a mechanism to respond to possible hardship cases. [18]
2.19
The Welfare Rights Centre expressed concern that the proposed shortened
portability period does not reflect the needs of multicultural Australia:
This Bill ignores the cultural realities of a 21st
century multicultural Australia, with many people having close and extensive
ties to families living in countries outside of Australia...overseas travel can
be required in family emergencies, in cases of illness accident, natural
disasters, and when care for relatives is required. [19]
2.20
The St Vincent de Paul Society argued that the six-week portability
period was too short and pointed to the need for some parents of FTB-eligible
children to travel overseas for longer periods than six weeks, to care for
relatives or to receive medical treatment.[20]
2.21
RCOA questioned the impact the reduced portability period would have on
refugee communities:
[I]t is common for refugee community members to be required
to travel overseas for long periods of time to visit their relatives and other
community members, who were not able to come to Australia. This is particularly
important for those who have sick or dying relatives in secondary countries of
asylum. As such, refugee communities may travel overseas for several months.
This bill will impact their ability to receive family tax benefit while
overseas, placing further barriers on people visiting their family members.[21]
2.22
The National Welfare Rights Network agreed with RCOA and submitted that
'the families affected will include some of the more vulnerable families in the
community, such as new migrants and refugees who retain strong family ties
overseas.'[22]
2.23
Submitters also identified potential flow on effects of the Bill. Eligibility
for FTB is tied to other payments, so for some families the loss of income
would be greater than the FTB Part A payment.[23]
2.24
The Explanatory Memorandum (EM) to the Bill states that reducing the
portability period is consistent with the purpose of family assistance payments,
which is to assist with the costs of raising children in Australia. Where
families are outside Australia for significant periods of time, that purpose
would not be met.[24]
2.25
The changes to reduce the portability period are also consistent with
the portability period of other income assistance payments and rebates:
These provisions ensure that fairness remains at the centre
of these reforms. Fairness has always been at the heart of our social security
system. This realignment of the portability rules is a logical and fair change.
It ensures that portability rules for most income support payments remain
consistent across the board. This is important in simplifying what is already a
confusing and complicated social security system.[25]
2.26
The EM also notes that the Bill retains the capacity for the Minister to
extend the portability period in prescribed circumstances, such as where a
person cannot return to Australia because they have been hospitalised.[26]
Ceasing large family supplement
2.27
Submitters raised concerns that ceasing the large family supplement
would have negative consequences for large families, particularly for low
income large families.[27]
2.28
The EM to the Bill provides data from reports by the National Centre for
Social and Economic Modelling (NCSEM) published in 2002, 2007 and 2013, which found
that larger families do not face higher per-child costs compared to other
families.[28]
2.29
However, the WA Commissioner argued that the NCSEM report also found
that:
...[T]he proportion of income spent on children increases as
the number of children increases, with low income families spending a greater
proportion of income of the children compared with higher income large
families.[29]
2.30
This view was echoed by St Vincent de Paul Society, who recommended the
measure be rejected, but also put forward a second option where the large
family supplement would be retained for low-income families.[30]
CDA also agreed with this view, and added that the NCSEM data did not take into
account the specific circumstances of families of children with disability.[31]
National Council of Women of Australia also pointed to certain increased costs
of larger families, such as larger, more expensive cars for families with four
or more children.[32]
2.31
FamilyVoice Australia has pointed out that many large families rely on a
single income, and therefore these families are likely to suffer compounding
effects of changes being considered to FTB Part B rates and eligibility.[33]
2.32
RCOA raised concerns over the impact this measure could have on refugee
families 'as there are a number of refugee communities which commonly have
large families with more than four children.'[34]
2.33
The EM to the Bill states that the cessation of the large family
supplement is consistent with recommendations to abolish the supplement made by
the Henry Tax Review in 2010 and the Commission of Audit in 2014.[35]
2.34
In his second reading speech, the Minister noted:
The Henry tax review in 2010 recommended that the large
family supplement be abolished, as the policy rationale behind the payment was
not strong. The National Commission of Audit reiterated this position in 2014
by stating that the basic rates of FTB part A payment were sufficient for the
costs of raising children...This [amendment] reinforces the logical and evidence
based approach that the government takes to achieving policy outcomes.[36]
2.35
Additionally, as outlined in chapter one of this report, savings from
this measure, combined with savings from other changes including additional
family payments changes, would fund the $3.5 billion Jobs for Families childcare
package to 'provide greater choice for more than 1.2 million families by
providing a simpler, more affordable, more flexible, and more accessible child
care system.'[37]
2.36
The need for improvements to the childcare system was acknowledged by
the ACTU in its submission:
Universal access to government-funded paid parental leave is
critical to maternal and child health and wellbeing and helps supports greater female
workforce participation.[38]
Committee view
2.37
The committee acknowledges concerns raised about the proposed
reduction to the portability period, and the impact this may have on
multicultural communities. However, the committee also notes the comments made
by submitters about the overly generous existing portability period, and the
relatively minor numbers of families likely to be impacted by this measure.
2.38
Furthermore, the committee concurs with the statements in the EM
to the Bill, which outline that the reduced portability period will ensure
family payments are targeted to families who have a stronger residence
connection to Australia.
2.39
The committee notes concerns raised with ceasing the large family
payment supplement on low income families. However, the committee also notes
the data which shows that larger families do not face a higher per child cost,
and that these families will continue to receive per child family assistance
payments for each eligible child.
2.40
The
committee notes the Jobs for Families package, and acknowledges the need for
savings measures to fund this important reform which will help to support families to support themselves
and reduce their dependence on welfare payments.
Recommendation 1
2.41
The committee recommends that the Bill be passed.
Senator Zed Seselja
Chair
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